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The ONW Salon:  Trump, Trade and Trudeau's Charm Offensive

Susanna Kelley (Moderator): Critics say Canada is getting beaten up by the Trump administration in the NAFTA negotiations. Is Justin Trudeau's "charm offensive" with Donald Trump failing? Richard Mahoney, John Capobianco and Tom Parkin debate. 

One final note: today we say adieu to John, our long-time Salon panellist, who is off to other adventures.  We wish him well and thank him for all his wonderful contributions.


John Capobianco:

Since this will be my last submission on these pages, I would to thank our ONW Salon host, Susanna Kelley for being a true professional and for allowing me to be part of this for the last few years. I have thoroughly enjoyed it and will be reading the weekly posts regularly. My good friend Will Stewart, who is no stranger to these pages, will be taking over and I know will do an terrific job keeping up and defending the conservative side.

I would also like to give a big shout out to my two friends on the "other sides"––both Richard and Tom do a very competent and persuasive job defending their respective sides and I have enjoyed debating with them over the years on this forum and others. I wish you both a moderate level of success.

Now to the question of the day: Has PM Trudeau's charm offensive worked?

This is an interesting question and not an easy one to answer straight away. Of course, if you look at it this week as both Canada and the U.S. enter the fourth phase of negotiations without much to show for the on going talks, it would be easy to say that the charm offensive has not worked.

But there is still work to be done and we are still facing a volatile President who continues to say he wants to scrap NAFTA since it is a bad deal. It is near impossible to negotiate with someone who appears to first want to "tweak" the agreement and on other days wants to scrap it because he says it is a bad deal.

I have on these pages commended the Trudeau government's approach to dealing with the U.S., as have most pundits and observers of politics, because they did put on a massive charm offensive and it seems to have worked, at the early stages at least, with some of President Trump's early staffers. However, most of them are gone, fortunately. Some of the key international affairs advisors still remain close to the President and by all accounts are still close and in contact with the Trudeau administration.

We all know that the President is a self proclaimed master of the deal, so anything he does and says has to be taken into that context––is he doing this for negotiating advantage? Does he really mean what he says about scrapping it? That is yet to be determined but the signs of late, with the U.S. slapping 300% duties on Bombardier's CSeries planes, do not bode well for constructive talks.


Tom Parkin:

Trump put a 27% countervailing duty on imports of Canadian softwood lumber, which are estimated at $5.66 billion a year. Then he put a 219% duty on Bombardier jets, putting in doubt an estimated $5 billion sale to Delta Airlines.

Trump has hit the Canadian economy far harder than Mexico’s, which has only been touched by a new duty on $23 million a year in styrene-butadiene rubber exports to the United States.

Trump has built up a big stack of bargaining chips to use against Canada—piling on new claims that will get folded in, then wiped away in the negotiations.

The Trudeau response has been to make a show of tabling proposals—like eliminating right to work laws in the United States—that he and everyone else knows will never, ever be agreed to by the Americans. He's almost mocking us.

Americans, meanwhile, have barely tabled their proposals. It is growing increasingly likely this entire negotiation—from Trump’s “I love Canada” to his “tweak” promises—was a set-up to collapse the deal. Reading Trump’s quotes in Forbes just heightens that suspicion.

Mexico’s President has taken to publicly ridiculing Trump, building up his political currency among Mexicans and arming himself for the fight.

The Trudeau Liberals have taken the exact opposite approach. First, the Liberals has cozied-up to Brian Mulroney in an effort to create a no-hostility agreement with the Conservatives. It has worked well from a domestic political perspective—the Conservatives are boosters of the Liberal trade approach (see John’s comments above). But results elsewhere are impossible to find.

Second, the Liberals have told Canadians that due to our huge trade with the United States we have big leverage with U.S. politicians. Unfortunately, that’s just hogwash. Only in Michigan and Vermont does trade with Canada (not just exports) account for more than 10 per cent of GDP. For the vast majority of states, exports to Canada account for just 1 or 2 per cent of GDP. They don’t care about us or our so-called charm offensive.

Meanwhile, Ontario-U.S. trade is almost 50% of Ontario’s GDP. We care a lot.

Charm doesn't have a GDP. It doesn't have a currency. Or a weight in gold. It's what you show when you don't want to show you're holding nothing.


Richard Mahoney:

Tom goes a little over the top in his consistent desire to rail against his opponents in the Liberal government and the Prime Minister in particular. Would that he and other New Democrats shared the burden of conducting themselves responsibly in negotiations with such a crucially important trading partner, as Tom's statistics above demonstrate.

In the NAFTA negotiations now underway, the Trudeau government and its negotiators are fighting for our national interest and standing up for our values.

We have to start by putting this in the context of our times. The U.S. has always had a protectionist bent, and a protectionist Congress, even while pursuing free trade agreements around the globe. Canada has been pushing for issues like a fair and effective mechanism for resolving trade disputes since the original Canada-U.S. Free Trade Agreement negotiations in the eighties, and successive U.S. governments have resisted anything that restricts their ability to give trade advantages to domestic companies, no matter what the text of a trade deal.

Disputes such as those over softwood lumber and B.C. wine started under previous U.S. administrations and continue on. Add to that the hyper-aggressive actions of Boeing towards Bombardier. Boeing, arguably the most important employer in the U.S., has framed the dispute as existential. They regret the fact that they did not start a trade war with France when Airbus launched itself decades ago. Now they face a serious competitor. They don’t want Bombardier to get up off the mat to become a second serious competitor to their global dominance in passenger jets. So they go to the wall, apparently deciding that stopping Bombardier in its tracks is worth more to them than a $6 billion plus deal for new fighter jets that they had with the government of Canada.

