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Column / L.Ian MacDonald

NAFTA, Keystone and the new American president



It was not a speech urbi et orbi — to the city and the world.

Donald Trump’s inaugural address was a campaign speech, reiterating the isolationist, protectionist and nativist themes of the unlikely election result that made him the 45th president of the United States.

I meant what I said then, he said now. Power to the people, he declared. The people who put him there. Never mind the people sitting behind him, including four of his predecessors and the leaders of both parties in both Houses of the United States Congress.

“This American carnage stops right here and right now,” Trump declared, apparently oblivious to the strong economy bequeathed to him by four of his predecessors, who paid him the courtesy of showing up for his swearing-in, only to hear him belittle their achievements in office.

Trump proposed a narcissistic and inward-looking America, engaging with the world strictly on its own terms. “From this moment on,” he declared, “It’s going to be America First.”

On the economy and trade: “We will follow two simple rules: Buy American and Hire American.”

This wasn’t even speechifying, just sloganeering.

Within an hour of the inaugural address, the policy specifics were posted to the White House website, Trump’s new internet address.

Referring to “failed trade deals”, the link was unambiguously aggressive: “President Trump is committed to renegotiating NAFTA. If our partners refuse a renegotiation that gives American workers a fair deal, then the president will give notice of the United States’ intention to withdraw from NAFTA.”

Hello Canada, and hockey fans in the United States! Hola, Mexico!

Well, any of the three signatory countries can withdraw from NAFTA on six months notice. In Canada’s case, we would then revert to the Canada-U.S. Free Trade Agreement.

In a congratulatory call on Saturday, Prime Minister Justin Trudeau reminded the president that Canada was the largest international customer of 35 American states. The other relevant bullet points would be that 9 million American jobs depend directly on trade with Canada, that $2 billion of goods cross the border each day, and that when trade in services is included, the U.S. enjoys a modest surplus with Canada in our $800 billion relationship. (It was a $100 billion bilateral relationship before the FTA was implemented in 1989).

You can be sure that the governors of those 35 states and their 70 members of the U.S. Senate are aware of these numbers, or have been reminded of them by Canadian federal and provincial officials. These have also been the main talking points of Team Trudeau in their private talks with Team Trump.

For his part, Trump said Sunday: “Anybody hear of NAFTA? I ran a campaign somewhat based on NAFTA.” His incoming Secretary of Commerce Wilbur Ross has indicated both publicly and privately that the U.S. has two major re-openers on NAFTA—rules of origin and the dispute settlement mechanism (DSM), both first adopted in the original Canada-U.S. FTA.

This would be a major demand on Canada, which has benefited from generous rules of origin that, for example, classify foreign fabric as domestic content in the clothing industry. As for the DSM, the deal maker in the Canada-U.S. round, it was extended to the NAFTA and was the model for the World Trade Organization. The Americans have long thought Canada does too well on dispute settlement, and re-opening it could a way for them to do better. They’ll have to deal with Canadian trade officials, who are among the best in the world because they have to be—sitting across the table from the Americans.

Tuesday morning Trump signed an executive order approving the Keystone XL pipeline, though he said, “We are going to renegotiate some of the terms” and insisted that steel for the TransCanada project must be built in the U.S.

Trudeau has been a supporter of Keystone in the past, and was disappointed when his friend Barack Obama killed it.

With all the approvals in Canada still in place, as well as approvals from states on the route, all that’s needed for Keystone to proceed is Trump’s signature, along with his condition of “28,000 jobs, great construction jobs.”

Moving ahead on Keystone would get Trudeau’s relationship with Trump off to a positive start, and in Canada-U.S. relations, progress starts at the top.

In the meantime, the Canada-U.S. file is in the capable hands of Foreign Minister Chrystia Freeland, the smartest person in any room.

Canada-U.S. relations and NAFTA have been the dominant topics at the two-day cabinet retreat in Calgary, where Blackstone CEO Steve Schwarzman, chair of the President’s Strategic and Policy Forum, made the opening presentation Monday morning. Schwarzman’s appearance was arranged by former prime minister Brian Mulroney, lead director of Blackstone, who has been advising the Trudeau government at their request. Schwarzman also figures in Freeland’s 2012 book, The Plutocrats, and with a portfolio valued at $11 billion, he certainly qualifies for what Freeland, then a financial writer living in New York, called “the 0.1 per cent.” Schwarzman was reassuring, saying Canada is “a model for how trade relations should be. It’s a positive sum game. Canada is well positioned.”

Trump also announced Sunday that he’d be meeting with Trudeau soon. That first bilateral may eschew the tradition of US presidents booking their first foreign trip to Canada because of the probability of massive protests — and not necessarily just about Keystone or NAFTA.

As we were reminded by Trump’s churlish response to the Women’s March on Washington and countless other cities, it’s all about him.

L. Ian MacDonald, Editor of Policy, is a long time political columnist and author. He served as chief speechwriter to Prime Minister Mulroney and as head of the public affairs division at the Canadian Embassy in Washington. He is also a columnist for iPolitics.