John Ivison: Days before deadline, Canada should be ready to make tough choices

Canada-U.S. trade minister Dominic LeBlanc was due to brief his provincial counterparts on Friday about progress on trade negotiations with Washington, ahead of the imposition of new tariffs next week.

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It probably won’t take him long.

We are less than a week away from the Trump administration introducing a 50 per cent levy on around US$20 billion of Canadian goods, with no exemption for those covered by the Canada-U.S.-Mexico trade agreement, and a senior Canadian official described the two sides are still being “very far apart.”

In some ways I’m surprised that the parties aren’t closer but that is often the nature of trade negotiations. In 2018, the concessions that enabled the announcement of the tentative trilateral CUSMA deal to replace NAFTA were reached just 30 minutes before Trump’s deadline expired, after 11th hour negotiations between the U.S. side (in the form of trade representative Robert Lighthizer and the President’s son-in-law, Jared Kushner) and the Canadians (PMO staffers Gerald Butts and Katie Telford).

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This time around, it remains too early for the negotiating teams to hand the file over to the political side but it is seen as a possibility that any final deal will have to be hammered out by the President and the Prime Minister.

Still, it is a little disconcerting to hear the most senior people in government say they don’t know whether a deal is possible.

The Canadian side remains focused on alleviating the section 232 national security tariffs impacting the steel, aluminum, copper, auto and forestry industries.

The corollary is that any deal will require Canada to give the Americans what they want in other sectors like dairy, liquor and digital services.

The present U.S. Trade Representative, Jamieson Greer, said on Friday in Iowa that his sense is that Canada “wants to have a more conciliatory approach.”

It is apparent that going full “elbows-up” at this stage would be counterproductive. But it remains unclear whether the Canadian public is willing to stomach major concessions.

Officials characterize the current discussions as “sustained and comprehensive” but apparently they do not encompass defence and security, focusing purely on the trade issues.

Perhaps the only grounds for optimism at this stage are that negotiations are continuing — and that the most recent statistics suggest U.S. exports to Canada are still rising (even as the trade imbalance widens, thanks to energy prices).

Trump is not able to act without limits, contrary to the impression he likes to convey. He is constrained by the markets, public opinion, Congress and the states — all of which dislike tariffs on Canada.

TACO (Trump Always Chickens Out) is a far more likely outcome than FAFO (F— Around and Find Out).

But even if he does not impose the new tariffs, the existing national security tariffs will continue to harm manufacturing industries that have seen 50,000 jobs lost since he returned to office. Their alleviation remains Ottawa’s priority.

The Carney government is on the eve of making some very unpalatable decisions.

National Post
Jivison@criffel.ca
Twitter.com/IvisonJ

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