Add to all of that and more, the Donald J. Trump phenomenon. Trump promised to get rid of NAFTA in the campaign. His instructions to his trade negotiators are full of what his own allies, the U.S. Chamber of Commerce, call “poison pills” designed to make the negotiations fail. That said, some progress has been made during the last round. Negotiators met across 28 tables and consolidated half of the text overall.

Most observers from across the spectrum have credited Prime Minister Trudeau and Global Affairs Minister Freeland with deft handling of the U.S. generally. These observers include NDP Premiers, former Conservative cabinet ministers, labour leaders and trade experts not aligned with the Trudeau government.

But how this goes, and where it goes, is anybody’s guess at this point. Behaving responsibly with fact-based and reasoned arguments is the way to go, but is no guarantee of success in Trumpland.


John Capobianco:

Will a deal happen? Yes! Will it be anything close to what we have now? No––and it shouldn't be. Decades have gone by and the agreement needs to be refreshed badly on both sides of the border.

Tom dismisses the notion of a charm offensive being used at all as strategy, but the reason that the question was even asked is because for months this Liberal government has made the charm offensive its strategy to deal with the uncertainty that is Trump.

You can state all the facts and figures you want and Tom has done––yes, we know that we are insignificant to the U.S., and that it is a threat when one trading partner doesn't view the other with the same level of importance or respect. This is precisely why former PM Harper spent the better part of his years in government working out trade deals with China and Europe and parts of South America––he knew he couldn't rely completely on one nation for all the trade.

But to not have done what the Trudeau administration did early on in building some relations with the new folks south of us, who knows where we would be right now in the negotiations. Charm is a poor way of describing diplomatic relationship building, which is what they did.

The challenge is that that was then and things have changes dramatically down there. Many relationships built to ease negotiations are gone and the new ones are going sideways, but given what we are dealing with, this will evolve on a daily basis with more staff changes and, ultimately, will go down to the wire.


Tom Parkin:

I read nothing in Richard’s presentation that should increase anyone’s faith in the “charm approach.” Listing all the bad things that have happened then shrugging it off, as all the fault of Donald Trump doesn’t actually protect Canadian jobs.

What Justin Trudeau needs to do now is what he should have been doing for months: making Canadians aware of the substance of these negotiations (not distracting from them with fluff proposals) and preparing us for the possibility we may need to exit NAFTA.

A Trump-dictated NAFTA deal can be a lot worse than no NAFTA deal. But if Canadians believe we must have a NAFTA deal at all costs, then what we will get is a NAFTA deal at all costs. If Canadians understand we can say no—and what the cost is—we might have some leverage.

Remember, this isn’t NAFTA or nothing. It’s NAFTA or falling back to World Trade Organization rules. We won softwood lumber on those rules.

An International Monetary Fund report released this summer found exiting NAFTA for WTO would increase the average tariff on U.S.-bound Canadian exports by 2.1%, and a short term GDP cut of about 0.4%. A Canadian Centre for Policy Alternatives report calculated a NAFTA exit would result in “modest” pain, adding about 1.5% to the price of an average export.

That’s not nothing and it’s not preferred. And, yes I strongly agree with John, Canada should always be looking to expand trade. As a vast country with many resources, we must be extremely trade-oriented. We should always be pursuing "Plan B."

But by not preparing Canadians for the possibility—this necessity, in certain situations—of exit, Trudeau risks something even worse.

The Liberal strategy has been to keep Canadians in the dark while telling them everything is sunny outside. Time to pull up the blinds and see if that's true.


Richard Mahoney:

I would say the same thing back to Tom––nothing in his post suggests for a moment that Prime Minister Trudeau and team are doing anything but making the best of a difficult, delicate and important situation.

Trudeau seems to understand this stuff at a visceral level. The other person who has showed great wisdom and leadership in these discussions is an emerging star of the Trudeau cabinet, Global Affairs Minister Chrystia Freeland. It was great to see how she recently gave a gift to her counterparts in the U.S. and Mexico: Margaret McMillan’s The War That Ended Peace.

As the article above says, both Freeland and McMillan have commented on the parallels to today: “how a period of fast-paced globalization, prosperity, disruptive technology and increased trade was brutally upended by nationalism, zero-sum logic, a global terrorism panic and glorified militarism, ushering in the most blood-soaked era in history.”

While that sounds apocalyptic, it is an interesting reminder of the times we live in and how we cannot take peace and prosperity for granted. Things can unravel fast, and if Trump represents anything, it is a threat to many of the things that have made our society a relative success. It is a good thing that our leaders understand history as they deal with the issues in front of them.

I think Trump is likely setting up the negotiations for failure. Congress may not let him abrogate, because of the unprecedented Canadian offensive of taking the fight to the states that depend on Canadian-U.S. trade for middle class jobs. That effort, which Tom dismisses above, has involved Premiers such as the NDP’s Notley and the Conservative-by-another-name Brad Wall, and has helped put pressure on American legislators and helped them understand just how many jobs depend on Canada-U.S. trade.

In the end, Trump will then blame the Congress for the failure to get rid of NAFTA. And I suspect most Canadians will judge the actions of Prime Minister Trudeau and Minister Freeland as shrewd and responsible, designed to protect the interests of the country as a whole.


Richard Mahoney is a lawyer with deep experience in politics and governance.  He is a former senior advisor to the Rt. Hon Paul Martin, a former Campaign Chair and President of the Ontario Liberal Party. John Capobianco is a Senior Partner and National Public Affairs Lead at FleishmanHillard. He has been a Conservative strategist with over 30 years of political activism at all three levels, including as a former federal Conservative candidate. Tom Parkin is a veteran NDP strategist and a frequent commentator on national issues. 





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