CREC 6436 Canada and the World Part IV

Canada & the World CREC 6436 PART IV NAFTA A brief overview of the functions and operations of Canada’s Department of Global Affairs Bob Hillier

A bit of History Pre NAFTA After Confederation (1867) the Conservative Party (John A. MacDonald) campaigned on a National Policy that favoured tariffs against the US 1891 The Liberal party campaigned for “reciprocity” with the US. They did not gain the treasury bench. 1896 election the Liberals won and entered into an elaborate reciprocity treaty with the US. The Yanks liked this – Remember their policy of “manifest destiny” 1911 election the Conservative party won and abrogated the treaty. Their slogan was \"No truck or trade with the Yankees.“ During this time Canada’s was doing OK with “ Commonwealth Preference “. Canadian Companies including Massey Harris, Dominion Bridge, Canada Car and Foundry, MLW, Canadian Marconi and a lot of the Banks were considered the biggest or best run in the commonwealth. Great Britain was a main market for agricultural goods and of course Hudson Bay furs. This came to an end when the UK joined the ECM (European Common Market) in 1973 and had to abandon the preferences that had benefited the ex colonies. (cite NZ, Australia etc.) North American cars were made in Canada for export to commonwealth countries

1980s The concept of reciprocity with the United States was revived in the 1985 when the Royal Commission on the Economic Union and Development Prospects for Canada headed by former Liberal Minister of Finance Donald S. Macdonald issued a report, calling for free trade with the US. The Progressive Conservatives, under Brian Mulroney, acted on the recommendation by negotiating the Canada-US Free Trade Agreement. They won the 1988 election on the issue. 1965 – The Auto Pact APTA https://en.wikipedia.org/wiki/Canada%E2%80%93United_States_Automotive_Products_Agreement The current situation https://en.wikipedia.org/wiki/North_American_Free_Trade_Agreement#Legal_disputes

The Players Canada – Minister of Global Affairs (and Trade) Chrystia Freeland (from Peace River) United States – U.S Trade Envoy Robert Lighthizer Mexico – Secretary of Foreign Affairs ILDEFONSO GUAJARDO VILLARREA

The Canadian Players Justin Trudeau – Prime Minister Chrystia Freeland – Minister of Foreign Affairs Bill Moreau – Minister of Finance Steve Verheul – Dept. of Global Affairs https://www.hilltimes.com/2017/08/02/canadas-nafta- chief-negotiator-stays-limelight-building-reputation-best- business/115106 http://www.macleans.ca/politics/chrystia-freeland-a-foreign-minister-for-the-donald-trump-era/ https://www.thestar.com/news/insight/2015/11/29/how-chrystia-freeland-became-justin-trudeaus-first-star.html https://www.youtube.com/watch?v=d6NKdnZvdoo https://www.youtube.com/watch?v=BedKOsIDFgw

The American Players Robert Lighthizer https://en.wikipedia.org/wiki/Robert_Lighthizer 18th United States Trade Representative Incumbent Assumed office May 15, 2017 President Donald Trump Preceded by Michael Froman Personal details Born Robert Emmet Lighthizer October 11, 1947 (age 70) Ashtabula, Ohio, U.S. Political party Republican https://www.vox.com/policy-and-politics/2017/12/12/16705548/robert-lighthizer-trump-trade-nafta-wto-china http://vancouversun.com/news/politics/daphne-bramham-lessons-for-canada-from-how-the-koch-brothers-hijacked-democracy

Mr. Ildefonso Guajardo Villarreal was born in Monterrey, Nuevo León, on April 19, 1957. He obtained his B.A. in Economics at the Autonomous University of Nuevo Leon, and later pursued graduate studies in Economics at the Arizona State University and the University of Pennsylvania. Mr. Guajardo was Chief Economist of the Brazil Section, and Associate Economist in the Fiscal Affairs Department at the International Monetary Fund (1988-1991), before becoming Director of the North American Free Trade Agreement Affairs Office, based at the Embassy of Mexico in Washington, D. C. (1994). He has been a full time Professor at the Autonomous University of Nuevo León; and Assistant Professor at the Arizona State University and the Wharton Business School of the University of Pennsylvania. On December 1st of 2012, Mr. Guajardo Villarreal was appointed as Secretary of the Economy by President Enrique Peña Nieto. Ildefonso Villarreal President Pena Nieto and wife

Here’s what lies ahead https://www.washingtonpost.com/graphics/politics/nafta-renegotiation-process/?utm_term=.e86bde90bbc5



