Canadians this week got a taste of U.S. President Donald Trump’s “spectacle of excess,” with his jab at Canadian dairy, lumber, energy, and threatened withdrawal from the North American free-trade agreement. As Mr. Trump rounds out his first 100 days, it is a salutary reminder to Canadians that we do not enjoy any special exemption from the “Full Trump.”
Rather than get excited, the right response – and that taken by the government of Prime Minister Justin Trudeau – is to distinguish between what is noise and what is real.
What is dangerous about the noise is the effect it is having on business confidence, both domestic and foreign, and about investment in Canada. If investors think Canada is going to lose its ease of access to the United States, Mr. Trudeau’s commitment to create middle-class jobs will not happen.
As for Mr. Trump’s complaints in the case of our supply management policies for dairy, while wrong-headed and costly to Canadian consumers, any reform must come with a commensurate American compromise, such as opening its shipbuilding contracts to Canadian yards.
We could and should become dairy world-beaters, like New Zealand, which went through a similar process 30 years ago and now dominates world markets. Why can’t we do the same with Quebec artisanal cheeses and Ontario cheddar?
We can also remind Mr. Trump that U.S. agricultural subsidies are as American as apple pie, and worth more than $20-billion (U.S.) annually – the equivalent of the entire budgets of Manitoba and Saskatchewan.
Lumber, a variation of which – “shakes and shingles” – almost scuttled the Canada-U.S. free-trade agreement, now threatens the upcoming trade negotiations. That our management of “Crown lands” is different doesn’t mean that it is wrong, just different.
Our natural competitive advantage in lumber runs up against the small timber-lot holders in the U.S. Southeast. For them, their timber lot is a combination of heritage, annuity and a place to hunt and fish.
We will probably have to settle, yet again, for managed trade. But first the provinces, which administer their Crown resources, need to find a common position. Until then, we just put money into the U.S. Treasury.
Mr. Trump’s reference to energy was pure noise. His administration has already granted the Keystone XL permit without taking the threatened piece of the action. But energy presents an opportunity for North American collaboration around shared infrastructure with best-in-class labour and environmental standards.
Mr. Trump needs revenue. Carbon pricing should be part of the solution. If it generates jobs and dollars, Mr. Trump appears prepared to turn on a dime.
What is not noise is the executive orders initiating reviews by the U.S. Commerce Department, United States Trade Representative (USTR) and other agencies on steel, trade deficits, “Buy American” and “Hire American.”
We need to pay close attention to this process because it will influence both Trump administrative policies and the congressional mandate on renegotiation of the next North American (our preference) or Canada-U.S. economic accord.
Traditional diplomacy won’t work. Instead, we have to engage in the U.S. legislative system. This means appearances before congressional committees, submitting briefs and continued active advocacy on behalf of Canada. If we want to succeed in their system then we need to play by their rules.
What is not helpful is “tit for tat.” The threat by Premier Christy Clark to close B.C. ports to U.S. coal exports if Mr. Trump rescinded NAFTA was almost as dumb as the threat by an earlier premier, Glen Clark, to shut ports to U.S. nuclear-powered warships. Biting the hand that pays the bills and also protects you makes no sense.
In dealing with Mr. Trump, Mr. Trudeau said that “we’re not going to overreact,” but rather “lay out the facts” and talk about how “to improve the situation.” This is the rational policy response and, in normal circumstances, the right one.
But the Trump presidency is not a normal circumstance. We should expect Mr. Trump to continue to badger, bully and provoke.
At some point, the Canadian public will expect their prime minister to stand up for Canada. How he does it will be closely watched, not just in Canada but by other world leaders who are nonplussed by Mr. Trump.
In opposition, Mr. Trudeau once said that “for our American cousins, the relationship is consequential. For us, it has often been definitional.” Like it or not, the Trump challenge is going to help define Mr. Trudeau as Prime Minister.