NAFTA Negotiations and Mexico

Bureaucrats ‘literally working around the clock’ to prep for NAFTA talks

‘We’re in a period of great uncertainty,’ one top bureaucrat told Senators last month. The foreign ministry is preparing for anything and everything as a trade renegotiation inches closer.

Justin Trudeau and Donald Trump walk with each other at the White House on Feb. 13. Photograph courtesy of Donald Trump’s Twitter account

By PETER MAZEREEUW

PUBLISHED : Wednesday, March 8, 2017 12:00 AM

The federal government is working day and night to prepare itself as the new Trump administration in the United States eyes restructuring the North American Free Trade Agreement, according to a senior official in Canada’s foreign ministry.

“If my colleague Martin is looking a little tired these days, it’s because he and his trade policy colleagues are literally working around the clock to consider all of [the] different scenarios,” David Morrison, Global Affairs Canada’s assistant deputy minister in charge of the Americas, said of Martin Moen, GAC’s director general for North America and Investment, at a Senate Foreign Affairs and International Trade Committee meeting on Feb. 16.

“We really don’t know at this point how the U.S. wishes to proceed,” Mr. Moen told Senators.

Mr. Morrison said he believed the U.S. government is just now starting to think about how to deliver on President Donald Trump’s promise to renegotiate the NAFTA, or tear it up.

He responded to questions from the Senators about Mexico’s place in any renegotiations—Mr. Trump has lambasted the NAFTA as favouring Mexico over the U.S.—by saying Mexico is “most definitely not being left out of the conversation.” Mr. Moen noted that the existing three-way deal allows just two of the partners to address some trade issues, such as trucking or the sugar trade, without drawing in the third.

Some Canadian government officials speaking anonymously to Reuters in January and former ambassador to the U.S. Derek Burney have suggested Canada distance itself from Mexico, perceived to be the true target of Mr. Trump’s dissatisfaction with the NAFTA, which came into force in 1994.

In response to chatter about whether Canada should go it alone with the U.S., Foreign Minister Chrystia Freeland (University-Rosedale, Ont.) underlined at a panel discussion hosted by the Canadian Council for the Americas on Feb. 21 in Toronto that “NAFTA is a three-country agreement,” and “Were there to be any new negotiations, those would be three-way negotiations.”

In any case, Mexican Foreign Minister Luis Videgaray, who also spoke at the event, said he understood if Canada avoided some of Mexico’s one-on-one concerns with the U.S. Each country would have its own agenda, the CBC reported him saying.

Ms. Freeland’s foreign ministry is preparing for the possibility of bilateral agreements with the U.S. and Mexico if a three-party deal can’t be struck, Mr. Morrison told the Senate committee.

“We’re in a period of great uncertainty, and in a period of uncertainty it’s prudent to prepare for all eventualities, and that’s of course what we’re doing.”

The federal government’s position is that NAFTA has benefited all three countries, said Mr. Moen, adding, “when we talk with business associations in the United States, with specific companies, with local governments, they all agree.”

“Regardless of rhetoric, Canada and many in the United States understand that a secure, stable, and prosperous Mexico is indispensable to Canada’s own prosperity and security,” said Mr. Morrison, listing security, human and drug trafficking, health pandemics, and energy systems integration as issues “best addressed collectively.”

 

Ninety days-plus to go

Mr. Trump has repeatedly said that the NAFTA gives Mexico an advantage over his country, and has moved American jobs to Mexico.

He has been less critical of trade with Canada, calling it “a much less severe situation than what’s taken place on the southern border” during his press conference in Washington with Mr. Trudeau last month. Mr. Trump said the U.S. wanted to “tweak” its trading terms with Canada.

What that means is anyone’s guess. The U.S. and Canada have major or minor trade disputes centred around softwood lumber, dairy and chicken, drywall, wine, and proposals for country-of-origin labelling rules that would require products from north of the border to be tracked separately and labelled as foreign-made.

When Conservative MP Gerry Ritz (Battlefords-Lloydminster Sask.), his party’s trade critic, pressured the Liberal government in the House last month to make public what’s on the table for renegotiation in any NAFTA talks, Liberal MP Andrew Leslie (Orléans, Ont.), the parliamentary secretary for foreign affairs, didn’t do so, but answered that his government would be ready for talks if and when the U.S. was ready to sit down.

That is still at least a few months away. Mr. Trump’s White House held an informal meeting with congressional leaders last month to discuss the NAFTA renegotiation, but has yet to start the clock on a 90-day window in which they will formally negotiate over how the U.S. should try to change the deal.

