BRISKET AND A LATE BREAK

U.S. concession a key element to sealing the deal

On a pressure-filled weekend fuelled by multiple fast-food runs, it was a welcome respite.

As a small, elite team of Canadian officials huddled in the Prime Minister’s Office and negotiated what would become a new North American free trade deal, the husband of Katie Telford, Justin Trudeau’s chief of staff, came to the rescue.

Public affairs consultant Rob Silver and his son delivered homemade brisket. “Everybody was pretty happy about having something real, rather than running out and getting coffee and doughnuts,” said David MacNaughton, Canada’s ambassador to the United States.

But he said more important relief came late Saturday, when the U.S. finally confirmed it would take off the table one of its most challenging demands — scrapping NAFTA’s Chapter 19 dispute resolution tool.

By the next afternoon, MacNaughton was fairly sure that a deal would be reached with American counterparts gathered in Washington — including presidential son-inlaw Jared Kushner. The two countries finalized the pact a few hours later, bringing to a close an extraordinary few days of talks that could shape Canada’s economy for years to come.

“I’ve never felt such responsibility,” said MacNaughton, former chair of the StrategyCorp consulting company. “It’s not like playing chess or, you know, betting on a golf game. It’s serious stuff and it affects people’s lives and livelihoods. It’s quite an awesome responsibility.” Foreign Affairs Minister Chrystia Freeland said Monday she warned at the start of the trade talks last year there would be moments of drama.

“One of the things that we know is trade diversification is an extremely important part of growing the Canadian economy, and we’re going to continue to engage in increasing our trade footprint all over the world,” he said. Foreign minister Chrystia Freeland downplayed the clause’s importance, saying it simply means that if one partner deals with a nonmarket economy, it “could be a reason (for another partner) to leave.”

Two officials familiar with the government’s trade agenda, who spoke on the condition they not be named as they were not authorized to speak publicly, said the clause will not interfere with Canada’s sovereign right to negotiate deals with other countries. They reject the notion it might let the U.S. exert undue influence, as it always had the ability to pull out of NAFTA anyhow. One described the provision as allowing for “sharing information and giving a heads-up,” and denied that the U.S. is trying to bring Canada in line with its posture towards China: “I think we have our own approach to dealing with trade with China, and that approach is not determined by the approach of our partners in this particular agreement.” The other put it this way: “There are occasionally items added to agreements that speak more to a domestic constituency.”

That is how Brett House, deputy chief economist at Scotiabank, saw it. “The introduction of that doesn’t change that a country can withdraw at any point. What I think it does is provide the executive of any of the three countries, in this case mainly the White House, and the (U.S. Trade Representative) and Commerce Department, with a bit more political cover,” he said.

WE’RE GOING TO CONTINUE TO ENGAGE IN INCREASING OUR TRADE FOOTPRINT.

House agreed the language could give the U.S. “grounds” to shift to a bilateral deal with Mexico if Canada engages with a country it doesn’t like. “It changes the political calculus,” he said. Canada and China had launched exploratory free trade talks in 2016. It was expected Trudeau might announce formal negotiations during a visit to Beijing last December, but nothing materialized. The relationship has been in neutral since then, though one senior Canadian official said there had been “increasingly positive” signs from China lately, and that the two countries were “working through” a template for a deal that China has in mind. “Nothing is going to move quickly on that front now,” Evans said.

Some Canadian ministers are headed to China this November for a trip focused on promoting Atlantic Canada.