Canada US Relations after Charlevoix

After the diplomatic disaster of the Group of Seven summit in Charlevoix, Que., it is now clear that for Mr. Trump it is not about leading – the traditional role of the U.S. President – but about winning at any cost. Relationships are not for cultivating, but only for using to Trumpian advantage.

Canada and like-minded countries need to stick together, act in tandem and push back against Trumpist protectionism. It means taking it to him where it hurts and targeting his base: in particular the farm community. At the same time, we need to tell Americans, who will suffer job loss and higher prices, that they have only their president to blame.

For more than 500 days now, Justin Trudeau has made nice to Mr. Trump. The advice from former prime minister Brian Mulroney was correct – that the relationship with the president is the most important relationship for a prime minister and that Canada-U.S. relations, alongside national unity and national security, are the files that require a prime minister’s constant attention.

Among liberal democratic leaders, Mr. Trudeau was seen as the one who had the best relationship with Mr. Trump. He was the Trump whisperer. But Mr. Trump’s behaviour at Charlevoix, Que., was abominable.

The tweets before Charlevoix, Que., took personal shots at both Mr. Trudeau and French President Emmanuel Macron, the other leader who has cultivated Mr. Trump. The tweets afterward, insulting Mr. Trudeau, are beyond the pale. As Mr. Trudeau said, we are a polite people but we are not pushovers.

Canadians are justly outraged, but we have deep interests at stake, so we need to proceed with care and planning.

First, we need to get our act together domestically. Mr. Trudeau needs to consult with the premiers and business to get their advice on our retaliation list. What is their assessment of increased protectionism on their province and industries? What about life after the North American free-trade agreement? We will be hurt. We will need to provide adjustment assistance for the afflicted. But how would Americans like it if Canadians began to spontaneously boycott American goods, especially U.S. farm produce, and stopped travelling south for holidays?

Second, we need to take advantage of the free-trade deals that we already have in place and put real effort into matchmaking; business with business. As a matter of our national security (two can play this game), we should quickly pass the implementing legislation to bring the new Comprehensive and Progressive Trans-Pacific Partnership into effect. With Canada’s implementation, the agreement would immediately come into force.

If this means keeping parliamentarians at work into July so be it. Provincial legislatures may also have to be recalled. While they are at it they should pass their enabling legislation for the Canada-Europe Comprehensive Economic and Trade Agreement. This is a matter of grave national economic urgency. Canadians need to see that their legislators are acting in the national interest.

Third, we need to act in tandem with our G7 partners and like-minded countries, such as Mexico, as we collectively retaliate to the recently imposed steel and aluminium tariffs. Canada and Mexico learned the value of acting collectively when they worked together to persuade the U.S. Congress to rescind its protectionist country-of-origin labelling requirement in 2015.

American legislators respond to local pressure. They need to feel the heat of retaliation. Canada has a lot of allies, especially in the Republican congressional caucus. They don’t like Mr. Trump’s direction and are already moving to curb the trade powers that were ceded to the executive branch during Franklin Roosevelt’s administration. Hopefully, we will see then the beauty of the checks and balances at work. The U.S. founding fathers designed their system to prevent a president from becoming a king.

The more Mr. Trump attacks his fellow G7 and fellow democratically elected leaders the more difficult it makes it for them to go along with him when it counts. That includes, however unlikely, a deal with North Korea.

The road that Mr. Trump is going down makes no economic sense. George W. Bush reluctantly imposed limited steel tariffs in 2002 (Canada was exempt) and lifted them a year later because it was costing American jobs, not creating them.

Canadians are used to compromise and consensus, especially in how we handle the relationship with Uncle Sam. Manage it well and we can tell them when their breath is bad. Mr. Trump has a bad case of halitosis. We need to tell him so and serve him the bitter medicine he has brought on himself.

