By Canadian Press

‘Time is running out’: Experts call on Ottawa to increase efforts with U.S. on trade

Jul 26, 2024 | 12:24 PM

WASHINGTON, D. C. — A group of experts is sounding the alarm that Ottawa needs to swiftly make more inroads with Americans, or Canada will be deeply disadvantaged in a looming review of a crucial trade agreement.

“Time is running out very rapidly for us,” said Perrin Beatty, co-chair of the Expert Group on Canada-U.S. Relations.

The independent group, which includes former diplomats, policy advisers and business leaders, was created in recent months amid concern Ottawa was “sleepwalking” ahead of a 2026 review of the Canada-United States-Mexico agreement, Beatty said.

A new report from the expert group says Canada must get its house in order before formal talks begin. It calls on Ottawa to develop and initiate a clear strategy, appoint a chief negotiator and engage with Canada’s business community.

“The train is fast moving out of the station,” said Beatty, also president and CEO of the Canadian Chamber of Commerce.

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Negotiation of CUSMA, commonly dubbed “the new NAFTA” in Canada, was a key test for Ottawa following Donald Trump’s victory in the 2016 presidential election.

“The new NAFTA is a victory for all Canadians, of every political view, and in all regions of the country,” Deputy Prime Minister Chrystia Freeland said in January 2020. “It has been a real Team Canada effort.”

Even so, Robert Lighthizer, Trump’s trade representative, critically recounted in his book how Canada handled the renegotiation, saying at one point the two countries weren’t speaking and “NAFTA was hanging on by a thread.”

The new report describes Trump’s current relationship with the Liberal government as “chilly at best.” If Trump returns to the White House, he is likely to set his sights on disrupting global trade and has already signalled plans for a 10 per cent tariff on imports.

It doesn’t necessarily mean Canada can ease up efforts under a Democratic president. Joe Biden largely kept Trump’s tariffs in place, despite promises to reverse them. There was also tension over the Biden administration’s Buy American procurement rules.

Many expect Kamala Harris, working to secure the Democratic nomination after Biden ended his run, will follow the path of her predecessor on Canada-U.S. relations. Harris, however, was one of 10 U.S. senators to vote against the trilateral agreement under Trump, saying it didn’t do enough to protect American workers or the environment.

The federal government is tracking views about the agreement in Canada, the United States and Mexico, said Global Affairs Canada spokesperson Jean-Pierre Godbout. Ottawa is eyeing a range of potential scenarios for review, he said.

“When the time comes, the government will be ready to advance and defend Canadian interests,” Godbout said in an email.

Beatty said the problem is the relationship between the two countries has “shifted from being strategic to being transactional.” In addition, Canada has become a less important trade partner to the U.S. compared with other places in the world.

Ottawa will have to sell Canada’s importance for other things like security, said Fen Hampson, co-chair of the expert group.

“It’s not going to be easy,” said Hampson, a professor of international affairs at Carleton University. “We really have to up our game.”

Industry Minister François-Philippe Champagne is making regular visits south of the border as part of the Team Canada engagement strategy. Canada’s ambassador to the U.S., Kirsten Hillman, has been pounding the pavement from state to state, and attended the recent Republican National Convention in Milwaukee, where she made Ottawa’s case.

But the report says there are limits to Canada’s charm offensive. Americans are taking a closer look at Canada, but not in a good way.

Trudeau faced significant pressure over Canada’s defence spending while in Washington for the NATO leaders’ summit earlier this month.

The prime minister promised to meet NATO’s target, the equivalent of two per cent of gross domestic product, by 2032. But he has been criticized for the lengthy timeline and a lack of detail on how Ottawa will make it happen.

Americans across political lines have also been extremely critical of Canada’s new tax on large foreign digital services companies. The Office of the United States Trade Representative has said it will do what’s necessary to stop the tax.

Canada must stop “pulling at the tail feathers of the American eagle,” positioning Canada as part of the solution instead of part of the problem, Beatty said.

That means the federal government should develop a Hippocratic Oath, like the one taken by physicians, he said.

“First do no harm.”

This report by The Canadian Press was first published July 26, 2024.

Kelly Geraldine Malone, The Canadian Press