All posts by Don Newman

Trump the Disruptor: Don Newman

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Since Donald Trump was sworn into office a year ago as president of the United States with his “America First” agenda, friends and allies have been lamenting the lack of world leadership by the United States.

That is, until December 6th. In a classic case of be careful what you wish for, Trump stood the world on its head by reversing 70 years of American policy in the Middle East. Despite entreaties from everyone including NATO Allies, Arab governments throughout the area and even the Pope, Trump announced he was moving the American embassy in Israel from Tel Aviv to Jerusalem.

Like Trump, other politicians in the heat of an election campaign have promised to move their country’s embassy from Tel Aviv to Jerusalem. In 1979, Conservative Leader Joe Clark made that promise. It helped him win a minority government. But once in office, he realized his mistake and enlisted former Conservative Leader Robert Stanfield to help him abandon his pledge. Stanfield led a commission which “studied” the question and recommended against the move.

That’s because the ultimate fate of Jerusalem is an intricate part of any future Middle East solution. Both the Israelis and the Palestinians claim the historic city as their capital. Now, by siding with the Israeli claim, the most important outside participant in any future settlement has picked a side in the dispute. Trump has made an already intractable problem almost impossible to solve.

However, no longer can it be said that, under Trump, the United States has abdicated its role in the world. The lesson going forward is that as long as Trump is president, the United States will play the role internationally that he is playing in domestic politics.

More than anything else, Donald Trump is a disruptor. He is in domestic politics and he is in international affairs. Untutored in history, world affairs or diplomacy, he responds to situations on an individual basis, unable to see connective linkages between different problems.

For instance, if he wanted to recognize Jerusalem as Israel’s capital, why did he not first demand something from the Israelis.

A firm pledge to stop building more settlements in the West Bank as a quid pro quo for the Jerusalem recognition would have gone at least some way to mitigating the reaction to the move. And it would have removed a real impediment to a future final settlement.

Such an arrangement would have been less disruptive than what we now have. But Trump doesn’t seem to care. As a disruptor he thrives on disruption, on throwing adversaries and allies off balance, seeking from their confusion an advantage for America and for himself.

Close to home, Canadians can see that strategy in the current negotiations on the North American Free Trade Agreement. The United States has proposed several changes to the treaty that are complete non-starters for both Canada and Mexico. Soon Trump will inform the U.S. Congress that he is giving six months notice that he is terminating the deal. Then, in that half-year when NAFTA is in limbo, American negotiators will apply the pressure. Ultimately, Canada will have to decide if a bad NAFTA is better than no NAFTA at all.

In the wider world, North Korea, China and Iran are areas of intense Trump interest and concern. He alternately threatens and then hints at negotiations with them. How they respond at any given time seems to affect both his mood and his approach. Chinese President Xi Jinping alternates between being an ally trying to contain North Korea and a competitor out to destroy American power.

Even with Kim Jong-Un, the erratic North Korean president who is developing nuclear missiles to hit North America, Trump has vacillated between threatening to obliterate his country and negotiating.

When Donald Trump assumed office in January 2017, many people hoped his fiery, uninformed rhetoric of the presidential campaign would be tempered once in power. That he would become more “presidential” in the traditional American way.

That has not happened. One year on, he is as unstable and unpredictable as ever. He dominates the domestic politics of his country. By his actions in the Middle East in December he has shown he will dominate international affairs as well.

America has not abandoned its international role. Under Donald Trump it is just playing it a different way.

Don Newman is Senior Counsel at Navigator Limited and Ensight Canada, Chair of Canada 2020 and a lifetime member of the Canadian Parliamentary Press Gallery.

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Newman on NAFTA: Mitigating Collateral Damage

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Canada is a trading nation.

That is why developments in the past year to both our current and potential trading relationships are so troubling.

Look at the four pillars of our trade policy. NAFTA, The Trans Pacific Partnership, CETA, the trade agreement with the European Union, and a potential Free Trade Agreement with China.

