Canada and Mexico

If Canadians are wary about the incoming Donald Trump administration, think about the Mexicans. For them, Mr. Trump presents a clear and present danger.

His threats have moved beyond promises to deport “two … it could even be three million” and to build a “Great Wall” across the entire land border that “will be paid back by Mexico.”

Threatening to impose a 35-per-cent border tax, president-elect Trump has cajoled American, Japanese and German companies to abandon their investment plans in Mexico. The peso has plummeted to its lowest levels ever against the U.S. dollar.

To prepare for a President Trump, President Enrique Pena Nieto recently appointed a new Foreign Minister, Luis Videgaray, and yet another new ambassador to the U.S. (the third in nine months). In speeches to Mexico’s diplomatic corps last week, both Mr. Nieto and Mr. Videgary said that in any negotiations with the U.S., the entire bilateral relationship would be on the table, and that Mexico will not pay for the wall.

For Canadians to feel smug or secure would be a mistake. We may not yet be a direct target, but we are within Mr. Trump’s range of vision.

Inevitably, we would become collateral damage, especially when it comes to protectionist border measures. A survey last month of Trump supporters revealed that 73 per cent expect either a better deal or withdrawal from NAFTA within the first 100 days of the Trump presidency.

Mr. Trump promises more enforcement capacity to secure U.S. borders and, at last week’s Senate Homeland Security confirmation hearing for secretary-designate Gen. John Kelly, both Democrats and Republicans told him not to ignore the northern border and pressed for more security. Eight of its 15 members come from northern border states.

Nor would Canada be exempt from any new border tax, said Mr. Trump’s press secretary last week. The National Bank of Canada has estimated a 10-per-cent border levy would cause Canadian exports to slump 9 per cent within a year.

Canada and Mexico need to make common cause in the face of Trumpian excess. A visit to Mexico, before the summer, by Prime Minister Justin Trudeau would visibly underline our enduring partnership at a time when Mexicans are feeling vulnerable and alone.

While our borders are different and our responses will reflect our particular circumstances, we need to stay close, especially in any NAFTA discussion with Washington.

An active advocacy campaign – a joint effort led by our consuls, suppliers and their customers – needs to inform Americans, especially those living in the 31 states won by Mr. Trump, that their first or second markets are either Canada or Mexico.

Studies conducted for the Canadian Embassy and by the Wilson Center estimate that our commerce accounts for over 14 million American jobs. Underlining our integrated continental market is the fact that 40 per cent of the finished goods that Americans buy from Mexico, and 20 per cent of what they buy from Canada, is “made in the U.S.A.”

Linda Hasenfratz, CEO of Linamar, got it right when she warned there is “too much emotion and not enough fact” out there. Ms. Hasenfratz, who also chairs the Business Council of Canada, argues that adding cost and inefficiency would undercut our global competitiveness. The ultimate cost will be borne by the consumer.

We should look at expanding Canada-Mexico trade in produce – their tomatoes and vegetables for our beef and pork. There are major Canadian investments in Mexico – producing trains, planes and automobiles – as well as banking and mining operations. We need an active investment outreach to encourage Mexican firms to follow the lead of Grupo Bimbo, the world’s leading baker, that owns Canada Bread.

Then there are the people-to-people ties. With the visa lifted we can and need to encourage more Mexican tourism and study in Canada.

Any renegotiation of NAFTA should begin with including the improvements already negotiated through the Trans Pacific Partnership (TPP): preclearance of goods; increasing the number of professionals eligible for fast-track passage and temporary employment; and a trilateral approach to new infrastructure to enhance North American competitiveness.

If Mr. Trump repudiates NAFTA then we should keep it (U.S. withdrawal does not kill NAFTA like it does the TPP) and look for prospective new partners, including Britain, the Pacific Alliance (that includes Chile, Colombia and Peru) and to new partners across the Pacific.

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.

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Trade Commissioner Service and Promoting Canadian Trade

With CETA and TPP in limbo, here’s how Canada can give trade a practical boost

With our big trade-policy initiatives – the Canada-EU trade deal and the Trans-Pacific Partnership – in limbo, Canada’s leaders need to turn their attention to trade promotion.

Canada lives by trade. It represents 60 per cent of our GDP. One in five jobs is linked to trade. There are more than a million small- and medium-sized enterprises operating in Canada. A 2013 survey concluded that only 41,000 were exporting. We can do better.

We need a trade strategy that has the support of the provinces and regional leadership. International Trade Minister Chrystia Freeland should turn her considerable skills to achieving consensus on a new trade plan and then deliver it through a re-energized Trade Commissioner Service.

The Harper government’s Global Markets Action Plan is a good starting point. It established priority markets that also integrated the services of Export Development Canada, Canadian Commercial Corporation and the BDC.

Ms. Freeland needs to achieve buy-in from the provinces and our cities. Since the successful implementation of the Canada-U.S. free-trade agreement (1988), our premiers and civic leaders, regardless of political stripe, are among the strongest advocates of expanding our global customer base and attracting foreign investment.

Saskatchewan’s Trade and Export Partnership (STEP) just celebrated its 20th anniversary. It works because it aligns government resources with exporter needs. Recognizing that city regions are the hubs for innovation and home to our service industries, the 11-city Consider Canada alliance has launched a series of initiatives to attract foreign investment and talent.

