Getting to NAFTA: The Strategic Principles Determining Canada’s Approach

John Delacourt

Many in Ottawa—and in Washington, for that matter—were baffled by the Trudeau government’s pre-emptive offer to re-open NAFTA in the hours immediately following Donald Trump’s election victory. But while the American president’s volatility demands the sort of diplomatic innovations normally exerted in dealing with rogue states, long-time Liberal strategist John Delacourt says the Trudeau team’s got this. 

At the time of this writing, the first round of the North American Free Trade Agreement (NAFTA) negotiations—or renegotiations, if you will – has just concluded. What promises to be the most important policy process for the Canadian economy and a pivotal test for the Trudeau government has been upstaged by the ongoing turmoil of the Trump administration. It is difficult not to read any positive developments or setbacks in the negotiations as provisional, given the leadership crisis at the White House. Yet, within the Prime Minister’s Office (PMO) and the Privy Council (PCO), the strategic focus on the importance of these talks has not wavered since that first morning Americans woke up to Donald Trump as their president.

Though the talks may yet dissolve in acrimony, Canada’s team comes to the negotiating table with one inarguable advantage; sound strategic principles have guided their every move to get us here. This is an achievement all the more remarkable with a government that was barely into its first mandate when Trump the presidential candidate first warned of his ambitions for NAFTA. What follows is a brief enumeration of the ways in which the best conditions for a favourable outcome have been established.

1. The Best Defence is Offence

It seems so very long ago now that an Ottawa micro-controversy erupted over the Trudeau government’s first salvo in the NAFTA renegotiations. In the days that followed the Trump victory, Trudeau did not wait to find out if the new president was true to his words that NAFTA had to be “torn up” because it was a “bad deal” for American workers. There was every indication that the tone and indeed the course of any dialogue on trade between our two countries would be oppositional, if not hostile. As in dealing with any opponent in the political arena, he who sets the frame, determining the rules of engagement, has the advantage.

And so it was that Trudeau signaled, through Canada’s ambassador to the U.S., David MacNaughton, that we were “prepared to talk … that the agreement as it stands has benefited all three countries but … anything can be improved and so we’re open to having discussions.”

The criticism from the Canadian opposition and indeed from former Republican presidential candidate Rick Santorum at the time was that Canada was ill advised to wake the bear, that we would soon be at a disadvantage as our powerful neighbour trained its eye on where it could exert influence to Canada’s economic disadvantage. And yet, by setting the frame, Canada was able to affirm that we were trade partners rather than adversaries. With a maverick administration whose key advisers were new to statecraft, Trudeau’s team correctly read that Trump would be looking for allies on the international stage, given how ambitious his team was—and remains—in redefining America’s place in the world.

2. Relationships are Everything

Recently, just prior to the firing of Trump’s key adviser Steve Bannon, much was made in the Canadian media of a New Yorker piece by Ryan Lizza, in which Trudeau’s principal secretary, Gerry Butts, was depicted as being good friends with alt-right Trump advisor Steve Bannon. Bannon, now back at Breitbart News, is as close to an arch-villain, eminence grise character for American progressives as it would be possible to cast. Lizza wrote that Butts and Bannon often talked strategy and Butts had even offered up some advice on tax policy that would appeal to the middle class. The implication for Canadian progressives was that a new light was cast on Butts, and by association, Trudeau. Behind the curtain that blocked out the sunny ways, a cold, cynical, calculating game was being played.

Less cynical and calculating than simply necessary. Any relationship, no matter how transactional, requires a working rapport. And it follows that if there is no relationship more important to the Canadian economy than ours with the U.S., the importance of the rapport between key advisers is only that much greater. As for the purportedly congenial relationship between Katie Telford, Trudeau’s chief of staff, and Ivanka Trump and Jared Kushner, the ability to find common ground with those closest to Trump himself may yet turn out to be the best insurance policy we’ll have against impulsive decisions by the president.