The most important of these is NAFTA that ties our economy to those of the United States and Mexico. By more than a country mile, the U.S. Is our most important market, with seventy-two per cent of our exports going to the United States.

A year ago, Donald Trump had just been elected President of the United States. He had run on a campaign to either change NAFTA or‎ end the treaty. Almost no one thought that he would be reckless enough to actually end NAFTA, we thought that Mexico with a favourable trade balance with the United States in the hundreds of millions of dollars could be under some pressure. ‎ Canada, with an almost equal trade balance with the United States, we thought was relatively safe.

That view‎ was heightened when Prime Minister Justin Trudeau visited Washington after Trump took office last winter. When it came to Canada, the President said, all NAFTA needed was a few “tweeks.”

Well five months into renegotiating NAFTA the talks are stalled. The Americans have made a series of demands that would gut the treaty as we now know it. Both Canada and Mexico have rejected the demands, but the reality is most of the demands would affect Canada more than Mexico.

For instance, ending the independent dispute settlement mechanism and replacing it with domestic U.S. Tribunals in trade disputes with the Americans would turn every issue into a rerun of the one-sided softwood lumber dispute we periodically have with the Americans.

And the U.S. claim that American companies should be able to compete for Government procurement contracts in ‎Canada and Mexico, but “Buy American” policies could limit Canadian companies from competing in their country, has to be the most one sided trade proposals ever.

There are also American demands for a “Sunset clause,” that could bring an end to NAFTA every five years, new, tougher content rules for contents in cars manufactured between the three countries, and an end to corporations being able to sue governments for damages in trade disputes.

The current stand-off has many observers believing that President Trump will give the required six month notice to end American participation in NAFTA early in the new year.

He will do that to increase pressure on Canada and Mexico to give in to American demands. But if they don’t, NAFTA would be terminated.

If that happens, or even if it doesn’t, Canada had been hoping to expand its trade with the rest of the world through three new trade deals.

A year ago, that prospect seemed bright. It is less so today.

Foremost among the new trade arrangements is CETA. That is the trade and investment arrangement with the European Economic Union that went into effect in September.

Unfortunately, there are problems. In the on-going negotiations to form a new coalition government in Germany, the Green Party has been demanding the cancellation of German participation in CETA. If that were to happen, it would effectively kill the deal.

The other problem looming with CETA is NAFTA. As reported here before, European companies are holding back on ‎investment decisions in Canada until they see if operations they set up in here will also have access to the United States. In other words, if NAFTA fails there will be a negative impact on CETA too.

The other two pillars of our trade policy are in the Asia – Pacific. So far, this autumn, they have both brought disappointments.

The effort to resuscitate the Trans-Pacific Partnership without the United States seemed ready for fruition at the APEC Summit last month‎. But at the last minute Canada balked at signing. Canadian participation in the TPP remains a work in progress.

Likewise, negotiations with China for a Free Trade Agreement. ‎Business people traveling with Prime Minister Trudeau to Beijing and beyond this past week had hoped that the start of negotiations would be announced while the Prime Minister was in China. There was no such announcement. Only that preliminary talks will continue.

So, the trade landscape twelve months on is more complicated, more confusing than it appeared a year ago. The coming twelve months will be more challenging, more difficult and more important than the year just past.

This will have to be the top priority of the Trudeau government.

Because, Canada is a trading nation.

Don Newman is Senior Counsel at Ensight and Navigator Limited, a Member of the Order of Canada, Chairman of Canada 2020 and a lifetime member of the Canadian Parliamentary Press Gallery.

Is CETA Canada’s Last Hope if NAFTA fails? Not so fast, says Don Newman

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Ensight and Navigator’s Don Newman on the potential of CETA to replace any economic loss from a failed NAFTA but why European business are not committing until NAFTA is resolved.

