Grading the Trudeau government on trade

Liberal agenda takes its hits over last few weeks

OTTAWA • It’s been a tumultuous few weeks for Justin Trudeau’s progressive free trade agenda, with uncertainty looming over several existing and potential deals.

Just weeks after the Canadian prime minister was lambasted for apparently “sabotaging” a major pacific trade deal, his office is planning a trade mission to China. Meanwhile, officials from Canada, Mexico and the United States are at loggerheads over controversial proposals in a renegotiation of their North American deal.

The Trudeau government has publicly defended free trade in a time of rising protectionist sentiment but as it learned in a dramatic lead-up to the signing of Canada’s deal with the European Union, concluding so-called progressive agreements is easier said than done.

Here’s what’s going on with the big fish.

THE WORST DEAL EVER?

A fifth, largely fruitless round of North American Free Trade Agreement talks ended with a whimper earlier this week as fears over a complete unravelling intensify.

Several U.S. demands are deeply problematic for Mexico and Canada, among them: stringent, U.S.-heavy origin requirements for autos; a sunset clause allowing leaders to back out at five year intervals; the removal of Chapter 19, which sets out binational panels to resolve anti-dumping and countervailing duty disputes.

“These are proposals that we simply cannot agree to,” Foreign Minister Chrystia Freeland, who oversees the file, told reporters Tuesday. “One of the things that we tried to do in this round is flesh out those proposals and say it seems to us that if this were to happen the net result would be negative for both of our countries.”

Although Congress is starting to raise a stink, following criticisms from American business and industry associations, President Donald Trump, who has called NAFTA the worst deal in history, is a wild card.

The next round, if it indeed goes ahead, is being planned for Montreal in January.

HOW TO PACIFY THE PACIFIC?

One of Trump’s first moves as president was to remove the U.S. from the 12-country Trans-Pacific Partnership, which also included Mexico and Canada. Over the summer and fall, the remaining countries have been sitting at tables working out how a deal could come together without American participation.

Talks had come “very close” to a conclusion, Canadian officials were saying, at the Asia-Pacific Economic Cooperation summit two weeks ago. But a clumsy move (or an unusual negotiating tactic?) stalled things.

It seems Trudeau and Japanese Prime Minister Shinzo Abe reached an impasse during a longer-thananticipated meeting right before a TPP 11 round table that some governments believed would result in a signing ceremony. Abe walked in without Trudeau and the latter’s absence caused a panic, including a snit from Australian officials who complained to the press he’d “screwed” everyone over.

Countries ended up announcing an agreement on “core elements” of a deal at APEC but nothing has been set in stone. If it happens, it won’t happen until sometime in 2018.

WHITHER CHINA?

Some in Ottawa have been speculating about whether Trudeau’s no-show at the TPP meeting was a performance for the Chinese, with whom he has been flirting. When the U.S. was a part of the deal, the trade bloc was to act as a heavy counterbalance to the ballooning Chinese economy.

At the beginning of December Trudeau is set to travel to China, fulfilling a promise made with President Xi Jinping that the two would meet annually. There could be more to it. Canadians have been posturing towards a potential free trade negotiation.

In August Canada and China concluded “exploratory talks” toward such a deal and the Canadian government recently released the results of a national consultation. While there are significant challenges — people’s concerns over human rights, foreign workers and whether China really follows rules — the Liberal government appears bullish. If formal talks are announced, they will likely take years.

DIVERSITY IS THEIR STRENGTH?

Trade Minister FrançoisPhilippe Champagne loves to talk about trade diversification. While NAFTA, the TPP 11 and China are big fish, Canada also recently launched exploratory talks with the Association of South East Asian Nations.

In October, ministers reported “preliminary positive results” from the same kind of discussion with MERCOSUR, the Latin American organization in which Brazil is the heavyweight.

Canada hasn’t forgotten about the world’s secondmost populous country after China. Champagne brought Canada’s ministers of innovation and transport with him on a trade mission to India last week.

But there are only so many trade negotiators in the Canadian government and NAFTA will remain a first priority for the foreseeable future.