Ms. Freeland should revalidate the Action Plan’s target markets. But the focus of the Plan should be on identifying customers, investors and technology partners. A revised strategy also needs to address:

  • International investment by Canadian firms, a necessary part of competing globally, including the role of pension funds;
  • Canadian business participation in development bank projects, especially infrastructure;
  • Foreign direct investment in Canada including state-owned enterprises and public-private partnerships;
  • Internationalization of start-ups through reciprocal soft-landing arrangements in incubators and accelerators in the United States and abroad;
  • Scaling-up Canadian companies lacking sales and marketing experience;
  • Identifying opportunities for Canadian cybertools, technologies and services, especially in emerging markets;
  • Utilization of the Canadian diaspora and the family ties created by immigration to advance trade and investment;
  • Integrating international education, immigration and tourism into our strategy.

The ultimate test of our trade agreements is their ability to generate new business for Canada. Ms. Freeland should produce an annual report card on progress in expanding our customer base.

To give the new plan a boost, Prime Minister Justin Trudeau should draw from the Jean Chrétien playbook and resurrect the Team Canada missions that included premiers and mayors, business leaders and university presidents. These initiatives help sell Canadian goods and services and create a sense of common purpose among our leaders.

Canada’s Trade Commissioner Service is our sales force but it needs re-energizing.

Trade commissioners are door-openers, matchmakers and a source of market intelligence for Canadian business. When local governments are not living up to their investment and trade obligations, the trade commissioners are our front-line advocates to achieve compliance. Trade commissioners find paths through the challenges of foreign languages, customs and regulatory thickets.

Every dollar spent by the Trade Commissioner Service generates $27 in increased exports. Firms that access its services export 18 per cent more than those who don’t.

Our trade commissioners would benefit from more specialized training, including assignments with Canadian business. They also need the right tools. Budget-paring obliged, for example, dropping memberships in American and European chambers of commerce, a small investment that gave them wider networks and market intelligence.

The reality of global competition is that government assistance in competing in global markets benefits Canadian business and our economy.

Canadian business is successfully integrated into the North American markets that account for nearly 80 per cent of our trade. Increasingly, it is earning its place in global supply chains, especially in the transportation and communications sectors.

Canadian agricultural products and foods harvested from our land and seas have earned a reputation for quality. Canadian services in banking, insurance and engineering are efficient and trusted. We are global leaders in medical and energy innovation and digital technology.

A good trade plan will set the compass for expanding our reach into global markets. But success – measured in contracts, investment and talent – requires sustained advocacy and marketing. The necessary first step is revitalizing Canada’s Trade Commissioner Service.

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Trump, Clinton and Canadian Trade

 

What Canada needs to do as Trump, Clinton talk trade

Colin Robertson The Globe and Mail Tuesday, Aug. 16, 2016.

Even when we are not the target, Canada is often collaterally damaged by U.S. trade action. In preparing for the next U.S. administration, our federal and provincial governments should be recalibrating their own economic policies.

The Trudeau government is mapping out the various scenarios depending on the election outcome. We need to closely examine the areas for collaboration and conflict in the policy platforms of Donald Trump and Hillary Clinton. Our place in continental supply chains should benefit from the reinvigoration of U.S. manufacturing promised by both candidates. Adoption of the Trump corporate tax rates would oblige us to re-examine our own regime. There is more opportunity in the Clinton plan for collaboration in green energy, research, and infrastructure projects.

Meanwhile Ambassador David MacNaughton and our U.S. envoys are reaching out to Americans to stress the value of the relationship to Canada, especially in terms of jobs and investment. This exercise should be co-ordinated with the provinces and business.

But we need to do more.

It should start with a doubling-down on trade liberalization at home and abroad.

Our sesquicentennial present to ourselves should be to finally tear down interprovincial trade barriers. The premiers made progress at their recent Whitehorse meeting, but they now need to deliver on their promised Canadian free-trade agreement.

A recent Senate report estimates the annual cost of interprovincial trade barriers is $130-billion. Last month, Quebec, Ontario and British Columbia agreed to co-ordinate online wine sales, but as the Senate report observed, it’s only a modest step. The top 10 barriers cited by the Senate, which include trucking, food (notably cheese, wine and beer) and varying standards, should be the starting point for provincial action.

Internationally, we need to ratify the Canada-Europe trade agreement (CETA) as soon as possible and then launch an ambitious trade promotion exercise, led by the Prime Minister and premiers, to take advantage of the deal. Our European missions should already be identifying the trade opportunities of an agreement and, working with the provinces and business, matching the new opportunities against Canadian products and services.

A Canada-China free-trade agreement is in the cards. We should approach this carefully. What lessons can we learn, for example, from the experience of the New Zealand and Australian free-trade agreements with China?

Better prospects are closer economic ties starting with Japan and Mexico, and they should be top of our list if Ottawa or the U.S. Congress fails to pass the Trans-Pacific Partnership (TPP) trade agreement.

We can resume the economic partnership negotiations with Japan. And we should be working more closely with Mexico in our continuing advocacy efforts, reminding Americans why our continental economic partnership creates jobs and growth for all of us. Mexican ministers are regularly visiting U.S. states to point out the jobs created by trade with Mexico. We should do the same.