Canada’s safety net may not be as strong as we had hoped.

With the renegotiation of NAFTA stalled by American demands on automobile content, Buy American procurement rules and the elimination of the current dispute settlement,‎ both the Canadian government and Canadian businesses have begun thinking about alternative arrangements.

And it is no idle search. We are a trading nation. More of our GDP is dependent on trade‎ than the any of the other G-7 countries and eighty per cent of that trade is with the United States. Not having NAFTA would not stop all cross border trade with the United States, but it would certainly put a crimp in it.

So what to do if NAFTA expires in a Donald Trump inspired wave of American protectionism? Enter CETA, the ‎Comprehensive Economic and Trade Agreement between Canada and the European Union, which went into effect in September.

It is too early to see the benefits of the agreement yet, but there is optimism on both sides‎ of the Atlantic.

Now, however, some Europeans are saying not so fast. CETA took years to negotiate and the problem of market size was significant.‎ Europe has a population of 350 million people while Canada has a population one tenth of that. But throughout the negotiations the Europeans were aware that as a member of NAFTA, access into Canada was a way into the United States as well.

Trade agreements are as much about investment as they are about the movement of goods. With CETA, Canada stands to benefit from billions of dollars of investments in plants and equipment and the jobs that would come with them, not just to serve the Canadian market, but also the 300 million Americans living south of the border.

But now NAFTA is anything but a sure thing. And I am told by European sources that businesses there are awaiting the outcome of the ‎talks before making any CETA decisions.

In fact, the trade deal we thought could help offset any losses from a cancelled or diminished NAFTA may not be much help after all.

Low key NAFTA talks are scheduled in Washington next month, with a full blown round of negotiations with the Trade Ministers present scheduled for Montreal in January.

But as the NAFTA talks come to the crunch point, it is ironic that the fate of not one, but two trade deals, may ultimately be at stake.

Don Newman is Senior Counsel at Ensight and Navigator Limited, a Member of the Order of Canada, Chairman of Canada 2020 and a lifetime member of the Canadian Parliamentary Press Gallery.

Newman on NAFTA: Why Canada Won’t Walk Away from the Negotiating Table

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Ensight’s Don Newman on NAFTA talks resuming in Mexico City this weekend, why the Ministers won’t be there and when the next make or break period is (Hint – January).

NAFTA negotiations are resuming this weekend in Mexico City.

This time the negotiators from Canada, the United States, and Mexico will be on their own. Canada’s Foreign Affairs Minister, Chrystia Freeland, and her counterparts from the United States and Mexican cabinets won’t be there. Not enough progress is expected to be made that their attendance will be required.

Not only that, the cabinet ministers won’t be attending the next negotiating session either. Breaking with the usual sequences of rotating the meetings between the three countries’ capitals, only the negotiating teams will meet again next month in Washington, although it should be Canada’s turn to host the next meeting in Ottawa.

However, Ottawa will be the site of a meeting in January, where the Ministers as well as the ‎negotiators will be present. That meeting could be make or break for NAFTA. Either a new deal will be taking shape or the differences will be too wide to bridge.

Between now and then, the Canadian Government and, by extension, all Canadians will have some hard thinking to do.

We have already decided to stay at the negotiating table as long as the Americans are there. Even though at least three deal breakers were put on the table by the U.S., we are not going to give President Donald Trump ‎an easy out and walk away from the talks.

Instead, if he gives notice that he wants to terminate NAFTA, and provides the U.S. Congress with the six months’ notice required, we and the Mexicans will still be at the table. The termination notice may well be a negotiating ploy, but it will also trigger a constitutional argument in Washington over whether Trump has the unilateral authority to end the deal.

As with everything Trump does, that will be full of controversy and ‎clamour in Washington. In Ottawa, more serious thinking has likely already started and will be continuing.

What is increasingly clear is that the North American Free Trade Agreement that emerges from these negotiating sessions is not going to be a new and improved version of the one in effect for almost a quarter century.

