For Trudeau, Brampton and all of Canada, free trade is good, especially when we open new doors
After two boisterous years in office, Donald Trump has proven to be an equal opportunity insulter.
He has trashed war heroes (John McCain), Hispanics, Muslims, a black congresswoman (Maxine Waters) who dared question his competence, and all NFL players who took a knee to protest police brutality. He compared anti-Nazi protesters to those carrying Tiki Torches at a hate-filled rally in Charlottesville. His morning tweets run the gamut, from straight insults to crazy conspiracy theories to ugly responses to slights – perceived or real – brought against him by the hated media who, according to him, are “the enemy of the people.”
His tantrums have been weaponized to charge up his base – which they did Tuesday night at a rally in Mississippi when he mocked Christine Blasey Ford, an alleged victim of sexual assault.
When authoritarian figures like Vladimir Putin compliment him, he channels his best Sally Field, and says, “They like me. They really like me!”
Still, he often saves his most heated invective for his friends and allies, especially Canada.
He called the NAFTA the worst trade deal ever. He called out Canada for “decades of abuse” on trade. At a rally in North Dakota a while back, he threatened to impose a 25 percent tariff on Canadian-made cars, and this, he said, would “destroy” his northern neighbour’s economy. After Justin Trudeau hosted last summer’s G-7 conflab in Quebec City, he called our prime minister as “weak” and “dishonest” as you can get. He did it while Air Force One was still taxiing on the runway for his next stop, and next confrontation: Europe. He dumped on America’s NATO allies, and upended royal protocol by turning his back on the Queen of England.
In Helsinki, Putin met him in secret for two hours, then flattered him on stage. Trump stood silently by his side, mute, deferential, and smiling.
Most recently, our foreign minister, Chrystia Freeland, was targeted during a bizarre 90-minute press conference held after Trump’s America-first speech at the United Nations. It seems the fact-challenged president doesn’t like her, or Canada very much.
Or maybe he does?
On Monday morning, The Donald did the perfect political pirouette and was downright giddy and brimming with positivity as he praised negotiators on both sides of the 49th parallel as the old NAFTA trade deal re-emerged under another name: the United States-Mexico-Canada Agreement (USMCA). Suddenly, Trudeau was his best friend, again.
Trump’s Twitter feed called the USMCA a “wonderful” and “historic transaction. It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our farmers and manufacturers, reduces trade barriers to the U.S. and will bring all three great nations together in competition with the rest of the world.”
Understanding the psychology of Donald Trump is beyond the scope of even the best Freudians. But what was clear, was the reaction from the Brampton business community both before and after the trade deal was done.
Before: “Obviously, our members are concerned about this and other threats made by Trump, and we cannot take these kinds of matters lightly,” said Jaspal Brar, president of Unifor Local 1285, representing Brampton’s Fiat Chrysler employees at the Williams Parkway plant.
After: “On Monday, everything changed for tens of thousands of Brampton workers employed in the auto sector and other manufacturing industries heavily involved in cross-border trade.”
Before: “Re-negotiating agreements is tricky, and there’s always the risk that trade with the U.S. will get more expensive and/or more complicated,” said Todd Letts, CEO of the Brampton Board of Trade.
After: “The certainty USMCA brings, including Chapter 19 [the independent dispute mechanism, which the Trudeau government was fighting hard to retrain] and concessions from Mexico on wages, bodes well for local manufacturers and our domestic auto industry. The challenge now is securing agreement for using Chapter 19 to eliminate the tariffs on aluminum and steel.”
Yes, if you parse the numbers at the local level, it’s clear a new trade agreement, NAFTA 2.0, is critical to the city’s future. According to the BBOT, a rough estimate of the value of exports from Brampton to the U.S. is $6.5 billion, a massively outsized figure compared to the overall scope of the city’s export market. There are over 400 Brampton companies currently exporting to the U.S., and on average, U.S. business represents 34 percent of total sales. When the NAFTA was implemented in 1994, it spawned 423 company start-ups in this city. How dependent is Brampton on the NAFTA, and its successor, USMCA? There are 23,433 people employed in companies that export to the U.S.
To estimate impact, factor in the average Brampton household income ($92k) before tax, so roughly $55k after tax, and with the annual overall Brampton payroll leaning on exports south of the 49th parallel of more than $1 billion, according to the BBOT, that works out to an average of $5,950 of income per household in the city that is directly tied to the U.S. export market.
