Western Standard - Crunch coming between government control and your rights

00:00:00.000 Good evening, Western Standard viewers, and welcome to Hannaford, a weekly politics show

00:00:21.120 of the Western Standard. Many of us are still wondering why Prime Minister Mark Carney decided

00:00:26.160 to poke U.S. President Donald Trump right as Canada and the U.S. were about to make a deal on

00:00:31.500 trade. First, he legislated supply management off the table. The 230% tariffs that Canada

00:00:40.100 applies to U.S. dairy products to keep Canadian product competitive are a known irritant to

00:00:46.500 Donald Trump. Then, right before the July 31st trade talks deadline, he promised, with conditions,

00:00:52.880 to recognize Palestine as a legitimate state.

00:00:57.940 Trump is famously pro-Israel.

00:01:00.320 Why would Carney do that?

00:01:02.500 With me today is Yaroslav Baran,

00:01:04.860 co-founder of Ottawa's Pendulum Group of Political Consultants,

00:01:09.060 and in a past life communications director to PM Stephen Harper,

00:01:14.280 who Yaroslav led party communications

00:01:17.900 through three national election campaigns.

00:01:20.920 They'd be the ones that Mr. Harper won, right, Yaroslav?

00:01:23.880 Yes.

00:01:24.880 Well, the first one, in fairness, he knocked the other guys down to a minority,

00:01:29.920 but in the few subsequent ones, he won and increased his vote share every step of the way.

00:01:35.380 Some of us would say that when consultants can gain some part in a significant string of election victories,

00:01:42.380 we should take what they say seriously.

00:01:44.560 So we want to hear from you tonight, Yaroslav, about what Mr. Carney is doing.

00:01:49.340 Some people say that he doesn't know what he's doing.

00:01:52.580 Some people say that he knows exactly what he's doing,

00:01:55.840 but he hasn't shared the plot, a hidden agenda, in other words,

00:02:00.400 which would be kind of ironic, really,

00:02:01.860 given the accusations that used to be made at the people you worked for.

00:02:07.780 What do you say about it, Yaroslav?

00:02:09.540 Is he on the ball?

00:02:11.040 Well, you know what?

00:02:12.540 The trade negotiations between Canada and the United States are not easy,

00:02:17.160 and we can't pretend that they're easy.

00:02:18.440 These are highly complex and probably the trading relationship between the United States and Canada is more complex than between the United States and any other country, given the volume and given the breadth of commodities and products and services that we do trade.

00:02:32.200 Now, that said, you know, let's take stock of what happened. There was this big August 1st deadline that everybody was really focused on. And that was the date when Donald Trump imposed a broad 35% across the board tariff on imports from Canada.

00:02:49.520 However, I would say, you know, the sky didn't actually fall just because our negotiating team

00:02:56.880 failed to finalize a trade agreement with the US. And the biggest reason for that is, I mean,

00:03:03.440 the victory lap should go not to the government itself, but to Canadian exporters. Because when

00:03:09.280 this trade war started some months ago, only about 38, 39% of Canadian exports to the US

00:03:16.400 were covered by the Canada-US-Mexico Free Trade Agreement. But the reason it was so low is that

00:03:22.320 many exporters simply didn't bother filling out the paperwork to officially register their exports

00:03:27.120 as being under CUSMA because there's an extra compliance burden but with little incremental

00:03:33.200 benefit to doing so because there's already a relatively free trade environment. So knowing

00:03:39.120 that this deadline was coming, Canadian exporters from sea to sea to sea have been frantically

00:03:45.120 filling out the paperwork, doing forms, and becoming compliant so that their exports were

00:03:51.680 covered and protected by the free trade umbrella. So by the time we got to that August 1st deadline,

00:03:58.640 somewhere around 85, 90, some would argue 95% of Canadian exports were covered and protected by this

00:04:07.100 KUSMA force shield over the Canadian economy. So this is an accomplishment by Canadian exporters

00:04:14.060 who became compliant to give themselves that protection.

00:04:17.860 Now, that trade deal is, of course, up for renegotiation.

00:04:21.880 Is it in about a year?

00:04:24.060 Yeah, it's supposed to start in July of 2026,

00:04:27.540 but there's pressure now, most recently, from the United States

00:04:30.700 to start that renegotiation early.

00:04:34.480 So that means we're not out of the woods.

00:04:36.300 We could have additional chapters of this trade war.

00:04:39.520 And even so, regardless of when that Kuzma review begins,

00:04:44.060 We're still not out of the woods. There are certain sectors that are still being pummeled by U.S. tariffs because they're they're being treated as outside of that of that Kuzma regime. Steel, aluminum, copper, softwood lumber.