In Canada, Mr. Trudeau is leading a government-wide political charm offensive to match his foreign ministry’s efforts on the policy side. He restructured his cabinet, many think to better match it to the task of dealing with a Trump administration, and dispatched his top aides and cabinet ministers to the U.S. to build ties with the Trump team and the new Congress. Many of the Liberal-led House committees are also planning to travel to Washington to meet their counterparts in the next few months.

peter@hilltimes.com

@PJMazereeuw

Top Canadian industries exporting to the U.S. last year

Source: Innovation, Science, and Economic Development Canada

Auto manufacturing—$60.6-billion

Oil and gas extraction—$60.3-billion

Petroleum refineries—$12.1-billion

Aerospace parts and manufacturing—$9.1-billion

Pharmaceutical and medicine manufacturing—$8.5-billion

Sawmills and wood preservation—$8.2-billion

Aluminum production and processing—$7.6-billion

Resin, synthetic rubber manufacturing—$6.7-billion

Ferrous metal (non aluminum) smelting and refining—$5.9-billion

Other plastic product manufacturing—$5.3-billion

 

Mix with Mexico, or go it alone?

With U.S. President Donald Trump aiming his disappointment with NAFTA at Mexico rather than Canada, analysts and government officials are weighing in on whether Canada should push for a revised two-way or three-way deal.

 

Take a step back from the trilateral:

“We should not indulge in ridiculous posturing—like getting together with Mexico to defend our interests, when Canada has very different economic interests than Mexico. It is a fundamental error to conflate them.”

—Former ambassador to the U.S. Derek Burney, Maclean’s, Jan. 30

 

“We love our Mexican friends. But our national interests come first and the friendship comes second.”

—An unnamed source quoted by Reuters on the sidelines of a cabinet retreat in Calgary, Jan. 24.

 

“Mexico is in a terrible, terrible position. We are not.”

—An unnamed Canadian involved on the trade file quoted by Reuters Jan. 24.

 

 

Don’t throw Mexico under the bus:

“Our relationship with Mexico is important. We should stand with the Mexican government and help them deal with the discriminatory trends that they are now seeing.”

—Green Party Leader Elizabeth May, speaking to reporters Jan. 30,

 

“Canada may not be in the crosshairs in the same fashion as Mexico but we have no immunity from Trumpian threats. Canada and Mexico need to hang together or, surely, we will hang separately.”

—Former diplomat Colin Robertson, The Globe and Mail, Jan. 16

 

“The Trump presidency should bring Mexico and Canada much closer together, not tear us apart. Whatever trade or investment measures the U.S. applies to our country may end up harming Canada as well and destroying the competitive advantages that the North American value chain has brought since NAFTA came into force 23 years ago.”

—Andrés Rozental, former deputy foreign minister of Mexico, The Globe and Mail, Jan. 27

 

“NAFTA is a three-country agreement. Were there to be any new negotiations, those would be three-way negotiations.”

—Foreign Minister Chrystia Freeland, speaking at a Feb. 21 Toronto panel discussion

 

“Throwing friends and neighbours and allies under the bus is a position for a weak leader. This is not the Canadian tradition.”

—Former prime minister Brian Mulroney, CBC’s Power and Politics, Feb. 21

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North America: States, Provinces and Territories

Why we shouldn’t put provinces in the corner

Later this week, Colorado Governor John Hickenlooper will host the first-ever summit of North American governors and premiers in Colorado Springs.

Mexican governors will have the best attendance, reflecting that, for now, Mexico is the most enthusiastic about North American collaboration. Yukon Premier Darrell Pasloski and Ambassador Gary Doer will lead the Canadians.

The summit agenda focuses on trade and economics with sessions on innovative infrastructure investment, economic innovation, jobs and investment.

Knowing governors matters. Mexican President Enrique Pena Nieto previously served as a governor. This year’s American presidential aspirants include Governor John Kasich and former governor Jeb Bush. Presidents Jimmy Carter, Ronald Reagan, Bill Clinton and George W. Bush all served as governors.

Regional collaboration with governors is well developed. Atlantic premiers have met regularly with their New England counterparts since 1973. The Council of the Great Lakes Region, formed in 2011, focuses on the economy and ecosystem. Western governors and premiers attend each others’ annual meetings. As Manitoba premier, Gary Doer included U.S. and Mexican governors at a 2006 Gimli Western Premiers Conference. They joined in the ultimately successful push to use “smart” drivers’ licences for cross-border travel.

Constitutions vest provinces, states and territories with responsibility for schooling, health care, roads and infrastructure. In Canada, the provinces own their natural resources. They share responsibility for trade and immigration with the national government.

