Trade tactics

There seems to be some consensus emerging on two points:

  • First, Prime Minister Justin Trudeau pushed President Donald Trump too far. At the press conference winding up the G7 meeting  “Mr. Trudeau decided to take him on,” says Lawrence Marin in the Globe and Mail, “It backfired. In saying he wouldn’t be pushed around and in calling the President’s actions “insulting” – even though they were insulting – he went too far … [and, he added] … Prime ministers have never publicly rebuked presidents this way. They’ve always imagescouched their language. The criticism, though similar words had been used before by the PM, set off Mr. Trump’s hair-trigger temper. So much so that he condemned Mr. Trudeau calling him “very dishonestand weak;” so much so that he sabotaged the summit by refusing to sign the wind-up communique; so much so that he rocked the international trading regime with more dire threats;”and
  • Second, some experts, including Rona Ambrose (at about the 5 minute mark of this CTV News interview) say that our dairy supply management system needs to be “on the table” despite the extreme political sensitivity of the issue. It probably does for a whole host of reasons, including the ongoing TPP negotiations. But if Canadian supply management needs to be “on the table” then so do US agricultural and defence industry subsidies and “sunset” clauses and so on and so forth. There is a way to “give up” supply management and still support the poultry and dairy farmers: subsidies, it’s what the Americans do on a massive ($20 Billion (in 2015)) scale ~ we can probably keep many thousands of Canadian egg and dairy produces afloat for a few hundred million dollars ~ just a fraction of the kind of money Justin Trudeau gives away to Arab states right now.

For now Prime Minister Trudeau has, inadvertently, united most Canadians against President Trump if not, yet, behind Justin Trudeau. Canadians know that they are being bullied by an arrogant buffoon and they don’t like it. What they might like less, I suspect, is a full blown trade war with a country ten times our size.

We are not defenceless in a trade spat … America wants and needs our resources and so do some other countries. But in some cases, oil to Asia, for example, we do not have the pipelines to get our oil to our seaports … right now Canadian oil goes to market through the USA ~ through American middlemen and American seaports with the profits going to Americans. Our dependency on the US for most of our sales ~ the thing which bothered Mitchell Sharp back in 1972 ~ is still a feature of our socio-economic system. The American market is large, generally friendly and open, and easy to access, being right next door. We speak the same language and we share a common network of roads, rail and pipelines and informations services. We are, more or less naturally, one big market; Jt7eMksit makes good sense to keep it so, especially for Canada which constitutes only about 1/11th of that big market. That being said the current US regime seems intent on knocking down a system that serves the best, even the vital interests of most Americans ~ Canada is the major export market for 35 of the 50 US states. But, Donald Trump must win Louis_XIV_of_Franceevery contest, he cannot be contradicted, he is a sort of 21st century Louis XIV, a sort of pseudo-sun king with fake orange hair and a childlike inability to tolerate criticism. I suspect that this temper tantrum will endure for a bit and may see Canada punished quite a bit ~ a tariff on cars made in Canada, just for a start. Auto tariffs might not last long but they would have a huge symbolic value for Trump if they bring Canada, cap in hand so to say, to the table.

It is a mixed blessing for Prime Minister Trudeau; he will have, for a while at least, massive public support for almost anything that he can do to punish America, but that support will fade when a car plant closes and so on.

For the moment, we should all join in celebrating the fact that the Kim-Trump summit, which might overshadow the recent G7 meeting until President Trump needs someone to bully again, seems to have ended without much shouting, “But,” as the Globe and Mail reports, “the text of a joint statement signed by the two leaders included no language on timing, nor did it mention the “complete, verifiable, irreversible denuclearization” that the White House has demanded. Instead, it merely reaffirmed the broad commitment to denuclearization that North Korea made in late April, after meeting with South Korean president Moon Jae-in … [and] … Other language in the document was similarly vague, such as establishing “new U.S.-DPRK relations in accordance with the desires of the peoples of the two countries for peace and prosperity.” Both countries agreed to “join their efforts to build a lasting and stable peace regime on the Korean peninsula.” Mr. Trump “committed to providing security guarantees to the DPRK,” without providing details of what those might be … [thus] … The language used in the joint statement, however, differed little from what North Korea has used for decades — and remained far from the specific provisions North Korea agreed to in 1994, in an agreed framework on abandoning its nuclear weapons program.