Through the TPP we have already effectively negotiated trade agreements with many ASEAN and Pacific Alliance nations. We should quickly turn these into regional agreements. There are continuing economic partnership negotiations with India. While difficult and frustrating, we need to keep plugging away.

Of the Trudeau Government’s many policy reviews, the recommendations of the Barton committee on Economic Growth could potentially shape our economic future in a fashion similar to the Macdonald Commission on Economic Union. Their policy deliberations should include advice on:

getting the most out of trade liberalization, especially in ensuring that the negotiated trade policy gains become realizable results for business. Can we do more with the Export Development Corporation and Canadian Commercial Corporation?;
managing foreign investment to our advantage, including its place in our planned big infrastructure transportation projects designed to get our goods to market;
in developing global champions in our oil and gas, mining and agri-food sectors, what kinds of incentives and performance measures will work?;
how to more closely align and co-ordinate government-funded research and its practical application? Genome Canada is an effective model;
how higher education can better contribute to skills and training. Shouldn’t we be revaluing our community colleges and putting higher public value on the dignity of our trades?

Both levels of government need to better explain how trade liberalization policies benefit Canadians. They also need to help those affected by change. Governments no longer get a free pass on trust.

The U.S. will always be our main market and our principal trade partner. Our broad economic policy approaches, of necessity, are often complementary, but not the same. And when the U.S. takes a wrong turn, we should not panic, but improve our own game.

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G7 in Japan

Canada and Japan talk trade in lead up to G7 summit

JOHN IBBITSON

The Globe and Mail  Sunday, May 22, 2016 10:05PM EDT

Justin Trudeau arrives in Japan on Monday for a week of talks ending in a G7 summit that is darkened by stalled trade agreements, a rising tide of insurgent populism and the possibility that a President Donald J. Trump could attend next year.

The ambitious Trans-Pacific Partnership trade agreement may not make it through the U.S. Congress; both Hillary Clinton and Mr. Trump, the likely Democratic and Republican presidential nominees, spout protectionist rhetoric; Britain votes June 23 in a referendum on whether to leave the European Union (called “Brexit”); and political turmoil in Europe threatens the future of the EU itself.

“The returns on trade have not been translated onto the dining room table,” said Colin Robertson, a former Canadian diplomat and vice-president of the Canadian Global Affairs Institute. Coupled with the uncertain recovery from the financial crisis of 2008-09, this has led, he believes, to a growing mood in both the United States and Europe that’s “anti-trade, anti-immigration, anti-big business, anti-establishment.”

Despite this, both Canada and Japan would like to reinvigorate their flagging trading relationship. Japan, once Canada’s second-largest trading partner, is now fifth. The two countries began free-trade negotiations in 2012, but put those talks on hold when they joined the ambitious Trans-Pacific Partnership talks that included the United States and a raft of Pacific nations.

Now all parties are holding their breath to see whether the U.S. Congress will ratify the TPP, as it’s known, since both Ms. Clinton and Mr. Trump say they oppose it. At the same time, populist politicians in both the United States (Mr. Trump on the right and Democratic presidential candidate Bernie Sanders on the left) and in Europe threaten the existing order.

In Austria’s presidential election on Sunday, the candidate supported by the Greens and the candidate of the extreme right-wing Freedom Party each took half the vote, with no clear winner apparent. Nativist, nationalist, populist parties are on the rise from Poland to France.

“You’ve got an awful lot of unhappy, angry people out there,” noted John Manley, head of the Business Council of Canada. “All they know is that things haven’t gotten better for them and they’re not sure why, but trade is a pretty convenient target.”

Against this backdrop, Mr. Trudeau will be offering a message of hope at the G7: that sustained government spending, such as the Liberals’ 10-year, $120-billion infrastructure plan, can revive both growth and confidence. It’s a 180-degree turn from what Canada was saying under the austerity-minded leadership of former Conservative prime minister Stephen Harper.

“I don’t think anything has changed to make the Canadian voice any more or less powerful today,” said Rohinton Medhora, president of the Centre for International Governance Innovation in Waterloo, Ont. “What matters is what the Germans think in Europe, what the Americans think about these issues.”

But if Canada does not have much influence in the global debate over trade, it does have an enormous stake in the outcome. The Canadian economy depends on trade, so any reversal of the decades-old trend toward ever-freer trade puts Canadian jobs and Canadian prosperity at risk.

Mr. Manley said he believes there could also be opportunities. If the Trans-Pacific Partnership agreement fails to be ratified, he is urging Mr. Trudeau to renew trade talks with Japan. “Canada has a rather unique opportunity to be a hub, rather than just one of the spokes,” he said, able to market itself as a conduit to both American and European markets.

All the more reason, Mr. Robertson urges, for Mr. Trudeau and International Trade Minister Chrystia Freeland to hie themselves to Europe sooner rather than later to nail down ratification of the Canada-EU free-trade agreement.

G7 leaders are painfully aware that, should Donald Trump become U.S. president, the global order would be under enormous strain. Not only is Mr. Trump vehemently opposed to the TPP (and to the North American free-trade agreement), he is threatening to launch a trade war with China and has mooted withdrawing the American security umbrella protecting Japan and South Korea.