Budgetary pressures oblige innovation by provinces, states and territories. They have become the incubators and outliers on policies and programs, good and bad. Medicare was pioneered in Saskatchewan. Current emissions standards on Canadian and U.S. cars and trucks began in California.

Collaboration in practical environmental management is long-standing. Bombardier “Super Scoopers” are shared during forest fire season. Line workers from state and provincial utilities help each other out when ice storms and hurricanes put out the lights.

During the past decade, most Canadian innovation on climate change occurred at the provincial level. When prime-minister-designate Justin Trudeau meets with the premiers, in anticipation of next month’s Paris climate summit, provincial achievements inevitably will form the basis for a constructive Canadian position on carbon pricing and innovation.

British Columbia’s carbon tax, now seven years old, works. Ontario has joined Quebec in a cap-and-trade system for carbon emissions which is also aligned with California. Alberta plans to double its current carbon levy. Last year, Saskatchewan launched the first commercial carbon capture-and-storage project at a coal-fired plant in Estevan.

Hydropower utilities in Quebec, Manitoba and British Columbia provide 63 per cent of Canadian electricity and they are world leaders in this renewable resource. Oil-sands companies now share 814 technologies worth almost $13-billion. Mining companies used 30 per cent less water from the Athabasca River in 2014 compared with 2012. Alberta’s energy regulator is sharing its best practices with Mexico.

During the years when the Harper government put China in the ice-box, the premiers kept alive the vital official ties necessary for Asian business. Jean Chrétien recognized the value of including the premiers in Team Canada trade missions. It’s a practice that Mr. Trudeau should revive, starting with Mexico, our third-largest trading partner.

President Pena Nieto was the first international leader to congratulate Mr. Trudeau, tweeting “let’s start a new chapter.” In June, Mr. Trudeau spoke of Mexico’s “fundamental impact” on Canada-U.S. relations and called for lifting the visa requirement imposed by the Harper government.

Lifting the visa should be Mr. Trudeau’s first initiative. Seeing Mr. Pena Nieto in Mexico City, before meeting President Barack Obama in Washington, will underline Mr. Trudeau’s personal commitment to a “new chapter” with Mexico. Mexican Foreign Minister Claudia Ruiz Massieu is ready to visit Ottawa. Talking about climate and competitiveness will also demonstrate to the White House that Mr. Trudeau appreciates the North American neighbourhood.

With the Trans-Pacific Partnership and separate trade deals with the European Union coming together, trilateral co-operation can make North America a competitive platform. The practicalities of getting our goods to market – roads, rail and bridges, ports and terminals, grids and pipelines – must involve premiers and governors. This week’s Colorado Springs meeting can advance this agenda.

The premiers’ and governors’ summit should become a regular event with NASCO, the trilateral network for North American trade competitiveness, as its secretariat.

Provinces, states and territories are often dismissed, inaccurately, as a secondary, inferior level of government. Yet it is their work that most affects the everyday life of citizens.

More Related to this Story

Pasloski lone premier to attend North American leaders summit in Colorado What if they held a summit and no one came?

National Governors Association Photo
Yukon Premier Darrell Pasloski at the Summit of North American Governors and Premiers, Oct. 31.

Peter Mazereeuw
Published: Wednesday, 11/04/2015 12:00 am EST

Canada’s premiers may have missed the memo from incoming prime minister Justin Trudeau about boosting ties with Canada’s southern neighbours.

Just one provincial leader attended the first-ever summit for the premiers and governors of Canada, the United States and Mexico on Oct. 30 and 31.

Six governors from each of Canada’s North American neighbours attended the summit in Colorado Springs, Colorado, according to the National Governors Association, which represents US governors.

The summit was announced in February by the associations representing state and provincial leaders in each country, and was the first designed to include sub-national leaders from across all three countries.

Co-operation on the economy was the official focus of the summit, which did not produce any binding commitments, said Yukon Premier Darrell Pasloski, the only Canadian premier to attend.

The leaders mostly used the summit—which included breakfasts, lunches, dinners, receptions and a few panel discussions—for networking and sharing ideas, said Mr. Pasloski.

“It was a chance to build relationships amongst the leaders in all three countries,” he said.

Prime minister-designate Justin Trudeau promised in his campaign platform to improve relations with Mexico and the United States. That included commitments to work with those countries towards a “continent-wide clean energy and environment agreement,” to host a summit for the three federal leaders and to “work to reduce the barriers that limit trade.”

Liberal Party spokesperson Dan Lauzon declined to comment on the premiers and governors summit, saying in an emailed statement that “our efforts are entirely focused on ensuring an orderly transition and on swearing-in the cabinet on November 4th.”