CPAC Prime Time Politics Monday, June 11, 2018

Colin Robertson and Christopher Sands on Canada–U.S. Relations00:10:34Quick View

PRIMETIME POLITICS

Colin Robertson and Christopher Sands on Canada–U.S. Relations

 The G7 Summit in Charlevoix ended in dramatic fashion on Saturday with U.S. President Donald Trump directing strong criticism at Prime Minister Justin Trudeau over Canada’s response to U.S. tariffs. CPAC’s Martin Stringer is joined by two experts in foreign affairs and diplomacy to assess the current state of the Canada–U.S. relationship. Colin Robertson is vice-president and fellow at the Canadian Global Affairs Institute and a former Canadian diplomat. Christopher Sands is director of the Center for Canadian Studies at the Johns Hopkins University School of Advanced International Studies. (June 11, 2018) (no interpretation)

 

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Prepare for the Worst

US officials back Trump’s outraged G7 remarks as Canada struggles to mend relationship with its largest trading partner

Chrystia Freeland will travel to Washington this week for a visit which will focus on trade talks – but also attempt to reset US-Canada relations.
 Chrystia Freeland will travel to Washington this week for a visit which will focus on trade talks – but also attempt to reset US-Canada relations. Photograph: Yves Herman/Reuters

Canadian diplomats are scrambling to mend a deteriorating relationship with its largest trading partner after senior US officials maintained the rhetorical barrage first unleashed by Donald Trump at the G7 meeting in Quebec.

Foreign affairs minister Chrystia Freeland will travel to Washington this week for a visit which will focus on trade talks – but also attempt to reset relations between the two countries, which have been pushed to their lowest point in recent memory amid an increasingly bitter row over trade.

In television appearances over the weekend, two senior Trump advisors said that Justin Trudeau “stabbed the US in the back” after the prime minister spoke out against the US president’s aggressive trade policies.

In an appearance on Fox News on Sunday, White House trade advisor Peter Navarro said: “There’s a special place in hell for any foreign leader that engages in bad faith diplomacy with President Donald J Trump and then tries to stab him in the back on the way out the door.”

The sharp escalation has shocked experts and fuelled worries of a devastating trade war, one which Canada, a middling economic power, would likely lose.

“There have been moments of tension in various times in the history of Canada-US relations, but I’ve never seen or heard of anything like the type of language the US administration has used towards Canada,” said Roland Paris, an international affairs scholar and former advisor to Trudeau.

Canadian officials hoped the G7 summit in Quebec over the weekend would be an opportunity to reset discussions around trade after Trump imposed punitive tariffs on the EU and Canada.

But the gathering concluded on a sour note after Trudeau told reporters Canada “will not be pushed around”. Trump responded via social media calling the prime minister “very dishonest and weak”.

“We have to prepare for the worst now,” said Colin Robertson, a former diplomat and head of the Canadian Global Affairs Institute. “There’s a lot of damage control going on today and for the next few days,” he said.

The US remains Canada’s largest trading partner, a relationship valued at $673.9bn, but Trump has claimed Canada has a trade surplus with the US, a statement not backed up by any evidence.

A recent report from the CD Howe Institute finds that the tariffs will cause significant economic pain in both countries: Canada could lose as many as 6,000 jobs and a 0.33% GDP reduction, whereas the US would lose 22,700 jobs, but only a 0.02% disruption to the GDP.

Last week, Canada introduced more than $16bn in retaliatory tariffs against the United States, meant to inflict targeted pain on politically vulnerable industries, such as whisky, orange juice, frozen pizzas and soy beans.

“There are plenty of people in the United States, including in positions of influence, who were just as outraged at those remarks as Canadians were,” said Paris.

Although there is little to suggest that his aggressive trade policy has spirited support within his party, analysts say Trump has seized on the duties as a weapon he can wield without needing congressional approval.

“He’s discovered these weapons and he’s using them for maximum effect to further his ‘American First’ bellicose trade and political agenda,” said Lawrence Herman, a former diplomat and international trade lawyer. “I think the lesson has come home that as a strategic objective: be less dependent on the unreliability of the United States … What Trump is showing is that the United States is an unreliable treaty partner.”

The recent spat has backed Canada into an uncomfortable position: while attempting to remain steadfast against a belligerent trade partner, it must also reckon with the fact that much of its economic productivity is tied to seamless free trade with its southern neighbour.

Trudeau’s father, Pierre Trudeau, famously likened the relationship with the United States to a mouse next to a sleeping elephant. “No matter how friendly and even-tempered is the beast, one is affected by every twitch and grunt,” the former prime minister said.