But Mr. Medhora remains hopeful. If the British vote to stay in Europe and the Americans elect Hillary Clinton, he observes, then the established order will remain largely intact. “A lot depends on what happens with Brexit and the U.S. elections.”

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Trade, Canada and the US Election

Why trade is taking a beating in the U.S. presidential race

Liberalized trade was once American orthodoxy, but in this volatile and unpredictable U.S. presidential campaign things are different: trade is taking a beating.

Where trade was once welcomed by free-market Republicans and union-backing Democrats, economic nationalism has suddenly united both Republicans and Democrats. Why? The trade issue intersects at the four corners of anti-globalization, anti-immigration, anti-Wall Street and anti-Washington.

Both Republican candidate Donald Trump and Democrat candidate Bernie Sanders have made criticism of trade deals central to their campaigns, forcing their opponents to play defence or to shift their stand on trade.

That’s why it’s worth watching carefully what happens in today’s primaries, especially in Ohio and Missouri. The takeaway from last week’s Michigan primary was that both Republicans and Democrats believe trade agreements are costing Americans their jobs.

For Canada, the stakes couldn’t be higher. America is our biggest market – and it’s essential that we tell Americans that we are also their biggest customer.

There have been critics of free trade in past presidential elections – Democrat Dick Gephardt, Republican Pat Buchanan, and independents Ross Perot and Ralph Nader all spoke out against trade – but they were crucified as flat earth types by editorialists and economists and ultimately spurned by voters.

Today, editorialists have little influence and the economists are split. Robert Reich, who served as Bill Clinton’s labour secretary, calls the Trans-Pacific Partnership (TPP) the “worst deal you’ve never heard of” and Nobel laureate Paul Krugman says the “elite case for ever-freer trade is largely a scam.”

Why voters think trade favours the ‘elite’

Following a long fight, President Barack Obama got the Trade Promotion Authority (the necessary enabling legislation for an up or down vote on the TPP) through Congress last year with the votes of Republicans. But that support is now heading south. Ohio Senator Rob Portman, who served as George W. Bush’s U.S. trade representative is now against the deal. And any congressional vote on the TPP is unlikely until after the November elections.

Most Americans say they know very little about the TPP, an attitude that is shared by most Canadians. The difference is that in the U.S., the more Americans learn about the TPP, the more they oppose it. This is especially true for Republicans.

Concern about trade and the TPP has expanded, Democrat pollster Pat Caddell said last week in Washington, because voters think trade favours the elite, not them. In short, Americans think they are getting “screwed” by their leadership on trade and immigration, says Mr. Caddell. And this backlash against the elites explains, in part, why the GOP establishment candidates are flaming out.

The GOP race is beginning to narrow to a race between two insurgents – Mr. Trump, the populist outsider, and the ideological evangelist Texas Senator Ted Cruz – both of whom are pushing messages around economic anxieties and political alienation. Trade is also the major theme in Mr. Sanders’ campaign and key to his upset victory last week in Michigan over Hillary Clinton. As a result, Mrs. Clinton is now calling for a “trade prosecutor” to enforce other nations’ trade commitments.

Mr. Trump and Mr. Cruz, along with Mr. Sanders, are all tapping into this discontent. Mr. Trump says he will “Make America Great Again” while Mr. Sanders promises a “New American Revolution.” If these forces unify behind a presidential candidate, and find a voice in state and local candidates in the November election, Canada could get sideswiped in a wave of nativism and protectionism.

Why Canada needs to speak up

The Trudeau government needs to do two things: explain trade to Canadians – and then remind Americans why our trade serves their interests.

We should also take full advantage of the promise from Mr. Obama and Mr. Trudeau to try and get a softwood lumber agreement settled in 100 days. Its resolution will only get more difficult when Mr. Obama leaves office. And we need to think about a Plan B should the U.S. not ratify TPP.

The government should use its promised cross-country TPP consultations to explain how Canadians benefit from trade. One in five jobs depends on trade and trade is equivalent to sixty per cent of Canada’s GDP. Training and adjustment for those whose jobs are affected must be part of the equation. Increasingly, trade deals are less about tariffs than regulations. These regulations should expedite trade while raising environmental and labour standards.

Prime Minister Justin Trudeau told the story in Washington last week of the benefits of the Canada-U.S. relationship. Canada is the largest or next largest export market for 45 states. Nine million American jobs depend on trade with Canada.

We need to parse this down to each district then take it to every state legislator and to those who do business with Canada. Our federal, provinical and municipal leaders need to spend more time getting this message out with their American counterparts. We should also make a common cause with Mexico, our North American partner.

Americans need to understand that trade with Canada serves their interests. If Canada fails to deliver that message, the political voices of protectionism and nativism that are now tempting many Americans are likely to win out – leaving Canada as roadkill in the process.

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A Foreign Policy Review?

Canada, we need to talk about our place in the world

Colin Robertson The Globe and Mail

The new Trudeau government’s international agenda is already crowded: planning for the Paris climate talks, processing 25,000 Syrian refugees, shifting our Iraq commitment from CF-18s to trainers and humanitarian help. Then there is the promised defence review, revamp of security legislation and examination of the Trans-Pacific Partnership. There’s a lot on the plate.

