With the Christmas and New Year’s holidays now behind them, Canadian lawmakers, at all levels of government, are beginning to look ahead to the future of the North American free trade agreement, the USMCA, or CUSMA as it’s called north of the border.
President Donald Trump has said it "might" be renegotiated. It might be left to fade away when it expires, or it might even be scrapped.
Prime Minister Mark Carney has also playing down optimism over a deal, as the U.S. makes new trade demands.
Trade talks turned sour a couple of months ago after an Ontario ad that featured segments of a speech by former President Ronald Reagan saying that tariffs did not work in the long run. That angered Trump, he immediately ended negotiations and threatened a further 10% tariff on Canadian products.
Ontario Premier Doug Ford, who’s government produced and ran the ad on American television networks, stood by it, saying it was the "best ad" that’s ever been run and viewed 12.4 billion times.
"Our intention was to bring it to the attention of the American people," said Ford. "Through the greatest president that ever lived, that was Ronald Reagan. Protectionism does not work. We’re their number one customer. They’re our number one customer. We need to work together."
Nevertheless, there’s been no sign from Washington of any thaw in Trump’s position. Instead there have been new demands, pre-requisites according to the White House, that Canada provide more market access to American dairy products and ease provincial bans on imports of American alcohol products.
"A strategy is not to rush in to a bad deal, and that’s what we’ve been very disciplined about," said Carney. "And every week that goes by, the more that we’re developing our economic strategy at home, the more we’re developing those relationships abroad the stronger we get. It is a better position to be disciplined, have the tough negotiations which we’re having, having those discussions, and then if a good deal is there, yes we will sign it. But if it’s not there we’re not going to sign a bad deal."
It’s clear, for now, that the trade relationship between Ottawa and Washington has changed. Now all eyes are turning to talks on reviewing the three way trade deal with the U.S. and Mexico. Trump has said he could let it expire or push for a new agreement. But it’s unclear what he will do. And Hassan Yussuf, a member of the prime minister’s council on Canada-U.S. relations says Canadians have to be prepared in case Trump lets the old deal die.
"I don’t think [Trump's] yet figured out what’s in the best interests of America. Industry are telling him the opposite: this is not a good thing for the United States, they shouldn’t go there, it’s going to be quite devastating," Yussuf said. "But that may not deter him because so far much has not deterred him. I think the only thing [Canada] can hope for in the end of the day is the mid term election really sends him a different message and then he might be prepared to say 'wait a minute now,' we need think a bit differently how we’re going to go forward here."
The mandatory review of the Canada-U.S.-Mexico trade deal moves into high gear this year. The formal review begins in July. Trump has already referred to several Canadian trade irritants, such as supply management, softwood lumber, and the digital services tax.
Trump has claimed that he holds all the cards with his devastating tariffs — even on close allies like Canada.
But Carney said Canada has been aggressive in developing different defense, security and trade partnerships outside of those with the U.S.
"The good news is virtually everybody wants to do more with Canada. So that’s true in Asia, whether it’s the Philippines, Thailand and Singapore," Carney said. "The ASEA countries which are almost a quarter of the world’s GDP, it’s Indonesia, it’s the European Union, it’s the U.K., it’s the countries of the Gulf. United Arab Emirates is going to invest $70 billion in Canada. They’ve made a commitment to that. So people want to do more with Canada because we have what the world wants"
As for the talks themselves, Carney has said Canada is ready to resume them whenever Washington wants. But he’s in no hurry, as he continues to diversify Canada’s trade partnerships.