The Trump administration is only going to sign a new agreement that tilts the trade playing field to the Americans’ advantage. The only real question is how much.

In 1987 when negotiations on the Canada-U.S. Free Trade deal came down to the deadline, then Prime Minister Brian Mulroney could have threatened to walk away without an agreement. If he had, and NAFTA had not happened, the status quo would have been preserved, nothing would have changed. In effect, no one would have noticed.

But that is not the case now. For the past twenty-five years the Canadian economy has been shaped around NAFTA.

If NAFTA were to go away, one of the underpinnings of our economy would go with it. This time the status quo would disappear. The impact would be profound. 

That is why the Government is going to have to see what kind of a free trade agreement is left when the negotiations are over. It may well be that some of NAFTA is better than no NAFTA at all. Or it may not be.

And that is why the next two and a half months are so important.

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.

Mid-Term Downturn: Newman

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If the first year for a new government is a honeymoon, the second is a time to launch major initiatives, and the third is where everything begins to fall apart, then, so far, the Justin Trudeau government is closely following the script.

As it passes the second anniversary of its election and begins year three of a four- year mandate, the government that promised “sunny ways”, a new way of doing things, and a more equitable Canada is finding the agenda it ran on more difficult to enact and more controversial to pursue.

Compounding the natural third-year problems of any government, just as the difficulties hit the Liberals they lost their comfortable status of having no real opposition.

The Conservatives chose Andrew Scheer as their new leader last June after multiple ballots winnowed through a large field of candidates. In October, Jagmeet Singh needed only one ballot to dispatch three other candidates to become the leader of the New Democrats.

Singh does not have a seat in Parliament and doesn’t plan to seek one until the next general election in October 2019. Whether that is an effective strategy remains to be seen, but as of now the NDP is re-energized by its unconventional choice of leader.

More importantly, as the Official Opposition, the Conservatives are set and planning for the next election. With a caucus of almost 100 members, many of them former cabinet ministers, and many MPS with more political and House of Commons experience than the Liberals across the aisle, the Conservatives are set to be an effective Opposition. That is true, even if the as-yet-unproven Scheer proves to be no more than adequate as leader.

The problem is further compounded by timing. Just as the opposition parties are getting their acts together, issues and events are also coming together.

Almost immediately is the problem of NAFTA. Will the trade agreement among Canada, the United States and Mexico that has been a cornerstone of this country’s prosperity be renewed, or as President Trump has threatened, be cancelled by the Americans?
If the deal is cancelled, the government will have to have a Plan B ready quickly, or there will be politically and economically damaging consequences.

And after trying to have it both ways at the same time, the Liberals are going to have the square the circle on environment and energy development. The twinning of the Kinder-Morgan Trans Mountain Pipeline from Alberta to Vancouver has been approved, but construction has yet to begin and legal and environmental challenges threaten to hold it up indefinitely.

The unofficial quid pro quo for new pipelines is putting a price on carbon. In 2016 the Liberal government and every province but Saskatchewan agreed to put a price on carbon beginning in 2018. The price on carbon, the so-called carbon tax, is to go into effect next year and reach $50-a-tonne by 2022. So far, no sign of a shovel in the ground to build a new pipeline.

This contradiction will test the government’s mettle the coming months, particularly Energy Minister Jim Carr and Environment and Climate Change Minister Catherine McKenna. Carr has been a competent pair of steady hands in the first two years of the Liberal government. McKenna hit the headlines early with the signing of the Paris Accord on climate change and the agreement for a carbon tax. Now, both will have to be at their best in the next two years to bring their contradictory constituencies to an agreement. It won’t be easy.

And the government will have to get the way it communicates its messages under control. The disastrous roll-out this past summer of the government’s small corporations tax changes shows just how weak strategic communications actually is in the Trudeau government. Unless addressed, this fault could be fatal.