A review of Canada’s international policies is no easy assignment. Lester Pearson, our greatest diplomat, thought it was better to do foreign policy than review it because events beyond our control make grand plans irrelevant.

Foreign policy reviews come in three broad types.

Most are internal affairs, conducted by the civil service for cabinet consideration. Pierre Trudeau’s Foreign Policy for Canadians (1970) and the subsequent Canada-U.S. Relations: Options for the Future (1972) took this approach. So did Paul Martin’s much rewritten A Role of Pride and Influence (2005).

Then there are the more focused reviews, again conducted internally, as with Stephen Harper’s Global Commerce Strategy (2008) and Canada First Defence Strategy (2008).

There were other efforts by other governments that came to naught – dying from either bureaucratic nibbling, political indecision or the sense that events had passed them by.

Given the mixed record of reviews, Mr. Pearson’s skepticism may be right. But Mr. Pearson also recognized the dangers of complacency and acknowledged that foreign policy is too often reactive, rather than creative.

In terms of efficiency of process, broad public outreach and ultimate implementation, the most successful review was Jean Chrétien’s Canada in the World (1995).

The Chrétien exercise owed much to the work of two special joint parliamentary committees, looking at defence and foreign policy. They conducted national hearings and commissioned studies, including a still valuable essay by John Ralston Saul on culture and foreign policy.

The new Trudeau government could look to the Chrétien model with its emphasis on parliamentary involvement. Cross-Canada parliamentary hearings can be complemented through public dialogue, applying the Trudeau government’s apt facility with social media like Google Hangout.

It would benefit both parliamentarians and the public service if departmental staff were assigned to help the committee. Give the committee a sufficient budget to commission studies and for international travel. And have the committee report before the end of 2016 so that its recommendations can be acted on during this Parliament.

Deepening parliamentarians’ knowledge of international relations will help them and enhance the various interparliamentary committees and country friendship associations.

As our diplomat-in-chief, Prime Minister Justin Trudeau is in the midst of a whirlwind tour of summits. These well-tweeted travels inform but do not give depth or context. Mr. Trudeau should revive the practice of prime ministers, from Louis St. Laurent through Pierre Trudeau, of reporting to Parliament on major travels abroad.

A global policy review should focus on three questions:

  • Where do we want to play a role in the world and why?
  • What do we want to achieve?
  • How much will we spend?

Our international interests are vital. Trade generates 60 per cent of our GDP. Immigration and refugee resettlement provides us with new talent and new ideas.

Our sovereignty and well-being depends on the international rules-based system – the UN, the World Bank, IMF and WTO – and our NATO collective security alliance. Their value endures, but reforms are necessary.

Relations with China and Russia deserve particular focus. China wants and deserves more clout. Russia wants more respect. Both have the capacity to cause disruption, as we witness in Ukraine and the South China Sea.

It is in everyone’s interest to have rising powers integrate into the international system. Accommodations must be made. But with accommodation must go recognition by China and Russia of their responsibilities to established norms and the rule of law.

A review of Canada’s global policies is no easy assignment. Where can we find our niche and lead? Can we be deliberate and focused?

With growing public apprehension that times are out of joint and concern about the future, we need a national dialogue on Canada’s place and priorities in the world. Achieving greater understanding, if not consensus, on our global objectives will also help define the Canadian brand in the 21st century.

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Trudeau and International Summits

CBC Power and Politics host Rosie Barton interviews CIGI Director Fen Hampson and CGAI VP Colin Robertson on PM Trudeau’s upcoming summitry

Find at 1 hour and 15 minute mark

http://www.cbc.ca/player/play/2678713362

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On CBC The National on Trudeau’s international series of summits interview with Catherine Cullen

http://www.cbc.ca/player/play/2678760522

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Analysis

Justin Trudeau’s travelling, week-long world leader seminar: Chris Hall

Bilateral meetings already set up with Obama, China’s Xi

By Chris Hall, CBC News Posted: Nov 13, 2015 5:00 AM ETLast Updated: Nov 13, 2015 9:29 AM ET

Off to see the world. Prime Minister Justin Trudeau heads out today for a week-long stretch of international summiting, beginning Saturday in Turkey and finishing up next week in Manila.

Off to see the world. Prime Minister Justin Trudeau heads out today for a week-long stretch of international summiting, beginning Saturday in Turkey and finishing up next week in Manila. (Chris Wattie/Reuters)

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He’s still flying high at home. And now Justin Trudeau takes off on his first foreign trip, a week-long journey to attend economic summits in Turkey and the Philippines that will bring him face-to-face with leaders of some of the most powerful countries in the world, each of them intent on gauging — and engaging with — the new prime minister.

For many of those leaders, Trudeau is the first Canadian prime minister not named Stephen Harper they’ll be dealing with on the world stage.

U.S. President Barack Obama has already lined up a formal bilateral meeting with Trudeau late in the week when the two are at the Asia-Pacific Economic Co-operation Summit in Manila.

Others are also setting up chats at the G20 meeting in Turkey this weekend. That list now includes China’s Xi Jinping, Mexico’s Enrique Pena Nieto and Italy’s Matteo Renzi, who, for what it’s worth, is three years younger than Trudeau.