Justin Trudeau, Donald Trump, Angela Merkel and other world leaders at the G7 summit.
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 Justin Trudeau, Donald Trump, Angela Merkel and other world leaders at the G7 summit. Photograph: Justin Trudeau/JT

Justin Trudeau amended his father’s metaphor at a gathering of American governors last year. “While you, my American friends, may be an elephant, Canada is no mouse. More like a moose: strong and peaceable – but still massively outweighed.”

Trudeau’s firm stance towards the US administration has resulted in a rare unified front amongst current and former political leaders.

Over the weekend, his conservative predecessor Stephen Harper appeared on Fox News to appeal for calm. Conservative leader Andrew Scheer tweeted his support for the prime minister.

Even Doug Ford, the newly-elected populist premier of Ontario – who has pledged to fight Trudeau on a number of policy initiatives – backed the prime minister’s position.

That support reflects a cold economic reality: Ontario is particularly vulnerable to America’s protectionist policies as more than 80% of the province’s exports are sent south of the border, said Robertson.

More recently, Trump has reiterated his threat to impose a 25% tariff on Canadian-made automobiles – a move that would devastate the $80bn industry.

Experts say that as discussions enter uncharted territory, it’s critical that the issues of trade remain the central of focus.

“Trudeau will not personalize this with Trump – and he will not let any of his cabinet or caucus do so. He’ll let public opinion do that for him,” added Robertson.

Meanwhile, Canada should push to ensure two large trade deals – the Trans Pacific Partnership and the Comprehensive Economic Trade Agreement – are finalized in the coming months to hedge against further uncertainty.

“We’ve got these open doors to Europe and the Trans Pacific Partnership. We’ve some housekeeping to do to show we’re serious,” said Robertson.

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Retaliation on Trade

Republicans pressure Trump to drop tariffs after Trudeau retaliation, but it might not matter, say U.S. trade watchers

By PETER MAZEREEUW      
‘Whether or not you can pressure an administration that has no policy, no direction, and no philosophy, I don’t know,’ says ex-Democratic U.S. trade representative Mickey Kantor.
Prime Minister Justin Trudeau, along with Foreign Affairs Minister Chrystia Freeland, announced plans on May 31 to bring in retaliatory tariffs on certain U.S. exports to Canada, beginning July 1, if President Donald Trump’s administration did not reverse newly-imposed tariffs on Canadian steel and aluminum. The Hill Times photographs by Andrew Meade

Republican lawmakers are pushing back against U.S. President Donald Trump’s tariffs on Canada, Mexico, and the U.S., likely making the case that the move could pave the road to his impeachment, say a former trade adviser to U.S. politicians and a Canadian lobbyist tracking the trade battle.

“The only hope there is the Republican leadership gets inside the head of the administration to say, ‘Whatever you’re trying to achieve, you’re going to lose the House in November. And if you lose the House in November, we’re immediately into questions of impeachment,’” said Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, a lobby group for an industry that relies on steel and aluminum crossing the Canada-U.S. border.

“That’s an argument they’ll certainly make,” said a former trade adviser to Republican and Democratic lawmakers, adding, “I don’t think that it will cause the president to withdraw the tariffs.”

Prime Minister Justin Trudeau (Papineau, Que.) could hardly have hoped for a better outcome after he responded to Mr. Trump’s tariffs on steel and aluminum from Canada, Mexico, and the EU by imposing retaliatory penalties—effective July 1—on U.S. steel and aluminum, and a variety of other goods produced in U.S. swing states or the electoral districts of influential Republican lawmakers. Numerous Republican politicians have openly spoken against Mr. Trump’s decision, U.S. industry groups have done the same, and even the powerful conservative advocacy groups backed by the billionaire Koch brothers, including Americans For Prosperity, are campaigning against Mr. Trump’s tariffs.

It’s not clear to what extent the Republican backlash is related to Canada’s counter-tariffs, however. Several lobbyists and analysts following U.S. trade issues closely said the penalties brought in by Canada’s government have created some pressure on Republicans and the White House, as intended, by hitting the pocketbooks of businesses that export to Canada and are represented by Republican lawmakers. But some of the politicians who have spoken out or taken action against the tariffs—including Republican House speaker Paul Ryan, who was targeted by Canada’s counter-tariffs, and the Republican Senate Foreign Relations Committee chair Bob Corker—have already said they won’t run for re-election, theoretically diminishing the threat unhappy constituents would pose to them.

