Trade talks between Canada and the U.S. appear to be progressing ahead of the midterm elections. Carlo Dade with the University of Calgary joins Michael Higgins to discuss the negotiations. This interview has been edited for length and clarity. Michael Higgins: How likely is the Trump administration to compromise to get something done with Canada? What’s truly at play here? Carlo Dade: This is the Trump administration, those questions are always difficult to get to. But, the recent announcements, I think, are part of the spin cycle in the lead up to the midterm election. Spin cycle meaning the administration spinning news stories out. I don’t think we’ve seen major changes in terms of the negotiations or the progress. And remember, we heard similar noise from the administration about Mexico two weeks ago, so I would move quickly on from that. The negotiations will be difficult. The negotiations the Americans had with 21 other countries before they got to us, and including the negotiations with Mexico, were difficult. I think we’re looking at nothing immediately before the midterms, and potentially even after. MH: What’s your read on the Carney government’s willingness to actually engage in this trade talk revival? CD: I think all governments remain engaged. But remember, the Americans have 21 countries to keep in line. They’re also still talking with Vietnam and India. The American plate is full, so we’re also fighting for time with the Americans with other countries, and not to mention Mexico. I think there is a willingness to engage, it’s a question of capacity on the U.S. end. The United States Trade Representative (USTR) is not a huge bureaucracy, but, looking at the 21 other countries, four of whose negotiations broke off at the last minute or after having negotiations signed … I don’t think we’re going to see substantive progress until after the midterms, and I stand a 20-per-cent chance about being correct in that analysis. MH: There are rumblings of a role for reviving Keystone XL. What weight do you see energy exports from our province carrying at this point? CD: They’ve always been important to the administration. When Canada has engaged with them, when the provincial government has engaged with them, there is a strong desire for Keystone XL. But, in terms of the jumping ahead to the midterms, you’re looking at eight to 10 potential new candidates, Democrats from the Democratic Socialist of America movement. That’s a movement that’s not favourable to Canadian energy or to fossil fuels. The change in the house may be better for Canada, but it won’t have any immediate impact, it’s not going to make a whit of difference to the tariff issue or to things that we face. But in the longer term, thinking about Keystone, that shift within the Democratic Party could become very important, and so the impact we’ll see won’t be on Tuesday, it may be years from now. It may be the next administration or impacts on the Democratic administration, should that ever happen. MH: So the U.S. midterms outcome is not really that consequential where Canada is concerned? CD: It’s inconsequential. For Canada in the immediate term with tariffs, you need 67 senators to vote in favour of repealing the tariffs, of taking back power that Congress has given to the president to issue tariffs under executive authority. Unless someone thinks that you’re going to get 67 pro-old-style trade votes out of this election, there is no way that Congress and this House and Senate can move to restrict the president’s power. Legal challenges, yes, but those take years, and the legal challenges aren’t the result of an election. MH: Now, talks with the European Union, the focus of a summit on Canadian soil last week. Nothing locked in stone, but there has been reference to association without accession. What takes these talks from a conceptual stage to something more concrete? CD: Obviously, the push for diversification, the current push. We went through this in 1971. The Americans imposed tariffs on us overnight, we rushed to diversify. This time, though, I think Canada is serious. In 1971, it took the Nixon administration four months to settle the issues and end the tariffs. This has gone on for two administrations. I think it’s finally dawning on Canadians and Canadian businesses that this time we have to get serious. In our business panel survey work, we found that Canadian businesses have a preference for the European market in the likelihood of increased tariffs from the U.S., which is not surprising. Longer term, being able to have a relationship with Europe opens the potential to link Europe to Asia. There’s a movement to link this Trans-Pacific Partnership Agreement to the EU. That’s going to be a generational challenge, and if we’re successful, it completely changes the board game for trade. But generational challenges start with the first step and the first investments, and that’s where we are now. But in the short term, the issues that Canada faces – productivity, efficiency – Europe’s not going to help us with those issues. In fact, an association status with Europe is kind of akin to joining an AA meeting where they’re serving booze, in terms of helping us with our regulatory efficiency, productivity, and other challenges that we face. MH: How much do alignment efforts with the EU further motivate the Trump administration to expedite its own trade talks with Canada? CD: Marginally, at best. The administration has things that they want out of us that they’ve gotten out of 21 other countries. They’re playing a long game here in terms of trying to rewrite the global rules of trade, the way the Nixon administration did in ’71, but a lot more expansively, a lot more brutally, and, I think, they’re doing a lot more damage along the way. Something like countries talking to each other will have marginal impact on the U.S. Where you run into trouble with this administration, and Americans in general, is when you start talking to China. That is the real challenge for us: managing the necessary relationship with the second-largest economy in the world, largest at PPP, the world’s largest trade partner. That is more of an existential challenge for us than Europe is.
