True allies in trade
After Canada has spent months trying to charm the new administration in Washington and avoid getting caught in the net of an America First trade policy — an effort that Conservatives have been happy to support — the president’s recent pointed criticism of Canada comes as a disappointment to Canadians.
We seem to be drifting towards drawn- out, adversarial wrangling, as Congress, lobbyists, and trade bureaucrats take advantage of the re-opening of NAFTA to have an old-fashioned showdown with Canada over stubborn bilateral issues. The uncertainty is already hampering business investment on both sides of the border.
Reading the headlines, you’d be forgiven for thinking that Canada and the United States can’t get along on trade. But when we get away from the handful of irritants that affect any relationship of this magnitude, our trade interests are almost completely aligned. We should be doing everything we can to focus the conversation on this common ground.
That’s why we should be talking about China.
President Trump has been very open about his plans to get tough on China’s trade practices. In fact, just as he was calling out Canada on lumber, dairy and energy, he was signing an order to take more action against subsidized steel imports from China. Overproduction in the steel industry is as much a problem for workers and companies in Windsor, Regina, and Sault Ste. Marie as it is for those in the American Midwest. It’s why at last year’s North America summit in Ottawa, the three NAFTA countries agreed to take steps to stem the flood of these products into our markets.
The United States shares Canada’s desire for real access to Chinese consumers. Last year’s dispute, when China threatened to block Canadian exports of canola on questionable grounds, is an example of what we’re both up against. Billions of dollars of North American grain, fruit, vegetable and meat products are held up by this type of protectionism every year.
The bilateral free- trade agreement that Canada is exploring right now is not a solution. Australia’s experience with a similar agreement shows that you can get China to lower its tariffs, but that won’t stop its regulators from discriminating against your goods and services.
Working together, Canada and the United States have a much better chance of making sure China and others play by global trade rules, and the goodwill we would build in the process could help our NAFTA talks.
At the very least, Canada should stop pursuing courses of action that put us on the wrong side of American policy. Take the China- led Asian Infrastructure Investment Bank, for instance, which the Trudeau government agreed to join and fund at Beijing’s urging, and against the wishes of the United States.
Another concern is the Trudeau government’s lax attitude towards takeovers of Canadian companies by firms linked to Beijing. It approved controversial deals like Anbang’s purchase of a B.C.- based retirement home chain and reversed a divestment order issued by the previous government to a company that bought a Quebec firm with military-grade t echnology. The United States is going in the oppos- ite direction. A recent report to the U. S. Congress recommended a blanket ban on acquisitions by Chinese state firms due to concerns about national security and industrial espionage.
If we aren’t careful, Canada risks repeating the mistakes of the “Third Option,” when the Pierre Elliott Trudeau government responded to a previous round of American protectionism by prioritizing other markets. Diversifying our trade is smart to a point, but our southern neighbour will always be our top customer. It’s basic physics.
Within a decade, Canada had to reverse course. The government of Brian Mulroney faced the challenge head on, offering the United States a groundbreaking free- trade agreement that would make North America the world’s strongest economic bloc.
I’ve been thinking about this history as we face a United States that is once again anxious about trade. We have a short window to shape the direction of the NAFTA talks and head off years of bitterness and anxiety. That’s why the government needs to make its move now.
Finding common ground on China will help us put aside our petty differences and focus on more important work: building a North American economy that will create jobs and prosperity for decades to come.