All of this does not mean the Liberals situation is hopeless. Far from it. Justin Trudeau is the most dynamic party leader, and the Liberals are firmly rooted in the big cities and urban communities across the country where most of the population lives.

What it does mean is that the Liberal government must learn the lessons of the past two years, sharpen its focus to concentrate on the things that must be done rather things it would like to do, and regain control of the political narrative.

And one other thing. It must reach out to the people who can help it do those things—even if those people were born before 1965.
If those deficiencies are addressed in what will likely be a stormy third year in office, then Trudeau and his Liberals may look forward to a rosier fourth year.

That’s the year when governments who successfully weather a difficult third year go on to be re-elected.

Don Newman is Senior Counsel at Navigator Limited and Ensight Canada, Chairman of Canada 2020 and a lifetime member of the Canadian Parliamentary Press Gallery.

(As published in November’s Policy Magazine and on policymagazine.ca)

Don Newman: A Good Day for Minister Morneau

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In Question Period today in the House of Commons, the questions were relentless. Why did Finance Minister Bill Morneau not place his considerable ‎wealth in a blind trust as every other wealthy cabinet minister has done in the past and is only doing it now?

And when Question Period ‎ended, the Commons went to a recorded vote. The vote was on a Conservative motion that said the Finance Minister was in a conflict of interest, because his family firm Morneau Shepell must have benefited from government policy while he still owned shares.

But Bill Morneau wasn’t in the House of Commons for any of that criticism. He was preparing to present his fall fiscal update when the financial markets closed at 4:00pm.

What did the Fiscal Update Announce?

And while he was waiting he must have been smiling. Because Morneau told the Commons that Canada’s fiscal outlook had improved by $8.5 billion, since his budget last March.

What’s more, the improved ‎fiscal position means more money for the middle class, and those working hard to join it.

The Canada Child Benefit will increase by $200 for a family with two children next July. In 2019, the year of the next federal election, they will get $500 more than they do now.

The small business tax, which was 15 per cent in 2015 at the time of the last election, will drop to 9 per cent in 2019. Oh yes, that is the year of the next election.

The Government has been criticized for running deficits of close to $30 Billion for the past two years. Well this year, the deficit fell from a projected $28.5 billion in the spring budget to a projected $19.9 billion.

Now the projection is that by the fiscal 2022-2023 the deficit will have shrunk to $12.5 Billion. And the important debt to GDP ratio will fall from 30.5 per cent to 28.5 per cent.

How will it play out?

It is a rosy forecast but how will it play out? Well there are some pitfalls.

As the economy improves and inflation looms the Bank of Canada will have to respond by raising interest rates. And as interest rates go up, the Government’s cost of borrowing will go up, and the deficit will start to climb just to service the debt.

Add to that the uncertainty of the NAFTA negotiations and the economic impact of cancelling the treaty would have, there are potential storm clouds hovering over the financial future.

But for now, it was a good day for Bill Morneau. Not only did the Liberals use their majority to easily defeat the conflict of interest motion, as the Minister himself said, “it is a very good fiscal update.”

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.

Newman on NAFTA: Your Guide to What Happens Next if NAFTA Talks Fail

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Despite a charm offensive by Prime Minister Trudeau in Washington, President Trump is again signaling his opposition to NAFTA and his desire to terminate it. Our Don Newman explains what exactly will happen, if and when, the plug on NAFTA is pulled.

NAFTA – What Happens Next?

All may not be lost if the current NAFTA negotiations collapse, as there are at least two fallback positions for Canadians to consider. But if Donald Trump announces that he wants the United States out of the North American Free Trade Agreement, what exactly happens next?

Well the sun will still come up in the east the next morning. Under the United States Constitution, it is Congress, not the President, that has jurisdiction over trade and both the House of Representatives and the Senate jealously guard that authority.

