All posts by Don Newman

NAFTA and The Power of Words: Newman

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The difficulty going forward in further rounds of NAFTA negotiations was illustrated in the difficulty agreeing to the communique ending the first round on Sunday, August 20, 2017 in Washington.

American negotiators wanted the communique to refer to the four days of talks as the first round in the “renegotiation of NAFTA.”

But negotiators for Canada and Mexico balked at that wording. They wanted the talks described as discussions towards “the modernization of NAFTA.”

Shakespeare once asked: “What’s in a word?”

Well in this case, plenty. The words the Americans wanted describing the talks underline the approach the United States is so far taking in the negotiations. They want a major rewrite of the agreement that President Donald Trump has characterized as “the worst trade deal ever.”

Canada and Mexico don’t agree. Both countries‎ want to preserve as much as possible of the twenty-three year old agreement, and then modernizing it by adding new chapters to cover e-commerce and other aspects of today’s economy that didn’t exist when NAFTA went into effect in 1994.

The dispute over the communique words was matched by action. During the first negotiating session the Americans took an aggressive approach.

Consider just a couple of their demands.

They proposed that cars made under NAFTA, one of the real success stories of the agreement, have even more of their content manufactured in North America that the 62.5 per cent required for duty free treatment under the treat‎y now.

And that’s not all. U.S. negotiators‎ also want a specific amount of that content actually produced in the United States, rather than in any of the three countries as required now.

The Americans also want to do away with the independent dispute settlement mechanism currently in NAFTA, and have the U.S. Courts rather than panels with‎ experts from each of the countries deciding trade disputes. Canada has already said that could be the “deal breaker,” but the Americans proposed it anyway.

Those and many more issues will have to be negotiated, compromises made and agreements reached in the rounds of negotiating sessions going forward.

Can that be done?

Well there’s one hopeful sign.

In Washington all three countries finally agreed on words to describe what they were working on. They agreed the first round of talks had concluded on “the renegotiation of the modernization of NAFTA.‎”

Perhaps there is hope after all.

Ensight Senior Counsel Don Newman has extensively covered trade issues, politics and elections in Washington. He is a member of the Order of Canada and a life-member and past president of the Canadian Parliamentary Press Gallery.

Freeland sets the tone with enthusiastic, progressive vision for NAFTA

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Chrystia Freeland is optimistic about the outcome of the North American Free Trade negotiations the United States has forced on Canada and Mexico.

We know that, because she said so multiple times ‎earlier this week, the week the NAFTA negotiations begin in Washington.

The Foreign Affairs Minister struck her upbeat pose as she outlined the ‎things Canada will be seeking in what she called a “modernized” NAFTA. Those items will include the positioning of both labour and environmental clauses in the text of the agreement, as well as recognition of indigenous people and feminism in the NAFTA treaty.

How those second two objectives will go over with the Americans and Mexicans are unclear, and the U.S. is also likely to object to any direct mention of climate change in an environmental clause.

Outlining negotiating objectives was forced on the Trudeau Government by the Opposition parties. Under American law, the Trump administration had to reveal its negotiating objectives to Congress a month before the talks were to begin, and so Conservative and New Democrat MPS wanted the same thing‎ here. While the American objectives filled eighteen pages in a fully prepared document, Canada’s were spelled out in a couple of paragraphs in a ministerial speech.

And the presentation of the objectives explain the true nature of the negotiations.

These talks are being held because the Americans insisted they be held. Donald Trump campaigned and was elected on a promise to either change trade agreements to be more favourable to the United States — or end them altogether. In his inaugral address he made it clear. From then on it was to be “America First.”

The negotiating objectives revealed in July underline that approach. The Americans want greater access to our markets, while placing more restrictions on our access to their markets. Such a one sided approach would be laughable if it wasn’t so serious.

So while Canada will have a wish list for the NAFTA negotiations, the real job of our negotiators is to limit the damage of American demands. We are playing defence throughout this game. How well we play it will determine the future if NAFTA — and to a great degree the health of the Canadian economy.

There is an adage in sports that the best defence is a good offence. Unfortunately, in the NAFTA negotiations beginning this week, that adage doesn’t seem to be true.

Instead, ‎ Canada may well be put in the position of telling the Americans that any new restrictions to Canadian access in the United States will be matched by new restrictions on U.S. Access here. Of course, very much of that tit for tat type of exchange and the whole concept of a free trade agreement would become meaningless.

If that is the way the negotiations develop, then to save NAFTA it will be up to America‎ politicians and business to intervene with the Trump administration.

The Canadian Government has spent the past six months in an unprecedented campaign in the United States trying to convince anyone who might matter in this process how important NAFTA is to America.