Yukon premier attends on behalf of Canada

The sub-federal leaders discussed infrastructure, broadband internet access, skills and training and international trade, and took in panel discussions on several of those subjects, said Mr. Pasloski.

The Yukon premier—who is taking over as chair of the Council of the Federation next year—will report on the summit to Canada’s other premiers during a meeting this winter, he said.

“What I heard across the table from everyone is that the number one focus was jobs, in all three countries,” he said.

The leaders who attended the summit in Colorado discussed planning another for 2017, though no details have yet been determined, he said.

The summit came at a difficult time of the year for most premiers, as most provincial legislatures are now in session, Mr. Pasloski said when asked why more premiers didn’t attend.

Canada’s Council of the Federation announced the summit in February alongside the NGA and Mexico’s National Conference of Governors.

The summit’s host, Colorado governor John Hickenlooper, likely played a big role in determining the timing of the summit, Mr. Pasloski said.

Mr. Hickenlooper’s staff declined to accept an interview request.

Gary Doer, Canada’s outgoing ambassador to the United States, New Brunswick deputy premier Stephen Horsman and officials from across Canada also attended the governors and premiers summit, said Mr. Pasloski.

No ‘critical mass’ to draw attendance

The summit was a missed opportunity for Canada’s premiers to build upon their relationships with Mexico’s governors, said Laura Dawson, director of the Canada Institute at the Wilson Center in Washington.

Federal leaders have handled most of the relationship between Canada and Mexico, she said.

“It would have been much better for Canada to have had a strong showing,” she said.

However, Canadian premiers and US governors often meet each other at regional gatherings, she said.

Quebec premier Philippe Couillard hosted a summit of state and provincial leaders from the Great Lakes and St. Lawrence area in June, which was also attended by Ontario Premier Kathleen Wynne and governors from eight states.

Ms. Wynne and Mr. Couillard also attended a summit of Great Lakes leaders in April 2014, as did then-federal transport minister Lisa Raitt.

Co-operation between US governors and Canadian premiers will be important as the Liberal government rolls out its infrastructure stimulus plan over the next couple of years, said Colin Robertson, a former Canadian diplomat who served in the United States.

States and provinces need to work together to ensure infrastructure projects designed to boost cross-border trade in Canada and the US complement each other, he said. 

Canada’s relations with Mexico and the United States likely won’t suffer from the poor attendance, said Mr. Robertson. The NGA, Council of the Federation and National Conference of Governors likely made each other aware of the planned attendance well in advance of the summit, avoiding any surprise no-shows that are more damaging to relations, he said.

The Council of the Federation identified Mr. Pasloski as the representative of Canada’s premiers in an Oct. 21 press release.

The relatively poor attendance for the summit was likely a result of failing to achieve a “critical mass” of leaders, said Mr. Robertson. Premiers and governors are more likely to make time for well-attended events where they can hash out issues with many of their counterparts at once, he said.

The governors and premiers may be wise to plan the next summit to coincide with the NGA winter meeting in Washington, which will guarantee attendance by a substantial number of US governors, he said. 

BC premier overseas

BC premier Christy Clark took part in a trade mission to China instead of attending the summit, her office confirmed. The mission was scheduled to run from Oct. 30 until Nov. 7.

Newfoundland and Labrador Premier Paul Davis, the current Council of the Federation Chair, did not attend due to the election scheduled in that province at the end of November, council spokesperson Lindsay de Leeuw wrote in an emailed statement.

The Northwest Territories also have an election scheduled later this month.

Nunavut Premier Peter Taptuna did not attend the summit because the Nunavut legislature is currently in session, and the premier of Nunavut does not travel during that time, said spokesperson Yasmina Pepa.

Manitoba Premier Greg Selinger did not attend the summit “due to the fact our House is in session and the premier is required to attend Question Period and Estimates,” spokesperson Naline Rampersad wrote in an emailed statement.

Ms. Wynne—perhaps Mr. Trudeau’s closest provincial ally—announced that she planned to attend the summit in a July press release. Ms. Wynne’s office confirmed that she would not be attending in the days before the summit, but did not respond when asked why.

Mr. Couillard did not attend the summit because of a scheduling conflict, wrote spokesperson Harold Fortin in an emailed statement.  The premier’s office declined to say what Mr. Couillard would be doing instead.

Nova Scotia Premier Stephen McNeil did not attend the summit because of his crowded schedule and preperations for the opening of the legislature next week, spokesperson Laurel Munroe said in an emailed statement.