There is a case to be made that President Trump was, honestly, convinced that he had made concessions in Le Manoir Richelieu, including doing away with a key NATFA sticking point, the sunset clause and that by renewing his threats of retaliatory tariffs Prime Minister Trudeau was both stabbing him in the back and making him look weak as he prepared to meet, face-to-face, with Kim Jong-un. In this argument, Prime Minister Trudeau failed to understand how to deal with an erratic (even unhinged?) narcissistic personality.

In the longer term Prime Minister Trudeau needs to do a few things IF he really wants to keep the Canadian economy humming along:

  • Do ‘whatever it takes‘ to keep reasonably barrier free trade flowing across the Canada-USA border ~ that may be difficult until 2020, perhaps even beyond but he will get lots of help from US industrialists, bankers and some politicians who all know that trade wars have no winners, ever;
  • Broaden and deepen our other international free(er) trading agreements ~ we have the CETA, we need to make the TPP work, soon, without America, we should be trying to join the RCEP, and we should start working, now, on a CANZUK deal and even CANZUK+;
  • Increase the defence . budget, over, say, a decade to 2%+ of GDP ~ after cutting the fat from the current morbidly obese command and control superstructure. This will demonstrate our commitment, to traditional friends and allies and to competitors alike, to maintaining the liberal international order despite challenges from Kim, Putin, Rouhani, Trump and Xi  …

… each of whom, I think, wants to reshape the exiting world order in order to tilt the balance in favour of his country. (And, yes, I do think President Trump is more like those people in the pictures than he is like, say, Prime Ministers Abe, May or Trudeau or Chancellor Merkel.) A currently leaderless West has to stand a bit taller in the face of such an array of threats to global peace and security.

In essence, I want Prime Minister Justin Trudeau to ditch his green, feminist, First Nations and sunny ways agenda and look to Louis St Laurent and Stephen Harper for hints on how to govern Canada. Writing in the Globe and Mail, Colin Robertson, a retired diplomat and now a commentator, offers some good advice: “Canada,” he says, “and like-minded countries need to stick together, act in tandem and push back against Trumpist protectionism. It means taking it to him where it hurts and targeting his base: in particular the farm community. At the same time, we need to tell Americans, who will suffer job loss and higher prices, that they have only their president to blame … [and, while] … Canadians are justly outraged we have deep interests at stake, so we need to proceed with care and planning:

  • First, we need to get our act together domestically. Mr. Trudeau needs to consult with the premiers and business to get their advice on our retaliation list. What is their assessment of increased protectionism on their province and industries? What about life after the North American free-trade agreement? We will be hurt. We will need to provide adjustment assistance for the afflicted. But how would Americans like it if Canadians began to spontaneously boycott American goods, especially U.S. farm produce, and stopped travelling south for holidays?
  • Second, we need to take advantage of the free-trade deals that we already have in place and put real effort into matchmaking; business with business. As a matter of our national security (two can play this game), we should quickly pass the implementing legislation to bring the new Comprehensive and Progressive Trans-Pacific Partnership into effect. With Canada’s implementation, the agreement would immediately come into force.
  • Third, we need to act in tandem with our G7 partners and like-minded countries, such as Mexico, as we collectively retaliate to the recently imposed steel and aluminium tariffs. Canada and Mexico learned the value of acting collectively when they worked together to persuade the U.S. Congress to rescind its protectionist country-of-origin labelling requirement in 2015 … [because] … American legislators respond to local pressure. They need to feel the heat of retaliation. Canada has a lot of allies, especially in the Republican congressional caucus. They don’t like Mr. Trump’s direction and are already moving to curb the trade powers that were ceded to the executive branch during Franklin Roosevelt’s administration. Hopefully, we will see then the beauty of the checks and balances at work. The U.S. founding fathers designed their system to prevent a president from becoming a king.