There have recently been favourable signs that campaign has been having a positive effect. Perhaps that is why Chrystia Freeland is now so optimistic.

NAFTA talks aren’t an isolated issue for Trump, and that matters to Canada

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When the negotiation to renew the North American Free Trade Agreement between Canada, the United States and Mexico begins August 16 at a Washington Hotel two miles north of the White House, it will probably pass under the radar in the American capital.

That is because there is so much controversy swirling around President Donald Trump and his administration that unless the President himself decides to highlight the start of the talks, the media, politicians and the public will likely be more focussed on the possibility of a nuclear confrontation with North Korea or the investigation of Special Council Robert Mueller.

But while the President may want to herald the start of the NAFTA talks to divert attention from his administration’s other problems, will he ultimately be driven to end them for the same reason?

Will Donald Trump ultimately blow up the ‎NAFTA negotiations in a desperate bid to save his beleaguered Presidency?

Trump campaigned on repealing or replacing NAFTA. He called it “the worst trade deal” ever signed by the United States.

He also campaigned on replacing the health insurance plan know as Obama Care, cutting both personal and business taxes, launching a multi-billion infrastructure program and building a wall along the United States border with Mexico.

So far, no progress on any of these promises.

Instead, the Trump administration ‎is mired in a scandal over whether it colluded with the Russian Government and Vladimir Putin in the election campaign he won to beat Hilary Clinton.

So, desperate for a political “win” to show to his political base, will Trump disrupt and the destroy the NAFTA negotiations?

Never interested in the substances of issues, it wouldn’t take much to convince Trump ‎to do just that.

Remember in April Trump attacked Canadian dairy policies in a speech in Wisconsin. That was the headline in the newspapers and on TV.

The real story went much deeper. I was told that when Trump returned to Washington that evening he told Commerce‎ Secretary Wilbur Ross that he wanted to pull the United States out of NAFTA.

The reason; before his speech attacking CANADA a small group of Wisconsin dairy Farmers told him they had been adversely affected by a change in Canadian dairy regulations.

It took the combined efforts of the Prime Minister, the Global Affairs Minister and the Canadian Ambassador in Washington to talk the President out of killing NAFTA.

That was before Trump’s current problems had reached the boiling point.

Now the water is getting really hot for the President. Will the NAFTA negotiations be a victim of all the other problems besetting his troubled Presidency?

Milestones You Need To Know For NAFTA

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The NAFTA negotiations are only a month away. But next week we should find out at least some of the changes the U.S. Government will be trying to make in the 25 year old three way trade deal between Canada the United States and Mexico.

July 17th is the deadline for the Trump administration to notify Congress of its broad goals in the trade talks. For most of June, the Commerce Department and the Office of the Trade Representative heard representations from virtually every sector of the U.S. Economy‎.

The groups that made those representations are now about to find out whether their issues will be on Washington’s negotiating list.

Those that make it, and those that don’t, ‎will get a chance to make their case publicly. That is because the Trade sub-committee of the House Ways and Means Committee will hold public hearings on July 18th to hear representatives from the manufacturing, agriculture and service sectors of the American economy.

These hearings are important, because any final NAFTA agreement will have to be approved by the full Ways and Means Committee and by the Senate Finance Committee before being sent to the ‎House of Representatives and the full Senate for a vote.

The second date to watch for is August 14th. That is when NA‎FTA negotiations ‎can legally begin. August 14th is a Monday. Washington usually does not like to work in August, but in this case it probably will.

That is because of a third date, December 15th. That is when the Mexicans would like the talks finished. Both Canada and the U.S. are doubtful that can happen, but the Mexicans are pointing out that Presidential elections will be held there next July. A left-wing candidate has been leading in the polls and they don’t want the NAFTA negotiations to become the dominant issue in the polls.

Don Newman is Senior Counsel at Ensight, a Member of the Order of Canada, and a life-member and past president of the Canadian Parliamentary Press Gallery.

Political Perspectives – Justin Trudeau as a Phenomenon

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Editor’s Note: This week, Ensight is publishing a series of original content articles looking back on the Liberal government’s first year in power and ahead to the rest of its mandate.

Ensight Principal Will Stewart also provides an update on Ensight’s post-election research, and digs in on how the one-year old government has delivered on its brand promise and outlines the future outlook. Read that article here.

By Don Newman

A year after bringing his Liberal party back from the brink of despair and third place in the House of Commons to a comfortable majority government, Trudeau today is more popular than he was on October 19th, 2015, the night of his dramatic victory.

In Canada’s multi-party first-past-the-post electoral system, Trudeau’s Liberals captured 39.5 per cent of the vote a year ago. That gave the Liberals 184 seats in the 338 seat House of Commons.
Polls twelve months later give Trudeau and the party almost fifty per cent support. Translating that to seats in the House of Commons would give the Liberals over 200.
Trudeau has accomplished this with a stunning public relations operation, a natural flair for appearing in public, impressive discipline and a photogenic shine he shares with his wife Sophie Gregoire Trudeau and their young family.

