Trump’s Challenge for Canada - Global Trade Magazine
  March 14th, 2017 | Written by

Trump’s Challenge for Canada

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  • The election of Donald Trump will dominate Prime Minister Justin Trudeau’s 2017.
  • Canadian cabinet ministers must have an engagement plan with the US.
  • One in five Canadian jobs depend on trade with the US.

Dentons, the global law firm, recently released its Global Regulatory Trends to Watch in 2017. In this five-part series, we are publishing excerpts from the report focusing on public affairs and economic sanctions and trade across the world, including the US, Europe, the UK, China, Canada and Mexico. Authors for these excerpts are Andrew Cheung, Joseph Lougheed, Adrian Magnus, James Moore, Kenneth Nunnenkamp, Michael Zolandz, and Richard Jenkinson.

The election of Donald Trump was, without question, the most important global event to happen in 2016. But Canada’s political, business and public policy leaders must not treat the election as just a uniquely ugly campaign with a surprise outcome that can be looked past. It was a historic event that should shift everyone’s thinking about the forces of resentment that resulted in the outcome, and what it means for the years ahead. This isn’t the first time a tectonic shift in thinking has been thrust upon Canadians.

On November 27, 2000, Prime Minister Jean Chrétien was elected to his third of three majority governments and his final term as Canada’s Prime Minister. The Official Opposition—Canada’s conservative movement—was directionless and in disarray. In Québec, the separatist parties, the Bloc Québecois and Parti Québecois, lost support for their cause following their defeat in the 1995 Referendum and passage of the federal Clarity Act in 2000. The separatist leader, Lucien Bouchard, resigned as Premier of Québec in 2001. The result was a wide open field for Prime Minister Chrétien to move forward on any domestic or foreign policy agenda he wished to pursue.

Once 9/11 happened, everything changed. Prime Minister Chrétien’s third mandate was set: the Afghanistan mission, establishing the Department of Public Safety, passing anti-terrorism legislation, creating the Canadian Air Transport Security Authority (CATSA), and eventually saying no to the war in Iraq. Mr. Chrétien experienced the Macmillan principle.

British Prime Minister Harold Macmillan was once asked by a young journalist what he feared most in office, and he famously responded, “Events, dear boy, events.” 9/11 was, for Mr. Chrétien, one of those “events”. For Prime Minister Stephen Harper, the global recession of 2008-2009 was his. For Prime Minister Justin Trudeau, the election of Donald Trump is his, and 2017 will be dominated by this event—the biggest event—of 2016.

In 2015, after his cabinet was sworn in, the government made public the mandate letters of Prime Minister Trudeau’s cabinet ministers. Those mandate letters all likely have an addendum now: regardless of portfolio, all ministers must have a comprehensive engagement plan with the United States for the life of this mandate.

The range of policy anxieties that are now clear and present to Prime Minister Trudeau’s government are broad. A few examples:

    Auto sector: Canada’s auto sector is the eight largest in the world, integrated through North America, globally competitive, and employs more than half a million Canadians. The Canadian auto industry depends heavily on access to the American market, with $135 billion in two-way trade, with America absorbing roughly two-thirds of Canada’s parts production and 85 percent of Canada’s vehicle output. With President Trump directly criticizing business decisions by auto firms to invest in Mexico, the Canadian sector is rightfully concerned.

    Regulatory cooperation: In 2011, the Canada-US Regulatory Cooperation Council and the Beyond the Border Initiative were put in place to spur greater economic integration. With the North American Free Trade Agreement (NAFTA) having been the subject of a withering attack by President Trump, Senator Bernie Sanders, and emboldened players in both the Republican and Democratic Parties, it is unclear where this integration initiative will now end up.

    Border management: While President Trump’s commitment to “build a wall” along America’s southern border is well known, what is less well known are his thoughts on the northern border. More than 400,000 people cross the Canada-US border each day, as does an average of $1.7 billion in commercial activity. Efficiency of infrastructure, data sharing, supply chain realities are all dependent on a cooperative and collaborative policy approach.

    Mutual defense: Canada and the United States have shared interests in the defense and security of the North American continent. From policing the Canada-US shared border to participation in joint operations through NORAD and NATO, Canada and the US share a deep commitment to mutual defense. Initiatives like the Shiprider program that allows Canadian and American enforcement officials to move in tandem to protect the waterways along the border demonstrate the interconnectedness of their security interests. The Permanent Joint Board on Defense also remains an important tool for the Canadian and American militaries to have frank discussions, and exchange views and information regarding joint security.

With one in five Canadian jobs dependent on trade with the United States, and those jobs at risk in export dependent industries from the auto sector to agriculture to forestry and more, Donald Trump’s Presidency must now be at the center of Canada’s policy planning. In every region, in every aspect of the Canadian economy, it is all at stake, and Canada will need to engage with America anew. While the Canada-US relationship has been a most prosperous two-way economic relationship, the election of President Trump presents a challenge to Canada and Canada needs to be ready, engaged and persistent in protecting our interests. This responsibility lies not only with Ottawa, but also with the provincial governments, big city mayors, business leaders, and others who must shoulder responsibility for engagement with a more distrusting and cynical leadership in the US.