In a New York Times Magazine story issued earlier this year, Jim Balsillie, the former CEO of Research in Motion (creator of the Blackberry), told a reporter Canadians can ignore Trump’s rants, but they should be taken like a bitter pill. “Business isn’t personal. It’s hard-edged. People do these things to their neighbors. We need to manage our strengths and vulnerabilities. Trump’s behavior is unfortunate, but it has underlined that it’s really important to change our economy.”
According to Balsillie, the NAFTA helped re-establish our sovereignty. Before the deal, we were a timid, low-tech nation – the hewers of wood and the drawers of water. We produced primary products – oil, coal, wood, gold and even beaver pelts. If it was in, on, or running along the ground, we would find it, mine it, drill for it, kill it, and send it to our neighbours to the south for manufacturing. The production gap between us and the U.S. wasn’t narrow, it was wide as a six-lane highway. We didn’t build anything of significance, and when we did (the Avro Arrow), we didn’t have the fortitude to bring it to market. We were intimidated by the colossus to the south.
Canada has a rich and controversial history when it comes to free trade. According to The Canadian Encyclopedia, a Reciprocity (mutually beneficial trade) Treaty was signed by British North America Governor General Lord Elgin and U.S. Secretary of State William Marcy in 1854. The treaty remained in force for 10 years. During the Civil War, Britain quietly collaborated with the southern states and, at the end of the war, angry northern politicians ended reciprocity in 1866 which, ironically, was a key point in fuelling Confederation – the creation of Canada. In the 1880s an extensive free-trade arrangement, called "commercial union" or "unrestricted reciprocity," was advocated by Canadian businessmen, but protectionist and pro-British sentiments brought about its rejection. The last major attempt at reciprocity came in 1911 by the Wilfrid Laurier government – providing free trade in natural products and the reduction of duties on a variety of other products. It was accepted by the Americans but repudiated by Canadians, who ousted the Liberals.
Which led in a perfect linear path to the 1980s and the Progressive Conservative government of Brian Mulroney. He negotiated the Canada-U.S. Free Trade Agreement, signed by him and President Ronald Reagan in 1988. It superseded NAFTA (1994), which new President Bill Clinton, largely with the help of Reagan-Republicans, dropped into the lap of Canada’s former Prime Minister Jean Chretien, who a year prior had campaigned on a promise to quash the nascent NAFTA negotiations.
The deal spawned a new orthodoxy for Canadians and Americans: open borders and freer trade. The Americans, Mexicans and Canadians stepped lively to this new trading order – and everyone reaped a royal bounty. North American free trade became a $1.2 trillion enterprise for the corporate sector.
Then, in 2016, Trump was elected president, and rode in on a wave of grievances from his base supporters. The NAFTA didn’t make the lives of these citizens better, but in fact, led to the gutting of the manufacturing sector in the Midwest. Companies fled to Mexico for cheap labour, and bigger profits. Others, in a growing global free trade environment, shipped jobs overseas. The U.S. middle class was being hollowed out.
Canada’s dairy tariffs were an affront to the U.S. and causing serious damage to the business sectors in Wisconsin and New York state. Those damn Canucks even put restrictions on imported American wheat. Yes, said Trump, to the adoring and angry multitudes, the job losses and plant shutdowns were the fault of NAFTA, and its partners.
Mexico recently signed a separate deal with the Yanks, but Freeland and Trudeau hesitated in doing a deal with Trump’s hand-picked negotiators. While he ridiculed our leader and business sectors with insults, we imposed dollar-for-dollar tariffs on American goods in response to Trump’s tariffs on our steel and aluminum.
Which takes us back to the New York Times Magazine feature published mere months after Trump’s election. It explains how Trudeau threw together a ‘Team Canada’ approach to help save the NAFTA, and put Freeland, our trade minister at the time, in charge of negotiations. Team Canada spread out across the American business landscape and passed along word that we actually had a trade deficit with the U.S. Trump didn’t buy the argument, or the facts. He was offended. He wanted a new deal. And until last weekend, it looked grim that one was even possible.
While there are many issues to be worked out in the new agreement, including the continued imposition of tariffs on our steel and aluminum sectors, the overall components of USMCA look very much like NAFTA (the opposition parties here are making loud noise about a new clause that seems to force Canada into a corner regarding future trade with China, which could be a deal breaker for the U.S., as it tries, sadly, to isolate the ginormous Asian monster that keeps swallowing up competitors, much like America did for the better part of the last century.)
While Trump wanted to take a chainsaw to the NAFTA, American negotiators settled for something less bloody and more subtle, cosmetic surgery. Yes, a little nip and tuck would do.
