It’s not a catastrophic defeat

I think that John Ivison, writing in the National Post, has it about right when he says that even though Justin Trudeau says”“Today is a great day for Canada,”” he sound like “King Pyrrhus of Epirus, just after he lost the bulk of his army in battle against the Romans … [and, for Canada]  … As with Pyrrhus, another victory like today and we will be utterly ruined.

Mr Ivison says, and I agree that, “Trudeau claimed the trade deal signed with the Americans and the Mexicans will prove good for workers, businesses and families – that it removes uncertainty for manufacturers and improves labour rights across North America … [and] … He’s right that the unpredictability of the situation has been eased and the threat of punishing auto tariffs removed – for now .. [and, even worse for Canada] … The widespread sense of relief, if it endures, could help propel him back into power next year … [but] … to trumpet the agreement as the result of some kind of grand strategic vision – “we are on the right track and we didn’t get here by accident” – is to fundamentally misrepresent what has just happened.

What just happened, John Ivison says, is that “Canada has been played … [because] … Donald Trump used what he called “the power of tariffs” to bully his trading partners into capitulation. He made clear his intent to pull investment back into the U.S. and, despite his eccentricities, has managed to do exactly that … [and] … We are now in a new era of managed trade, where the U.S. has the ability to cap Canada’s growth … [thus] … Take the agreed exclusion of Canada from section 232 tariffs on autos. Canada would only fall foul of 25 per cent auto tariffs if passenger vehicle exports were to reach 2.6 million units a year – significantly above the 1.8 million units sold south of the border now. But no investor is going to build a new car plant in Canada knowing the prospect of crippling tariffs still exists, if that threshold is crossed … [and] … A similar quantitative cap is likely to apply to steel and aluminum, if and when that tariff is removed – and it will prove a similar disincentive to investment … [consequently] … “It’s the preservation of a 25 year-old status quo,” said James McIlroy, a trade consultant at McIlroy and McIlroy in Toronto. “This is a silent job killer and it’s not good for Canada.”

Mr Ivison also discusses other losses for Canada, including those that might compel us to seek American approval before we even try to negotiate with e.g. China which one observer calls “astonishing” and about which Marie-Danielle Smith, also writing in the National Post, says “Canada’s efforts to forge trade deals with other countries are now far less likely to lead to free-trade negotiations with China, experts predict, because of a clause in the new North American deal that appears to give the United States unprecedented leverage over its partners’ other trading relationships.” John Ivison goes on to say that “This deal is fundamentally a story about the re-assertion of U.S. power. As Canada’s former ambassador to Washington, Charles Ritchie, wrote in his memoir Storm Signals, the president (in this case Lyndon B. Johnson) never listens, “or at any rate never listens to foreigners. The phrase ‘consultation with allies’ is apt to mean in U.S. terms, briefing allies, lecturing allies, sometimes pressuring allies…The word comes from Washington and is home-made.”

He also says, and I agree fully that, “no-one should be fooled into thinking Canada has “won” – unless by “win”, you mean the avoidance of catastrophic defeat.” The new USMCA is not a catastrophic defeat for Canada but it is anything but a victory.

Gary Clement, who draws in the National Post, also gets it about right …

gary-clement.png

… and I guess we should be thankful for small mercies.

2 thoughts on “It’s not a catastrophic defeat”

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