3. This ‘Special Relationship’ Requires Special Teams

As one senior Liberal told me following the Trump victory in 2016, the challenge Trudeau’s team faced at the time was that, even prior to his victory in the Liberal leadership race, they had developed strong ties to the Democrats and had drawn inspiration, if not a significant part of the 2015 campaign’s field operations playbook, from the best practices honed by two Obama victories. And if there had been any significant outreach at all to Republicans during this period, it would have had marginal influence at best, given the Trump team’s fractious relationship with the old guard of the GOP. The first priority for Canada-U.S. relations was to figure out who among the Liberal caucus, the senior ranks of the public service and yes, among the Conservative opposition could exert real influence in the months to come.

Much has already been said and written about Foreign Affairs Minister Chrystia Freeland’s rapid ascent to a pre-eminent role within Cabinet, given her wide range of key contacts both on Wall Street and in Washington, but Freeland required a special unit working closely with her to lay the necessary groundwork going into the first round of negotiations. This is the Canada-U.S. Relations Unit working within the PMO. The core of this team, led by Brian Clow, her former chief of staff when she was at International Trade, includes a few of her most effective and dependable staffers from that time. The unit operates within a kind of war room setting, managing stakeholder engagement and rapid response issues management a short stroll down the hall from where Butts, Telford and team run the PMO.

Yet just as vital to their effectiveness is their link to the Canadian Embassy’s operations in Washington, with David MacNaughton playing an active role in ensuring no Canadian industry or sector doesn’t have a game plan with a clear-eyed understanding of what’s on the table—and what’s at risk. For this is key to the offence strategy: focus on the regions and industries where the U.S. has more to lose than gain in terms of jobs and economic development and ensure that the offices of U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross are duly apprised.

This overarching objective has dictated related “special teams” activity within the special Cabinet Committee on Canada-US relations as well, led by Transport Minister Marc Garneau. Garneau and Andrew Leslie, in his role as parliamentary secretary to Freeland, have taken the lead, working their strong contacts within the Pentagon and the Washington mandarinate—links forged during their years in senior roles with the Canadian Space Agency and the Armed Forces, respectively. Yet all key Cabinet Ministers, including Innovation Minister Navdeep Bains and Finance Minister Bill Morneau, have been playing every angle in the key states that have the most to lose if Canadian exports are suddenly priced out of the market.

All of this work is supported and co-ordinated by the ultimate special team, the NAFTA negotiators led by Steve Verheul, working out of Global Affairs. Verheul and his colleague Martin Moen kept their composure and held the line during the most precarious developments in the Canada-European Union (EU) Comprehensive Economic and Trade Agreement (CETA) talks. It’s that poker-faced demeanour and eye for the details that could prove pivotal as the talks progress.

4. Focus on Where the Votes Can’t Afford to be Lost

It may yet turn out to be one of the happiest accidents of contemporary Canadian history that one could overlay a map of the states that decided Trump’s victory on top of those where Canada is each state’s biggest trading partner to reveal a virtual match. The regions most vulnerable to retaliatory measures from Canada have the votes Trump and the Republicans need to maintain their grip on power. When “Buy American” and “America First” trade policy can lead to significant losses of American jobs at the bargaining table, those newly unemployed are less likely to cast their ballots—or even show up—for the next election.
It is assured that a team of advisers that campaigned for Trudeau—and that remains working for him—will keep the political lens on all strategic considerations, first and foremost. Ultimately, what will dictate the course of these negotiations, no matter how long they go on, will be how clearly the risks and rewards in political capital are wagered on both sides of the table. The chips do not fall where they may—they fall in key constituencies across the U.S.

Still, despite the sound strategic thinking at work for Canada, the Rumsfeldian known unknowns remain. Mexico’s role in these negotiations, much like the chaos within the West Wing, could add plot points that will either forestall or foster unexpected resolutions in the makings of a renewed and modernized agreement. Yet the Trudeau government has rightly understood these negotiations as a crucible, and quite possibly the determining factor for a mandate beyond the next election cycle.

A former director of communications for the Liberal Research Bureau, John Delacourt is Vice President of Ensight Canada.