A double blow for Trudeau
For Justin Trudeau’s governing Liberals, the timing couldn’t have been worse. On Thursday, as Canadian negotiators in Washington were struggling to salvage whatever they could from the floundering NAFTA talks, the Federal Court of Appeal ruled against the government’s signature Trans Mountain Pipeline project.
Both the North American Free Trade Agreement fiasco and the pipeline decision strike at the heart of Prime Minister Justin Trudeau’s economic strategy. That strategy relies on free trade deals and oil exports to keep the economy humming while the government concentrates on its ambitious social policy agenda, such as bettering the lot of Indigenous Canadians.
Of the trade deals, the NAFTA pact tying together Canada, the U.S. and Mexico was the most crucial. Similarly, of the pipeline projects, none was more important to the federal government than the $7.4-billion Trans Mountain expansion. It would bring heavy oil from the Alberta tarsands to British Columbia’s Pacific coast, where it could be loaded into oceangoing tankers.
Indeed, the Trudeau government deemed the Trans Mountain Pipeline so important that it agreed to buy it for $4.5 billion from its U.S. owner and pay all the costs of expanding it. This no longer seems like such a good deal.
The Federal Court of Appeal ruled that the government’s National Energy Board failed to take into account the effect of increased tanker traffic on B.C. coastal communities. It also ruled that the government failed to adequately consult Indigenous communities affected by the pipeline. It said construction cannot continue until these two defects are remedied.
The government may appeal to the Supreme Court. Even if it does, the damning federal court verdict has already served to bolster the political cause of pipeline opponents and embarrass a government that takes pride in its relations with Indigenous people.
Meanwhile, in Washington, Canadian trade negotiators are struggling to limit the losses of a NAFTA deal that the government had insisted would be a winner for all. As I write this, no final deal has been reached between Canada and the U.S.
But the usual array of unnamed officials has been working overtime to persuade the media that, in the end, Canada’s losses won’t be too great. They suggest that in order to appease U.S. President Donald Trump, Canada will give up some, but not all, of its supply management system for dairy and poultry farmers. They say that Canada will agree to U.S. demands that the pact be time limited. This had been cited by Trudeau as a deal breaker. But now that the U.S. is willing to let the pact run for 16 years (with the option of renegotiation after six years), Ottawa seems satisfied.
Canada still wants to keep a dispute resolution system the Americans have long opposed. But Trudeau is no longer describing elimination of this system as a deal breaker. In fact, it seems that there are no deal breakers. The Liberal government had said that it was willing to walk away from NAFTA if U.S. demands were too onerous. “No deal is better than a bad deal” was Ottawa’s mantra. But it seems this was never true. The Canadian government never had a so-called Plan B for a world without NAFTA. Trump recognized this and called Trudeau’s bluff — first by working out an arrangement with Mexico behind Canada’s back; second by giving Ottawa an arbitrary five-day deadline to sign on.
The revised NAFTA deal Canada is being pressured to sign isn’t all negative. Thanks to Trump, it includes more protection for U.S. and Canadian auto workers. Still, renegotiation appears not to have produced the win-win-win scenario that Trudeau promised when he announced plans to “modernize” the agreement.
Politically, the NAFTA talks haven’t worked out for the Trudeau Liberals. The opposition Conservatives have abandoned the façade of national unity and are already accusing the government of incompetence. Nor has the Trans Mountain gamble worked out. The government has just paid billions to begin construction now on a pipeline the courts say must be indefinitely delayed. Oops.