“Clearly across the country, in many places, what they have done is going to adversely affect campaigns for Republicans in the House and Senate where the Democrats have a chance, certainly to win the House, if not the Senate,” said Mickey Kantor, who served as the U.S. trade representative, the highest-ranking trade official in the government, under former Democratic president Bill Clinton.

“And that’s exactly what puts the Republicans under pressure. Now, whether that can pressure this president, is quite another question,” he said.

“Whether or not you can pressure an administration that has no policy, no direction, and no philosophy, I don’t know,” he said.

Mr. Trump took aim squarely at Canada after the G7 meeting in Charlevoix, Quebec last weekend, and a closing press conference in which Mr. Trudeau said Canada wouldn’t be pushed around by the U.S. on trade. Mr. Trump fired off a series of tweets in which he called Mr. Trudeau “meek and mild” and “dishonest and weak.” He left the G7 summit early, refusing to sign onto declarations about reducing plastic waste and climate change.

Mr. Trump’s chief economic adviser, Larry Kudlow, appeared on CNN Sunday that Mr. Trudeau had “stabbed us in the back.” White House trade adviser Peter Navarro told Fox News “there’ a special place in hell for for any foreign leader that engages in bad faith diplomacy with President Donald J.  Trump,” referencing Mr. Trudeau.

‘Dicey’ for Republicans to take on Trump

The Democrats are thought to have a strong chance of taking back majority control of the House from the Republicans in November’s mid-term elections, needing to win 24 Republican seats while keeping their own, with the party polling well and more Republican-held seats appearing vulnerable than those held by Democrats, according to reporting from The Financial TimesThe New York Times, CNN, Fivethirtyeight.com, and others.

Special counsel Robert Mueller’s investigation into the Trump team’s possible collusion with Russia during the 2016 election campaign, once completed, could produce evidence that Democrats could use to begin impeachment proceedings. If a majority of House members vote to impeach, the U.S. Senate would ultimately decide whether to accept that decision. Two-thirds of Senators would have to vote in favour of impeachment, The New York Times reported. The Republicans have a majority in the Senate, however, and are thought to have a good chance at holding it after the midterms.

“I’m not sure that he is convinced” that impeachment is a realistic outcome, said the former trade adviser, speaking on a not-for-attribution basis. “And at the end of the day, he doesn’t care about anyone but himself.”

Republicans vying for re-election are under pressure to support Mr. Trump’s actions, as the president can undermine their bids to stay in office by backing their challengers for the Republican nomination, which is not automatically awarded to incumbents, said Maryscott Greenwood, the CEO of the Canadian American Business Council, a government relations consultant at Dentons’ in Washington, and a former U.S. diplomat to Canada.

“That’s why it’s dicey to take him on,” she said.

“What [Mr. Trump] is doing is politically popular in the Republican base among Trump voters,” she added.

Mr. Trump’s White House team is digging into the “loyalty” of Republican members of Congress as it decides which races Mr. Trump should lend his support to, or not, CNN reported last week.  The White House is also considering doubling down, and imposing additional trade penalties on Canada in response to Mr. Trudeau’s retaliatory tariffs, The Washington Postreported last week.

Some Republicans may not feel pressured to react to Canada’s threat of counter-tariffs until it becomes a reality, and businesses in their district start to feel financial pain, said Ms. Greenwood.

Bill Huizenga, the Republican representative for Michigan’s second district, told The Hill Times that delay could be a reality for some lawmakers, but “for some of us it’s very ripe and we want to deal with it.”

“Some polling will say that people are in favour of this, and the population are in favour of this, but part of that might be they haven’t seen some of the ramifications of it. I’m not just talking with Canada and NAFTA. I’m talking larger scale,” he said.

“What I have expressed both publicly and privately is that I’m afraid that the actions from the [U.S.] administration, while they may be well meaning, are a misguided effort to recapture a world that really no longer exists that way that it once did.”

Republican Senator brings bill to rein in president

Sen. Corker made a splash last week by introducing a bill that would force the president to seek approval from Congress before introducing tariffs under national security provisions of the Trade Expansion Act of 1962, which Mr. Trump used to bring in the penalties against steel and aluminum from Canada and other countries.