What this all suggests is that beyond the grip and grin and the “family photos” that characterize these summits, there’s a strong interest in measuring the new Canadian leader through a more substantive discussion of the issues.

And Trudeau knows it, telling reporters on Thursday he intends to put the same issues before these world leaders that he put in front of Canadians.

“I’ll be talking about the fact that in order to create more global growth … that we need to be investing in our countries’ futures, we need to be investing in the kinds of opportunities that allow us to grow and continue to flourish as nations.”

The ISIS threat

But the global economy is not the only issue Trudeau will have to confront. The war in Syria, climate change and the new Trans-Pacific Partnership trade deal will all be discussed.

Turkey, the host of the G20 gathering, is trying to cope with the influx of an estimated two million refugees who are fleeing the violence in neighbouring Syria and Iraq.

Turkish President Recep Tayyip Erdogan added the conflict to the summit’s normal agenda of global economic issues, insisting the world needs to do more to respond to both the refugees crisis, while expressing concern over the coalition’s efforts to contain the ISIS threat.

Turkey believes Syrian President Bashar al-Assad has to be removed from office before any lasting peace can be brokered. But Erdogan’s new government is also worried that international efforts to arm and train Kurdish fighters — Canada is involved in the training — in the war against ISIS poses a threat to Turkey’s own internal security.

It’s a delicate balance for any political leader, let alone a Canadian PM whose government only took power last week.

Harper Mexico 20140219

Not always the closest of international partners, former prime minister Stephen Harper and U.S. President Barack Obama were nonetheless thrown together for much of the last decade. Obama’s tour of duty is almost over as well. (Sean Kilpatrick/Canadian Press)

Trudeau’s already signalled that Canada intends to resettle 25,000 Syrian refugees by the end of the year, and that his government will end Canada’s participation in the air strikes against ISIS targets.

“I made it very clear during the election campaign that it is Canada’s intention to withdraw from the bombing mission, but to do so in a way that is responsible and in coordination with our allies, to continue to demonstrate that Canada is committed to the fight against ISIS as a member of the coalition in the fight against ISIS,” he told reporters on Thursday.

He added the government would have more to say about that role in the weeks ahead.

China tricky

Former Canadian diplomat Colin Robertson says that first pledge to help resettle refugees will be well-received. And he believes Trudeau’s decision to withdraw from the air mission in Iraq is a bigger media story than a real point of contention with the the U.S. because the Americans recognize the Canadian military’s expertise at training and in helping anti-ISIS forces identify legitimate bombing targets.

“As long as we are staying involved and helping with training — that’s a more important contribution,” Robertson says.

He also suggests that the bilateral meeting with Obama provides a chance for the two leaders to talk about climate change, North American energy security and the Pacific Rim trade deal.

“Obama is very much looking at legacy,” Robertson says. “The Trans-Pacific Partnership is part of that. So is climate change. So he and Trudeau will have a lot to talk about.”

China isn’t part of the Trans-Pacific deal, and David Mulroney, a former Canadian ambassador to China, says that makes the face-to-face discussions with Xi delicate.

Taiwan

China’s President Xi Jinping is hoping to have a one-on-one with Trudeau at the G20 in Turkey this weekend. They are two leaders who could share the world stage for a while. (Jason Lee/Associated Press)

His advice: “Don’t over-commit. Pick your issues, and they should be largely economic.”

The latter part is important. China is locked in a dispute with the U.S. and many of its Asian neighbours over its territorial claims in the South China Sea — claims based in part on the creation of man-made islands in a busy international shipping area.

Mulroney, who is now president of St. Michael’s College at the University of Toronto, says that, under Stephen Harper, Canada skipped many ministerial-level meetings with APEC members, sending diplomats instead.

“You can’t just say ‘Canada’s back’ to the other leaders. Well, we can say it, but it doesn’t mean anything if Trudeau doesn’t deliver. He has to re-engage with Asia.”

Mulroney says that means building relationships, establishing the bonds and trust so you can at some point raise what he calls the difficult issues such as security and human rights.

“Justin Trudeau needs to demonstrate that he has strong negotiating skills as well as the personal qualities that attracted and excited Canadians in the last election.”

That demonstration begins this week.

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Resetting Canada’s North American relationships

Why we need to reset our relationship with the U.S.

Three events last week set the stage for redefining the relationship.

First, Prime Minister Justin Trudeau re-established cabinet government. New ministers lead newly reminted departments with a very different approach to policies, notably on climate change.

Second, President Barack Obama rejected TransCanada’s Keystone XL permit application ending, for now, a seven-year odyssey that dominated and chilled relations between the Harper government and the Obama administration.

Third, coincident with the release of the Trans-Pacific Partnership agreement, China pipped Canada to become the United States’ largest trading partner.

These events set the stage for a strategic re-examination and reset of our continental relationships.

Looking to the Paris climate change conference at the end of the month and building on work already done by our energy ministers, we should find points of convergence with Mexico and the U.S. Why not a North American statement on trilateral climate policy co-operation?

On Keystone, Mr. Trudeau expressed “disappointment” but astutely observed that the U.S. relationship is “bigger than any one project”. He has acknowledged that the most important relationship for any prime minister is that with the U.S. President. Now he needs to act on it. The challenge is to find the leverage points, as Brian Mulroney did with Ronald Reagan on free trade and with George Bush on acid rain.

