Canadian ambassador talks trade, tariffs and Trump

The new United States-Mexico-Canada (USMCA) agreement still awaits final approval, and Canada’s ambassador to the U.S. said it won’t be universally applauded.

KITCHENER — If you’d asked David MacNaughton a month ago whether a new trade deal between Canada, the United States and Mexico was possible, he probably would have said no.

MacNaughton, Canada’s ambassador to the United States, was in the thick of a frenzied push to finalize a deal, and that was far from a sure thing. “It was probably the most challenging three weeks I’ve ever spent,” he told a Greater Kitchener Waterloo Chamber of Commerce luncheon audience Friday.

When an 11th-hour deal was finally announced, MacNaughton emerged pleased, proud … and convinced he didn’t want to go through it again.

The new United States-Mexico-Canada (USMCA) agreement still awaits final approval, and MacNaughton acknowledged it won’t be universally applauded.

“It is inevitable when the deal gets done that there are going to be critics. Fair enough. I don’t have a problem with that,” he said. “I’m quite proud of what we accomplished under the circumstances.”

Chief among Team Canada’s victories was a stipulation that tariffs wouldn’t be slapped on Canadian auto exports, providing that volume remains below 2.6 million vehicles a year; the current tally stands at about 1.8 million.

“It would have devastated our economy and put us into a recession in a very short period of time,” MacNaughton said. Any future tariffs the U.S. wants imposed on national security grounds will be subject to a 60-day consultation period.

U.S. tariffs remain on Canadian steel and aluminum (and Canada applied retaliatory tariffs in return), but MacNaughton said he’s optimistic that dispute will be resolved soon — especially if he takes President Donald Trump at his word that the tariffs were used for leverage and would be removed if he got a good deal.

“I’m hopeful,” MacNaughton said in an interview following his talk. “I hesitate to make predictions about this administration, as you can imagine.”

Some analysts have expressed concern that new rules of origin requiring more vehicle components to be sourced in North America could lead to higher prices. MacNaughton said a reduced regulatory burden for businesses would in turn reduce costs.

“We’re hopeful that we will not have put the North American industry at a competitive disadvantage.”

Canadian dairy farmers have been among the most vocal critics of the agreement, as it grants U.S. producers access to about 3.6 per cent of the supply-managed Canadian dairy market — forcing Canadian farmers to dial back production as a result.

MacNaughton said the concession was made in order to preserve the supply management system. “That is the biggest protection that they have in terms of their net worth and their ability to prosper in the future.”

In a phased-in approach, U.S. dairy access will increase by one per cent a year, while the Canadian market is growing by three per cent a year, he said. “(Canadian producers) should be able to grow into as large volumes as they have at the present moment.” Federal compensation has also been promised to the dairy industry, which has seen more of its share of the market eroded in other Trans-Pacific and European trade deals.

MacNaughton was named ambassador early in 2016, a time frame that has spanned the tail end of the Obama presidency and nearly two tumultuous years with Donald Trump.

“It is impossible to compare the Trump administration to any other administration,” MacNaughton said. “And I don’t say that in a nasty way. The president campaigned on being a disrupter and he’s been a disrupter, and how that all will manifest itself ultimately we’ll see.”

Recent tensions between Canada and the United States have left some bruises, MacNaughton said, but it remains a relationship unlike that of any two other countries in the world.

“If it might not have been going as well as it was, it was that each of us perhaps took each other for granted. I think it’s important that we find little ways to remind each other how important we are,” he said.

“The other thing you’ve got to realize — and I’ve come to realize this too — is that everything doesn’t happen in Washington.”

This article was written by Brent Davis for the Waterloo Region Record. You can read the original article here.

Twitter: @DavisRecord

Twitter: @DavisRecord