That bill would apply to any decisions made in the past two years as well, essentially giving Congress a veto over Mr. Trump’s tariffs on Canada. Sen. Corker has support from nine other Senators in both parties, The Denver Post reported. The bill has a tough road ahead, however. Time to pass it before the midterms is running short, with a summer break looming. The former trade adviser said the bill was unlikely to attract enough support from Republicans—wary of a backlash from Mr. Trump—and Democrats, some of whom are protectionist, and favour U.S. trade restrictions.

Mr. Trump called Sen. Corker on the day he introduced the legislation, and the two had what the Senator described as a “lengthy” and “heartfelt” conversation, CNN reported. Mr. Trump would have the power to veto the legislation if it advanced through both chambers of Congress.

Mr. Trump’s treasury secretary, Steven Mnuchin, also urged the president to exempt Canada from the steel and aluminum tariffs, ABC News reported last week, after Finance Minister Bill Morneau (Toronto Centre, Ont.) and his counterparts in the G7 issued a statement urging him to do so.

Mr. Trump hasn’t shown signs of backing down yet, tweeting late last week that Mr. Trudeau was “being so indignant” and that Canada’s protected dairy sector was “killing our agriculture.”

“Trudeau has no option but to retaliate,” said Mr. Kantor. “Simply because, for domestic purposes, if not anything else, I would assume that the business community and regular folks in Canada are upset at what the U.S. has done and demand that Canada respond.”

Editor’s note: this story was updated online to include the outcome of the G7 summit that ended June 9.

peter@hilltimes.com

@PJMazereeuw

Who put Canada’s tariff list together, and how

Canada’s list of retaliatory tariffs includes 44 categories of steel and aluminum products—a tit-for-tat response to the U.S. tariffs on Canada—and 84 categories of other products, ranging from playing cards to yogurt.

Those other categories in particular were strategically selected by Canadian officials to put pressure on businesses in the electoral districts of influential U.S. Senators and representatives, particularly Republicans.

Public servants in Global Affairs Canada, including in the U.S. embassy and consulates, worked with peers in the Finance, Agriculture, and Innovation departments to assemble the list, according to Global Affairs spokesperson John Babcock. The offices of the ministers for those departments and the PMO and PCO were also involved, he said.

The government tried to ensure the products being considered for inclusion on the list were finished products, and therefore unlikely to be materials Canadian companies rely upon to make their own goods, and to ensure that non-U.S. alternatives were easily accessible for Canadian consumers, said an official from Global Affairs, speaking on background.

Staff in Global Affairs and the Canadian embassy and consulates would have brought in the knowledge of which states exported which products, said Peter Clark, a trade-focused consultant at Grey, Clark, Shih, and Associates and a former trade official for the Canadian government.

“The steel items are a no-brainer—they simply  copied the U.S. list and invited Canadians to comment to ensure they can avoid injury to Canada,” he said.

Canada has sharpened its approach to assembling these retaliatory tariff lists over the years, said Colin Robertson, a vice president of the Canadian Global Affairs Institute and former Canadian diplomat in the U.S.. Mr. Robertson said he was involved with similar efforts related to softwood lumber disputes in the 1990s and mid-2000s.

“We worked closely with Finance and Industry [Canada] and our own sector specialists. We did not reach out to consulates,” he said in an emailed statement. “We also have more data crunching capacity today to figure out where goods are produced and link it to congressional districts and states.”

Canada’s last government under prime minister Stephen Harper took a more thorough approach to assembling a list of retaliatory tariffs after the Obama administration supported Country of Origin Labelling requirements—commonly abbreviated to COOL—for Canadian meat.

Finance Canada is responsible for tariffs, and took the lead on assembling the COOL list, said Adam Taylor, a trade consultant for Export Action Global who was working as a senior staffer for then-trade minister, now Conservative MP Ed Fast (Abbotsford, B.C.).

“The bureaucracy are best equipped to know that stuff, because our embassy is supposed to track who’s influential with the administration,” and who you can “raise the ire of” if you need leverage, said Mr. Taylor.

The list of counter-tariffs included orange juice, targeting Florida, an important swing state where Republican Governor Rick Scott is challenging Democratic Senator Bill Nelson for his seat; whisky, targeting Kentucky, the home of Republican Senate majority leader Mitch McConnell; yogurt, targeting Republican House speaker Paul Ryan in Wisconsin, the second-largest exporter of the product to Canada among U.S. states, after New York; and more.

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