Canada & the World CREC 6436 Rev 2019 Pt V

Canada & the WorldCREC 6436 Rev 2019A brief overview of the functions and operations of Canada’sDepartment of Global AffairsBob HillierPART VNAFTANegotiations© CREC Bob Hillier 2019

A bit of History Pre NAFTAAfter Confederation (1867) the Conservative Party (John A. MacDonald) campaigned on a National Policy that favoured tariffs against the US1891 The Liberal party campaigned for “reciprocity” with the US. They didnot 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 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© CREC Bob Hillier 2019

1980sThe concept of reciprocity with the United States was revived in the 1985 when theRoyal Commissionon the Economic Union and Development Prospects for Canada headed by former LiberalMinister of Finance Donald S. Macdonaldissued a report, calling forfree tradewith the US. TheProgressive Conservatives, underBrian Mulroney, acted on the recommendation by negotiating theCanada-US Free Trade Agreement. They won the1988 electionon the issue.1965 The Auto Pact APTA–https://en.wikipedia.org/wiki/Canada%E2%80%93United_States_Automotive_Products_AgreementRemember the Meteor and Monarch (Ford cars manufactured and sold only in Canada)The current situationhttps://en.wikipedia.org/wiki/North_American_Free_Trade_Agreement#Legal_disputes© CREC Bob Hillier 2019

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–© CREC Bob Hillier 2019

The Canadian Playershttps://www.youtube.com/watch?v=d6NKdnZvdoohttps://www.youtube.com/watch?v=BedKOsIDFgwJustin 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/115106https://www.thestar.com/news/insight/2015/11/29/how-chrystia-freeland-became-justin-trudeaus-first-star.htmlhttp://www.macleans.ca/politics/chrystia-freeland-a-foreign-minister-for-the-donald-trump-era/© CREC Bob Hillier 2019

The American PlayersRobert Lighthizerhttps://en.wikipedia.org/wiki/Robert_Lighthizer18thUnited States Trade RepresentativeIncumbentAssumed officeMay 15, 2017PresidentDonald TrumpPreceded byMichael FromanPersonal detailsBornRobert Emmet LighthizerOctober 11, 1947 (age 70)Ashtabula, Ohio, U.S.Political partyRepublicanhttp://vancouversun.com/news/politics/daphne-bramham-lessons-for-canada-from-how-the-koch-brothers-hijacked-democracyhttps://www.vox.com/policy-and-politics/2017/12/12/16705548/robert-lighthizer-trump-trade-nafta-wto-china© CREC Bob Hillier 2019

The Mexican PlayersMr. 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© CREC Bob Hillier 2019

What it’ll take to renegotiate NAFTAHere’s what lies aheadhttps://www.washingtonpost.com/graphics/politics/nafta-renegotiation-process/?utm_term=.e86bde90bbc5© CREC Bob Hillier 2019

© CREC Bob Hillier 2019

History of the Nafta agreement US/Canada trade https://lop.parl.ca/Content/LOP/ResearchPublications/2017-572-e.htmlhttps://lop.parl.ca/Content/LOP/ResearchPublications/2017-571-e.htmlCanada Mexico Trade–http://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/nafta-alena/fta-ale/info.aspx?lang=eng© CREC Bob Hillier 2019

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 countries4. The concentration of wealth in the upper 1% - GINI co-efficient5. 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 currencies7. The impending role of China as the leading world economic power.© CREC Bob Hillier 2019

https://www.youtube.com/watch?v=DwKR08t5BGAhttps://www.youtube.com/watch?v=_blj_fUQOI8https://www.youtube.com/watch?v=VRkFRX2tPoYhttps://www.youtube.com/watch?v=6HyIEYZOPMsCar Productionhttps://www.cbsnews.com/news/nafta-talks-6-rounds-and-just-getting-to-core-issues/CBS News discussionMexican Point of ViewAmerican point of ViewAn American ViewpointSome viewpoints from different authors© CREC Bob Hillier 2019

Progress so FarThe 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.https://globalnews.ca/news/3765069/nafta-round-3-auto-rules/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-6-1.4508325Round 7 Mexico End of Feb.–© CREC Bob Hillier 2019

Canada’s main issues1. 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 etc3. Car manufacturing - Content quotas (more cars made in Mexico) KIA4. 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.© CREC Bob Hillier 2019

Some other notesThere 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 NATODiscuss why US company’sare establishing big R&D offices in Canada (MicroSoft in Vancouver etc.)The American victory in the cancellation of the Northern Gateway Pipeline.© CREC Bob Hillier 2019

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_disputehttps://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© CREC Bob Hillier 2019

That’s all folks Thanks for attending Elder College this semester.Bob Hillier Email [email protected]© CREC Bob Hillier 2019