The lack of an effective opposition as both the Conservatives and the New Democrats search for new leaders, has been an added plus. But the first year in office that featured among other notable events; a triumphant state dinner at the Obama White House in Washington, a fawning article complete with plenty of intimate colour photographs of Justin and Sophie in Vogue magazine and countless selfies with Canadians all across the country, has worked to build up the impressive political capital that has the Liberals ten points higher in the public opinion polls that their election night support a year ago.

Skeptics say Trudeau hasn’t made any big mistakes because he hasn’t done anything big. That is only partly true. They have done big things they promised they would do, like settling 25,000 Syrian refugees, changing the tax code so high earners pay more and middle income taxpayers pay less, and launching a promised inquiry into missing aboriginal girls and women.
But it is true that in their first year, the Liberals didn’t do anything hard — which in political terms means anything that could prove unpopular with at least some segments of the electorate. As the year rolled on it became clear to close watchers of the passing show that the “Sunny Ways” promised by Trudeau could not continue indefinitely. That going forward, the success of the government was going to be determined by how it handled the three Es; Energy, the Economy and the Environment.

As the government correctly sees them, the three are intertwined. Canada’s slow growth economy can only grow more quickly if the abundant oil sands resources are exploited and brought to market. That will results in more jobs, more prosperity and more tax revenues to balance government books and finance health care, education and a myriad of other programs.
But those oil sands resources can only be exploited and brought to market if there are new pipelines to carry the bitumen from Alberta to either the Pacific coast in British Columbia or the Atlantic coast in New Brunswick. Environmentalists, both in and outside of Canada, have vowed to shut down the oil sands by opposing any new pipelines and starving them of markets, and by extension, the government of resources.

Trudeau and his Ministers have said that new pipelines can only proceed if they have the “social licence” to be built. That means if the public is convinced that they are safe and as environmentally friendly as they can be. Moreover, the government and Canadians must be seen to be actively working to combat and reduce Green House gas emissions.
This month we saw how the government plans to square that circle. At the end of September it announced it was approving a pipeline. Not an oil sands pipeline from Alberta, but a natural gas pipeline from within British Columbia to the Pacific Coast. The approval comes with more than one hundred conditions that have to be met, but it is a pipeline approval none the less. And almost immediately it was attacked by some environmental and indigenous groups.

Then, one week later, the Prime Minister announced Ottawa is putting a price on carbon — a carbon tax if you will. Trudeau didn’t call it that and he left it up to each province to decide if it wants a straight tax, or a cap and trade system of limiting emissions. But he said if any province doesn’t act, Ottawa will act for it. By 2022 Canadians everywhere will be paying $50 a ton for carbon emissions.

But by then work should be underway on the pipeline carrying natural gas to be liquified at a plant near Prince George on the B.C. Coast. And so should work on another pipeline.
Before Christmas the federal cabinet is expected to approve the twinning of the Kinder Morgan oil pipeline carrying oil sands bitumen from Alberta to Vancouver. The new pipeline, which will increase the flow of oil to the west coast by three fold, is opposed by Vancouver’s mayor and other near-by municipalities, by some indigenous groups, but supported by others.

It will be even more controversial than the natural gas line. But the Trudeau government is going to have to find the balance between the E of Environment, and the E of Energy if it hopes to grow the E of the Economy sufficiently to support its ambitious plans.

After a year of Sunny Ways the real task of governing has begun. It will be interesting.

Don Newman is senior counsel at Ensight and a lifetime member of the Canadian Parliamentary Press Gallery.

Political Perspectives: The Governing Is About To Begin

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By: Don Newman

The Trudeau government is working towards a late March date for Finance Minister Bill Morneau’s first budget.

March 22, 23 or 24 are the most likely dates for a budget that, as promised in the federal election campaign, will run at least a $10-million annual deficit. 

But developments since the election have raised two problems for the rookie finance minister as he plans the policies, programs and priorities for Canada’s increasingly troubled economy. As he conducted a fact-finding consultation in cities across the country this week the problems were becoming clear.

Each day the dollar was closing lower and the price of a barrel of oil‎ was also down. So, it turned out, was both consumer confidence and business confidence according to the most recent polls.

That has raised the question of how big the deficit in the first Morneau budget will ‎or should be.

Will the Liberals’ promised deficits of $10-billion a year for three years to spend on job creating infrastructure projects, then balance the budget in the fourth and last year of this mandate, provide enough stimulus for an economy that seems to be slowing down by the day? And will the slumping economy produce enough revenue to fund all the other programs of the federal government and limit the borrowing by Ottawa to just $10-billion?