But Andrew Coyne, writing in the National Post, suggests caution. First, he says, and I agree fully “it is impossible to deal with the current president of the United States in any of the usual ways — as a responsible ally, as a trustworthy negotiating partner, as a rational actor, as an adult. The leaders of the world’s other major economies spent the better part of the past weekend attempting to do so, even after the unprovoked attack on their economies of the previous week, in the form of steel and aluminum tariffs.” He goes on to say, and again I agree that “The bizarre, almost obscene after-action attacks on Justin Trudeau by Trump and two of his more odious minions must be seen as of a piece with this performance: an attempt to shift the focus, and the blame, for the fiasco Trump had made of the conference onto the prime minister of Canada. Or perhaps it was just for the sheer bloody-minded pleasure of it. Or perhaps it was just more or less random, the uncontrolled eruptions of an incontinent mind … [thus] … At any rate, they constitute an unprecedented — there’s that word again — diplomatic affront. I cannot think of any world leader who has ever spoken publicly of the leader of an allied nation, or allowed others to speak on his behalf, in such insulting terms: dishonest, weak, back-stabbing, special place in hell, etc.

Point 1: America, Donald Trump’s America is NOT our good neighbour, America is NOT our trusted friend and ally; Donald Trump’s America dislikes us because we are not them, because we will not bow and scrape to the King of the World. Donald Trump’s America is, in short, an enemy state.

But,” Mr Coyne warns us, “whatever we think of Trump, we have to live with him; however unjustified his assaults, rhetorical and economic, he nonetheless seems determined to make them. He has the power to do us great harm if he wishes — just the auto tariffs he is now considering would probably be enough to cause a recession — and it is up to us to figure out how to prevent him from doing so. Or rather, it is up to the prime minister. Limiting the harm that Trump does to us is now perhaps his most important job, and it is how he will be judged.

Point 2: Donald Trump’s America can and very likely will decide to punish us for daring to talk back,

Then he gets to his main point: “This is a counsel neither of caution or belligerence,” he says, “but rather of cold calculations of self-interest: we should be prepared to adopt either strategy, or any other, based strictly on what is most likely to work. So far, it should be said, nothing has. The threatened retaliatory tariffs on American goods (to take effect July 1) have proved as ineffective at altering Trump’s course as the prime minister’s earlier attempts at “Trump-whispering” … [and] … Again, that doesn’t necessarily mean the PM is at fault: maybe no other approach would have worked any better. But if the prime minister should not automatically be blamed for failing to avert Trump’s wrath, neither should he be above all criticism. There is a disturbing sentiment afoot, which the government seems eager to encourage, to the effect that anything other than unwavering support for the prime minister is somehow disloyal … [but] … This is silly. The stakes are large, but not existential; this is a fight about tariffs, not World War Two (and even in that conflict, dissent was not prohibited) … [thus] … We are unlikely to frame an effective counter-strategy if it is not open to debate and criticism. It is one thing to say we should be united in rejecting the president’s personal attacks on the prime minister, as we are in defense of Canada’s national interest. But how to defend that interest is a matter on which reasonable — and patriotic — people can differ.”

Point 3: honest people can disagree with Prime Minister Trudeau’s policies without being labelled as Trumpists.

Therefore, I go back to my three point plan ~ shore up Canada-US trade partnerships as ell as we can; expand our other free(er) trade opportunities; and pull our wight in the world ~ and look for ways to make Donald Trump’s America pay for electing him.

Any trade sanctions we apply should be, as Colin Robertson suggests, above, designed to punish those Americas who supported Donald Trump. Our aim must be to undermine his presidency and to undermine America’s faith in his ability to negotiate a deal. It is probably wrong to call for a “Boycott America!” movement, but it is not wrong to carefully, cannily and very publicly craft trade policies that aim to do serious economic harm to the people in the states that both depend upon trade with Canada for jobs and prosperity and supported Donald Trump. The Canadian government should be very open and very clear that its retaliatory policies are designed to hurt those Americans who support President Trump because we believe that he is a “clear and present danger” to global peace and prosperity and we, almost all of us, sincerely hope, for America’s sake and our own, that he will be, at most, a one term president.

2 thoughts on “Trade tactics”

  1. I fully expect dandy don to use us as a whipping boy and we will suffer, but maybe it will stiffen backs enough to give a fresh perspective on where we are and where we should be going.

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