That is why to abrogate any trade deal, the President has to give Congress six months notice that he wants to end it. And with NAFTA that will be a critical six months.

Canada, as well as Mexico‎, will then have to determine whether Trump really wants to end NAFTA or whether he just wants to put more pressure on both countries to cave into what they consider unreasonable American demands. This is a negotiating technique that works in real estate and licensing deals and Trump seems to believe it can work in negotiating international trade deals as well.

That, of course, remains to be seen. Mexico has said it will not bow to that kind of pressure, and will end any negotiations. The Canadian government hasn’t said what it would do.

NAFTA in 1987

The past might not be instructive either. At the critical moment in the 1987 negotiations on the Canada – U.S. Free Trade Agreement, Ottawa said the deal could not be completed without an independent system of expert panels to settle the trade disputes that would inevitably arise. The Americans backed down.

But in 1987, if Free Trade had not gone ahead, what was then the status quo would have been maintained. Now, of course, is different. If NAFTA disappears the whole network of supply chains, economies of economic scale and other forms of integration and investment would go with it. There is a lot more at stake than in 1987.

First Fallback Position – Saving Portions of NAFTA

With so much more at stake now than in 1987, Canada, and perhaps even Mexico, may be convinced to keep talking, and to try to save as much of NAFTA as possible working against a six month deadline.

If that is what happens, this is the first fallback position. It means Canadian companies and Associations will have to‎ quickly decide what is absolutely key to their success in the current NAFTA agreement, and what they could survive without.

That will then have to be quickly, forcefully and effectively conveyed to the Government.

But suppose negotiating stops. What happens then?

Second Fallback Position – Engaging US Congressional Committees

In Washington, the NAFTA ball lands in the court of two powerful Congressional Committees with the primary responsibility for trade deals: the House Ways and Means Committee and the Senate Finance Committee.

They will be the ones with the responsibility of unwinding the laws, rules and regulations in the United States that comprise the system created to facilitate NAFTA.

They will be the ones who will be subjected to tremendous pressure. Lobbyists representing Governors whose states will be particularly hard hit by NAFTA’s cancellation, ‎the U.S. Chamber of Commerce, the auto industry, the agrifood industry and farmers organizations among others, will all pressure the Congressmen and Senators on those committees to save and protect the elements of the NAFTA package that favour their interests.

As well, other Senators and Congressmen who are not on the two committees, will be lobbying those that are, to protect industries or consumers in their districts that have benefited from NAFTA.

This is the second fallback position. This can also be an opportunity for Canadian companies and associations to try and preserve elements of NAFTA. Working with Congressman and Senators, and with likeminded American partners, this will be an opportunity to mount effective lobbying efforts in Washington.

It Ain’t Over ‘til It’s Over

So, although NAFTA could be in peril, as Yogi Berra said: “It ain’t over ’til it’s over.

And as the British slogan during the wartime blitz advised: “Keep calm and carry on.

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.

Newman on NAFTA: Canada’s Full Court Press in Washington and Why it May Not Be Enough

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Ensight’s Don Newman on how high the stakes are for Prime Minister Trudeau during the fourth round of NAFTA talks in Washington and why President Trump may just walk away

Prime Minister Justin Trudeau is visiting Washington this week to meet with President Donald Trump and important members of the U.S. Congress.

Why this week? Well this is the week the negotiations for a renewed North American Free Trade Agreement could collapse. And Trudeau wants to be seen as doing everything possible to try and prevent that.

The fourth round of talks to revise the 25 year old agreement begin Wednesday in Washington. ‎This is the round where the Americans are expected to put their most contentious issues on the table.

These issues include:

Buy American / Hire American

The controversial demand that United States‎ companies have the right to bid on Canadian Government contracts, but government contracts in the United States are reserved for only local companies, under the Trump administration’s “Buy American. Hire American” plan.