History of the Nafta agreement US/Canada trade https://lop.parl.ca/Content/LOP/ResearchPublications/2017-571-e.html Canada – Mexico Trade https://lop.parl.ca/Content/LOP/ResearchPublications/2017-572-e.html http://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/nafta-alena/fta- ale/info.aspx?lang=eng

Since the inception of NAFTA 1994 it is important to note that other trade events have occurred affecting the three countries’ 1. WTO recognition of China (US MFN accolade) 2. Technology improvements – ie the introduction of robots in manufacturing 3. Canadian trade agreements with the EU and some South American and Asian countries 4. The concentration of wealth in the upper 1% - GINI co-efficient 5. Elimination of competition due to amalgamation . 6. Other things like the blooming American government fiscal debt and the purchase of same by China could have an impact of the future stability of the three countries currencies 7. The impending role of China as the leading world economic power.

An American Viewpoint https://www.youtube.com/watch?v=DwKR08t5BGA American point of View https://www.youtube.com/watch?v=_blj_fUQOI8 Mexican Point of View https://www.youtube.com/watch?v=VRkFRX2tPoY Car Production https://www.youtube.com/watch?v=6HyIEYZOPMs CBS News discussion https://www.cbsnews.com/news/nafta-talks-6-rounds-and-just-getting-to-core-issues/

The Financial Times and other well-connected news outfits are saying there is a chance negotiations could last all year, and maybe even drag into 2019. Round 1 – Washington August 16, 2017 Round 2 – Mexico City September 5, 2017 Round 3 – Ottawa September 23, 2017 Round 4 – Arlington October 11, 2017 Round 5 – Mexico City November 17, 2017 Round 6 – Montreal January 29, 2018 http://www.cbc.ca/news/politics/nafta-lighthizer-montreal-round-6-1.4508325 Round 7 – Mexico End of Feb. https://globalnews.ca/news/3765069/nafta-round-3-auto-rules/

Canada’s main issues 1. Dairy – Canada’s supply management system versus US massively subsidised food and agriculture subsidies. Quebec vs Wisconsin (P.Ryan Speaker of the house) Implications for NZ, Australia etc. 2. Softwood Lumber – Majority of timber in Canada is grown on crown land. In the US it is on private land. BC, Quebec, New Brunswick vs Washington, Oregon etc 3. Car manufacturing - Content quotas (more cars made in Mexico) KIA 4. Dispute resolution – US wants resolution by US courts and Discuss what happens if Canada loses the agriculture argument. (V.I. & Quebec) Discuss what happens if NAFTA is terminated – do we go back to CAFTA History of our relationship with China might be relevant. Large corporates setting up on Canada because of U.S. immigration policy etc.

Some other notes There is one state in the U.S. that has public ownership of forests and issues stumpage rights on a similar basis to Canada. Trudeau’s father was a globalist and advocated diversifying trade away from the U.S. - he was not well liked by the U.S. administration. The issue of GST has not come up. US is one of the few countries that does not have a Value Added Tax (VAT). The product leaving Canada is of course GST exempt. One bargaining chip with the US is Canada’s promise to increase military spending and/or remain in NATO Discuss why US company’s are establishing big R&D offices in Canada (MicroSoft in Vancouver etc.) The American victory in the cancellation of the Northern Gateway Pipeline.

Canadian ownership of US sawmills continues to climb with the count now reaching 40 mills, up from just two a decade earlier. West Fraser now owns more sawmills in the US South (16) than in Canada (13), Canfor Corp owns 11 sawmills in the South, one less than its Canadian total. Interfor owns 13 sawmills in the US – nine in the South and four in the Northwest. It owns five sawmills in Canada. The growing trend of Canadian ownership of US mills is driven by the potential for a lumber trade conflict, by timber availability and lower labour costs in the US. Amid the Mountain Pine Beetle infestation in Western Canada, these firms' ability to grow is severely diminished without looking outside of Canada. https://en.wikipedia.org/wiki/Canada%E2%80%93United_States_softwood_lumber_dispute https://globalnews.ca/news/3902539/canadian-softwood-lumber-harms-american-producers/ https://www.fia.fs.fed.us/library/brochures/docs/2012/ForestFacts_1952-2012_English.pdf

That’s all folks Thanks for attending Elder College this semester. Could you complete the Course Feedback forms before you leave. Bob Hillier Email [email protected]