Trade, Canada and the US Election

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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.