Car Manufacturing

The demand that all cars manufactured in the three NAFTA countries have a minimum of fifty per cent of their content originate in the United States. Present NAFTA content rules require that sixty-two point five per cent of a car must come from any of Canada, the U.S. or Mexico to pass duty free among the three countries. Raising the content rules as proposed by the Americans would mean that NAFTA countries content would be over eighty per cent, with the overwhelming amount of that content American.

Dispute Settlement

And the proposals for a changed dispute settlement arrangement. The Americans say the present method of settling disputes by independent panels whose members are drawn from all three countries is unfair to the U.S. They want U.S. Trade law, courts and tribunals to adjudicate disputes.

Both Canada and Mexico have said this proposal is a deal breaker that will kill NAFTA. And seeing the way U.S. Trade tribunals are hammering Canada in the Bombardier – Boeing dispute and on Canadian Softwood lumber exports, the resolve to say an emphatic “NO” to putting those same arrangements in NAFTA will only be strengthened. But saying “no” to these proposal will give President Trump the opening he is looking for.

During the election campaign last year Trump said he would either reform NAFTA or kill it. Many people have thought killing it is his real objective. Rejection by Canada or Mexico of the one-sided U.S. proposals put forward this week‎ would give him that opportunity. This week’s visit by Prime Minister Justin Trudeau is a last ditch effort to prevent that from happening. It is unlikely to be enough.

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.

Newman on NAFTA: Does the Boeing/Bombardier dispute set a dangerous precedent for Canadian companies?

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Ensight’s Don Newman on the timing of the third round of NAFTA negotiations ending at the same time as the Boeing/Bombardier dispute escalateing and how timing is everything in politics.

Timing is everything.

Foreign Affairs Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer have been scrambling to assure everyone who will listen that the massive punitive duties imposed by the United States on Bombardier C series aircraft have nothing to do with the current NAFTA ‎negotiations.

But of course they do. How could they not?

Technically, the two hundred and twenty per cent tariff imposed‎ by Commerce Secretary Wilbur Ross, is the result of a trade complaint against Bombardier launched by Boeing, the behemoth American air plane manufacturer and defence contractor, last spring. But the fact that the tariff Ross imposed is almost three times as much as the penalty Boeing requested shows that there is something more going on.

The tariff announcement came the same day that the third round of NAFTA treaty talks were winding down in Ottawa. There is a feeling that this round was even less productive than the two that proceeded it in Washington and Mexico City. No small feat.

One reason is that the Americans, who forced this renegotiation in the first place, have so far‎ not tabled the one demand, for what is for both Canada and Mexico a make or break clause in the deal. And that is Chapter 19, the independent dispute settlement provisions that allow trade disagreement under NAFTA to be settled by panels of arbiters drawn from all three countries.

The original American NAFTA negotiating objectives tabled with the U.S. Congress said‎ the removal of Chapter 19 was a U.S. goal. So far, what (if anything) Washington wants to replace it with, has not been presented.

If there were to be no replacement at all and President Trump made good on his threat to leave NAFTA, that would mean that every trade dispute would be subject to the same kind of U.S. kangaroo court procedure we have seen Bombardier subjected to in the Boeing complaint.

That is why both Canada and Mexico have said that without an independent dispute settlement process there can be no NAFTA deal.‎ Essentially, we want Chapter 19 maintained.

But what if the Americans propose a watered down version that gives them more chance of winning most trade disputes?

As we have reported before, there is a growing Canadian concern that the Americans are holding back their most controversial proposals on purpose. They will table them as “take it or leave it” as the negotiations progress.

The next round of talks will be in Washington, from October 11th to the 15th. Will this be the time, with any “home field advantage” that might apply, that the Trump administration will table its plans for a dispute mechanism more favourable to American interests?

And will the Bombardier decision be held out as the example of what will happen to Canadian Exporters if we don’t agree?

Bombardier and the NAFTA negotiations have nothing to do with each other? The timing is everything.

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.

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.