The answer to both questions appears to be no. In fact after dodging the worst of the global slowdown of 2009 and 2010, the Canadian economy seems to be slipping into the vicious cycle of declining government revenues and increasing government expenditures last seen in Canada during the recession of the early 1990s. 

Now Morneau is being counseled to delay his budget at least into April to better understand just where the national economy is headed. After all, last year Conservative Finance Minister Joe Oliver delayed his budget a month to try and figure out where oil prices were heading.

(As it turned out the delay didn’t help Oliver. He forecast oil prices almost double the $29.60 a barrel they are currently trading at, juggled some of the figures and claimed the budget was balanced. As we know, the Conservatives then lost the election.)

But others are worried that even an end of March ‎budget is not soon enough to steady nervous Canadians worried about their jobs, and perhaps their homes and retirement investments. They argue an earlier rather than a later budget is what is needed.

So far the Liberals have been basking in the post-election honeymoon glow. But they should be ready for the glow to begin fading when Parliament returns for its winter session on January 25th. And it will disappear entirely after the budget is brought down, whenever that turns out to be.

The old maxim says that to choose is to govern. With the looming decisions awaiting in budget 2016, the governing is about to begin.

Don Newman is Senior Counsel at Ensight Canada and Navigator Ltd. A member of the Order of Canada and a Life Member of the Parliamentary Press Gallery.

POLITICAL PERSPECTIVES – WHAT IS PAST IS PROLOGUE

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By: Don Newman

Shakespeare’s adage from his play The Tempest has never seemed more true than it does as we reach the Labour Day week end and the mid-point in the longest Canadian Federal Election campaign since the nineteenth century.

All that has happened throughout August on both the campaign trail and in an Ottawa court room has set the stage for the final five week sprint to election day on October 19th.

And while the testimony brought out in the trial of Senator Mike Duffy, the falling price of oil and the slumping economy and stock market have all been damaging the Stephen Harper and the Conservatives, the government has been able to keep its hold on the traditional party base and remain competitive in what is a highly unusual three way race.      

Now, with the Duffy trial again on recess until after the election, Harper and the Conservatives can only hope that the focus will shift from what did the Prime Minister know about the $90,000 payment of the Senator’s dubious expense claims by his chief of staff Nigel Wright, to the issues they want to run on; the economy and national security.

However, as the focus will undoubtedly shift, it will not necessarily be good news for the Conservatives. Economic uncertainty is on the rise. Stock markets are roiling, oil prices are falling, investment decisions are on hold and confidence is shaken.

In fact the major economic discussion at the moment is whether the lack of economic growth means the country is actually in a recession. And the most dramatic split amongst the parties is the Liberals’ break from the Conservative and New Democrats promise to balance the budget come what may. Instead they are offering a plan to run deficits for the next three years to fund a major infrastructure program.

While at first look this policy approach would seem to play into the Conservative narrative of “tax and spend” Liberals, the Liberals are hoping it will resonate with all but hard core Conservatives.  

First, it is serious policy, countering the argument that Liberal Leader Justin Trudeau is all glitz with “nice hair.”

Second, it provides direct action to counter the economic slowdown, while at the same time providing badly needed infrastructure renewal, instead of hoping that “trickle down” economics of selected tax cuts will generate the neccesary stimulus.

And third, it puts the New Democrats and leader Tom Mulcair in a squeeze. Slightly ahead in the polls since the election call, Mulcair and his party have been running a cautious, front runners campaign.

Whether they have been far enough in front to justify that approach is open to debate, as is the decision to embrace a cautious economic approach and echoing the Conservative pledge to balance the budget no matter what economic challenges may come along.

The NDP have felt that pledge is crucial to  counter the claim that they are poor managers with no economic experience. But for voters on the centre-left that they compete with the Liberals for their support, it may not be seen as sufficient change from Harper at a time of economic difficulty.

This issue will be the dominant one in the week after Labour Day, culminating ten days later on a stage in Calgary. That is where and when the leaders will meet in their second televised debate. The subject will be the economy.

After that debate there will be one month left until the election. Clearly, the prologue will be past.

Don Newman is Special Advisor at Navigator and the former senior parliamentary editor for CBC Television as well as the former host of several political affairs programs including “Politics”, “This Week in Parliament”, and “Capital Report”. Newman ‘s career provided him with vast experience in covering elections and other major political events both in Canada and abroad. One of Canada’s most respected journalists and an award-winning broadcaster, his career spans five decades. He is a Member of the Order of Canada, a life-member and past president of the Canadian Parliamentary Press Gallery, and has numerous other honours, awards and honorary degrees.