Trump is master of branding. The Trump company doesn’t build much anymore, but brands his name on buildings and that ups the value, except when it doesn’t. USMCA is just like that. It carries the Trump brand, and to his voters, it was another election promise kept. This is what he is telling his supporters – even if it is not true. Yes, it’s a win for America’s business class – even if it was, in fact, a compromise. Canada and Mexico have been put into their rightful place – even if that’s another stretch of the truth. To Trump’s way of thinking, the acronym NAFTA is gone, replaced by USMCA. This sounds better, more American, and it puts the US ahead of the MCA. Heck, it even sounds militaristic – which Trump likes, although the only thing he ever accomplished in battle was to win his father’s millions to fund his many business failures.
While the new deal is a work in progress, Canada’s economic leaders were already trying to create a sophisticated post-NAFTA business model anyway – one that wasn’t so dependent on American largesse (and its huge corporations that treat our country like a cheap outpost for redistributing goods and low-end labour, while the profits return home; the auto sector is a notable exception). Our leaders already brokered a deal with the European Union for a new free-trade pact. We are all-in on the Trans Pacific Partnership (TPP). (Trudeau even floated a trade deal with China, which was vaporized, mysteriously, sometime during his trip there late last year.)
If Canada learned anything from the negotiations with Trump and his band of brigadiers, it’s that trade isn’t free if it isn’t fair. The capitalistic credo of go forth and multiply only works if everyone benefits, and money shouldn’t be made by sending companies south to tap into Mexico’s cheap, indentured labour market.
Trump is an outlier and an outright liar. He’s a braggart and a bully. His America-first mantra plucks at the black heartstrings of many of his most vile, nationalist (or nativist) supporters. But it’s also embraced by his moneyed friends, the .01 percenters, and even the many in that rarest of air who likely deplore him. They loved his corporate tax cuts, and they’ll love his new-look NAFTA.
But as Basillie told The Times, it’s important for Canada to stay the course, and remain cool. Ninety percent of our population (and businesses) cling to the 49th parallel, and feed from the giant market to the south. Brampton is one of those local markets that is locked into the American marketplace.
Trump’s bluster and jingoistic rants might alarm us, but even his own negotiators know you can’t pull up the drawbridge on world-wide trade. The tentacles of the NAFTA run too deep.
While Trump’s nativism will be tested in the upcoming midterm elections, don’t count him short. The U.S. economy is on fire. The new trade deal is a win for America, he says.
The NAFTA impacted 500 million people (7 percent of the world’s population), and produced 29 percent of the world’s wealth. It wasn’t the worst deal ever, but simply a partnership for its time. It created a rules-based system that spit out a certain amount of unfairness, and was ripe for a re-do. Trump’s election only quickened the process.
His upset win in ’16 and bullying tactics, drove Team Canada negotiators to adjust their own tactics on the run. But in the end, as Balsillie noted, they never took his bully-boy bluster personally – but they did take it seriously.
Freeland remained determined but cool. One of the longest friendships on the planet, and a valued trading partnership wouldn’t be destroyed by a political neophyte and reality TV star who tweets his daily ugliness for all to see.
Jerry Dias, head of Unifor, Canada’s largest sector-union that represents thousands of workers at the major auto parts manufacturers, including the Fiat Chrysler plant here in Brampton, was duly impressed by Freeland, and the Team Canada approach. It was comparable to Canada’s Own the Podium program that has reaped rich rewards for this country in both the winter and summer Olympics. He told CBC News the day USMCA was struck, Freeland was the right person at the right time to represent Canadian interests.
Dusty old American president Calvin Coolidge once said, the business of government is business. In the end, business interests trumped Trump. It’s what always drove negotiations between Canada and the U.S. in the first place, and created a tripartite trade deal that while not perfect, is something all parties can live with – for now, even the dairy farmers have been promised fair compensation.
The equal opportunity insulter can now claim victory, and brag about his incredible negotiating skills, and USMCA will be always be his baby, an America-first document.
On the flip side, everyone can roll their eyes and feel secure with the truth – something that Trump rejects like any good real estate tycoon with a shady CV.
Maybe one day he will get his comeuppance, either at the ballot box in November, or whenever ex-FBI director Robert Mueller decides to unveil the contents of his Russia probe.
Until then, Freeland says Canada will continue to set its own “clear and sovereign course” on trade. Balsillie thinks moving away from our old business order (an overreliance on commodities like timber and oil and canola) will pay off in the long run.
In Brampton, it’s all about embracing high-margin businesses that sell intellectual property, which are more valuable and impervious to the predation of Trump.
Which, in the end, is a very good thing.
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