Start by having his principal secretary meet with the White House chief of staff. The relationship between chiefs of staff, as former Clinton chief-of-staff Leon Panetta once observed, is underutilized. Let them identify the opportunities and risks, convergences and divergences, recognizing that differences are normal but should never become personal.

For Mr. Harper and Mr. Obama, Keystone became personal. We should have recognized that for Mr. Obama, the environment is religion. He sees climate change as critical to his leadership and legacy. As he put it, “approving this project would have undercut that global leadership.”

There are ironies aplenty on Keystone. The U.S. has built the equivalent of 10 Keystone pipelines since 2010. More Canadian oil than ever goes south. We outpace OPEC with volumes over 50 per cent more than when the original pipeline permit was filed in 2008. A record 493,146 carloads travelled by train in 2014 despite the U.S. State Department acknowledgment that pipe is safer and its carbon footprint smaller. A higher percentage of Americans than Canadians favour the pipeline.

Calgary Mayor Naheed Nenshi got it right when he said “that one pipe, nearly a metre wide, is being asked to bear all the sins of the carbon economy.”

Rather than getting mad we need to be smarter in managing what will always be an asymmetrical relationship. It means that we must take the initiative, especially on economic issues.

For too long we hid behind the conceit that being the U.S. top trading partner gave us special privileges. It didn’t work. Now China occupies top spot and, eventually, Mexico will pass us.

The reality is that we account for just 15.5 per cent of U.S. trade while the U.S. accounts for 75 per cent of our trade. But with over 60 per cent of our GDP dependent on trade, the U.S. is our preponderant market and the easiest market for Canadian business to gain export confidence.

We need to up our game.

Prime Minister Trudeau’s first ask of President Obama should be to reinvigorate better border access for goods and people and accelerate regulatory co-operation. The Canada-U.S. cabinet committee should be renamed North America and focus on a continental competitiveness strategy. Canada is to host the next North American Leaders summit – to better prepare, delay this until the spring.

Given the critical role of states and provinces for trade and infrastructure, the next first ministers’ conference should focus on trade and getting our goods to market – continental, trans-Atlantic and trans-Pacific.

With everything we produce, when we only have one market we are price-takers, so finding new markets is vital.

Take softwood lumber. Like Halloween’s Freddy Krueger, it threatens again with the U.S. termination of the 2006 agreement. We have a year to work out a new deal. Appointing special envoys to find resolution, as we once did with fisheries and acid rain, would make sense.

Closer collaboration with Mexico is essential.

Despite U.S. perfidy, working together during the Trans-Pacific Partnership negotiations improved our auto deal. Staying united around retaliatory sanctions is the only way to persuade the U.S. Congress to pass remedial country-of-origin labelling legislation.

Pierre Trudeau once described living next to the United States “like sleeping with an elephant. No matter how friendly or temperate the beast, one is affected by every twitch and grunt.” As Justin Trudeau is now learning, managing the twitches and grunts is what defines a successful relationship with the U.S.

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Trade and Canadian Elections

Debating trade during elections is Canadian tradition

The tariff was a staple election issue after Confederation. Confederation itself was in part a defensive reaction to the U.S. abrogation of the Canada-U.S. reciprocity agreement. An integral part of Sir John A. Macdonald’s National Policy was a high tariff to protect Canadian manufacturing interests.

The dispute between Liberal free traders and Conservative protectionists culminated in the 1911 “reciprocity” election. A political cartoon from that era captures the mood. Captioned “The Way He Would Like it – Canada For Sale,” it features a grasping Uncle Sam exchanging a bag of money for a bowed and bound Miss Canada.

The dispute over tariff levels contributed to the rise of Prairie populism and the Progressive movement in the 1920s. Progressives eventually joined the Liberals, Conservatives and the Co-operative Commonwealth Federation (that, in 1961 morphed into the NDP). The Progressives also gave the Progressive Conservatives their antecedent, the national party name from 1942-2003.

Trade continued to feature in elections after the Second World War. It was the overarching theme of the1988 election. By then, however, party positions were reversed. Liberal Leader John Turner and NDP Leader Ed Broadbent opposed the Canada-U.S. free trade agreement (FTA) negotiated by Progressive Conservative Leader Brian Mulroney, who had once ridiculed free trade. The impassioned, televised debate between Messieurs Turner and Mulroney is an election classic.

Continental trade was an issue in 1993 when Canadians elected Liberal Jean Chrétien. Subsequent side agreements on labour and the environment secured the North American free-trade agreement (NAFTA). Despite some rocky years of adjustment, the Canadian economy boomed ahead during the nineties on the back of the improved continental access and our integration into global value chains.

The real success of the FTA and NAFTA was the confidence it gave Canadians to compete internationally. If most premiers opposed freer trade in 1988, today it is the premiers who are the most active salesmen and advocates for freer trade.

Always a trading nation, we have become a nation of traders. Canada draws most of its annual income from trade.

Yet fears about trade persist.

NDP Leader Tom Mulcair’s opposition to the TPP is a key theme in his party’s campaign and he has seized on Hillary Clinton’s opposition to bolster his arguments.

Successive U.S. administrations have done a poor job promoting the benefits of trade. While most Americans think the TPP a “good thing”, support is lower than in Canada and Mexico. Having 2016 presidential contender Ms. Clinton, one of the architects of the U.S. pivot to the Pacific, oppose the TPP undermines public confidence in freer trade.

Unifor, the union representing 40,000 Canadian auto workers, claims that the TPP will result in a loss of 20,000 auto jobs.

Similar fears were voiced by unions after the signature of the Auto Pact in 1965 and the FTA. In each case, employment subsequently rose. While employment in the auto sector is down significantly from its post-FTA/NAFTA highs, industry employment has posted small gains in recent years.

Adjustment assistance is essential to assuaging public fears on freer trade. The Harper government has promised funds to the auto and dairy industry in the wake of TPP.

Look to the example of Canada’s vintners. Before the FTA, Canadian Baby Duck was the preferred choice of teeny-boppers and, apocryphally, used to dissolve paint. With adjustment assistance, vines were replaced, equipment modernized and skills and training instituted. Today, Canadian wine is sold to 40 nations.

Governments and business need to do a better job of explaining the benefits of trade. If all politics is local so is trade. Businesses should tell employees how much of their salaries depend on trade.

Stephen Harper points with pride to the agreements concluded since 2006 with 39 countries. The TPP adds or updates 11 more. Meanwhile our market share of global trade continues to decline – “the second largest in the G20” observed the then senior deputy governor of the Bank of Canada.

Finding markets for our goods and services is even more important than negotiating the trade deals.

One of the most successful initiatives of the Chrétien government was the series of Team Canada missions that included premiers and the private sector. Governor-General David Johnston markets Canadian services, especially education, during his travels.

Debating trade during elections is a long and honourable Canadian habit, even if party consistency is not. Our next government needs to make explaining trade to Canadians a permanent campaign.

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The CSIS Podcast with Colm Quinn

A look at the week’s news in foreign policy through the eyes of the experts at the Center for Strategic and International Studies (CSIS) hosted by Colm Quinn. CSIS Scholar Scott Miller speaks on Canadian election results and cites my piece.

 

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TPP Deal would reignite North Amierican integration

TPP trade deal would reignite North American co-operation: Mexican minister

“There are very few issues that would not benefit from a more North American perspective,” Jose Antonio Meade told The Globe and Mail in an interview.

“More and more we are coming to realize that there is benefit to trilateralizing the issues.”

But analysts warn that it will take more political will than U.S. President Barack Obama has displayed thus far to get the Three Amigos working together again.

Efforts to conclude the Trans-Pacific Partnership negotiation – an ambitious trade agreement that would involve 12 Pacific nations – foundered last month in Maui in part because Canada and Mexico rejected a deal that the United States and Japan had reached on automobiles and auto parts.

Canada and Mexico want a higher threshold of production within the trade zone before cars and car parts are exempt from tariffs than the United States and Japan are proposing.

And feathers were ruffled when Ottawa and Mexico City learned that the United States and Japan had negotiated the lower threshold without consulting them.

“I think it was safe to say it was a surprise,” Mr. Meade acknowledged.

To get the talks back on track, trade officials from Canada, the United States and Mexico met in Washington on Thursday in an effort to reach a compromise. In an e-mail, the Canadian Department of Foreign Affairs, Trade and Development described the talks as “constructive,” but had no further comment.

The TPP, as it is known, is facing major headwinds, and time is running out to reach an agreement. The U.S. Congress must ratify whatever agreement is reached, the American presidential election could hijack congressional approval and attention in Canada is distracted by the federal election.

But Mr. Meade remained confident that an agreement will be reached, although he would not predict by when.

And he said he believes that agreement would revive a continental approach to tackling major issues affecting the three countries.

Such co-operation has been on the decline, with Canada and Mexico negotiating bilaterally with the United States during the Obama administration, especially on border issues.

The trilateral relationship is “stalled for lack of political ambition and leadership,” said Colin Robertson, an analyst in Canada-U.S. relations.

Mr. Obama has shown little interest throughout his presidency in taking a continental approach to issues, preferring to talk with Canada and with Mexico separately – to the extent he talks to them at all.

“There’s not that grand vision, which we’ve had under previous presidents and which I think you have to have,” Mr. Robertson observed.

Canada-Mexico relations are also strained as a result of the Stephen Harper government’s decision to impose visa requirements on Mexicans visiting Canada.

But a successfully concluded Trans-Pacific Partnership would not only strengthen ties among the 12 Pacific nations that are part of the talks, Mr. Meade predicted, it would also update the two-decade-old North American Free Trade Agreement involving Canada, Mexico and the United States.

And that, in turn, could lead to a continental approach to other pressing issues, especially energy security. “The more we integrate our energy markets the more security we will have, the better prices we will have, the more competitive we will be,” Mr. Meade predicted.

Similarly, it makes sense to pursue a continental approach to reducing carbon emissions, he added.

But others are skeptical. Len Edwards, a distinguished fellow at the Centre for International Governance Innovation in Waterloo, Ont., and a former deputy minister of foreign affairs, agreed that a successful conclusion to the TPP talks would rejuvenate NAFTA.

But grappling with challenges in energy, the environment, agriculture, mobility and the like “will require renewed energy, co-operation and commitment,” he added. And at the moment, all three are lacking.

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