00:05:00.220 So these sectors are still being very, very hardly hit. And this is now the focus of Canada's trade negotiators trying to find some relief for those sectors. Well, at the same time, announcing domestic assistance packages, you know, loan guarantees and stuff like that as a temporary solution until we can negotiate away out of this morass.

00:05:20.820 So the first question is, can you say again what proportion of Canadian U.S. trade is covered by the U.S.-Mexico-Canada trade agreement?

00:05:33.160 Well, it's a moving target because different exporters are still coming online and some exporters are being scrutinized and maybe deemed not compliant. So different analysts have different figures, but the figures I keep hearing from reputed sources are somewhere between 85% and 95%.

00:05:52.080 So the steel, the aluminium, the softwood, lumber, the copper, that's the 5%?

00:05:59.440 Yeah, that would be outside of that. And they're still being hit very, very hard. In the case of the three metals, 50% tariff. And in the case of softwood, it's a little bit different. They're not technically tariffs. They're duties. They're levied under different legislation from the US. And it's different depending on who the exporter is. In some cases, it's 34%. In other cases, it's higher. In other cases, it's lower.

00:06:24.340 So where is the auto industry in this division of Canadian assets?

00:06:30.180 Well, this is also still a moving target.

00:06:32.020 The audio sector is still being negotiated by both sides, but steel and aluminum are

00:06:38.940 really big components in auto manufacturing.

00:06:41.980 And we've all heard the adage that the typical automobile on average goes back and forth

00:06:50.460 across the Canada-U.S. border eight times before it's ready to be sold.

00:06:54.860 So imagine having that 50% cariff leveled on steel and aluminum parts

00:07:01.620 every single time that it crosses the border.

00:07:03.920 It's just ultimately this is not a sustainable model

00:07:06.480 to continue to have a viable auto sector in Canada if this isn't fixed.

00:07:11.900 All right.

00:07:12.180 And I mean, I think we all understand now that in Mr. Trump's view of the world,

00:07:19.180 he needs to have certain strategic industries located within the United States.

00:07:24.840 And I think that means within the lower 48.

00:07:29.280 If I could double click on copper for a second,

00:07:33.320 because, yeah, what you're saying is absolutely correct.

00:07:36.160 I mean, the steel tariffs, for example,

00:07:38.880 are motivated by a desire to cultivate and reinforce a domestic U.S. steel industry.

00:07:44.740 Sure, that makes sense from a strategic point of view.

00:07:49.900 But copper is kind of funny.

00:07:52.060 Canadian copper faces a 50% tariff when going to the U.S., but the U.S. barely has a domestic

00:07:59.120 copper industry.

00:08:01.020 Canada currently exports four times as much copper to the U.S. than Americans produce

00:08:09.980 copper domestically.

00:08:11.520 So I would argue the Americans are really shooting themselves in the foot. They are still going to be hugely dependent on Canadian copper imports, except they're now going to be paying a much higher price of their own making because they don't really have a domestic industry yet to be able to offset those volumes.

00:08:27.960 But presumably the idea of these tariffs is to force U.S. copper users to develop the industry that Trump believes should be there in the United States.

00:08:39.920 Sure, but that's a long-term gain, and that's a lot of pain in the meantime for the U.S. market.

00:08:45.500 All right.

00:08:46.520 Okay, trade is on the line.

00:08:49.380 Mr. Carney is doing his best, we must assume, to keep it there.

00:08:54.180 But I still come back to the original question, which was, if you are in the middle of these complex negotiations,

00:09:03.380 why would you as prime minister of canada provocatively say we are really proud of our

00:09:11.280 communist system of producing uh dairy and eggs so we're not even going to talk about that

00:09:18.500 whatever you think about it and by the way i know you will support israel sir but

00:09:24.320 we we think it's time that palestine was recognized as a state why would you do that

00:09:31.120 two days before the trade deadline. Is there a method in this matters or is it really just a

00:09:36.740 kind of dumb thing? Yeah, to be honest, I don't think that it's part of a master strategy in

00:09:43.160 trade negotiation. I think that these are both kind of one-offs. I mean, dairy industry, supply

00:09:48.500 management. Mr. Carney's hands were somewhat tied by the passage of legislation by Canada's

00:09:55.880 parliament in June. Now, it started off as a Bloc Québécois private members bill, but it was

00:10:01.320 supported by members of all parties. So this thing passed basically unanimously. And what that bill

00:10:06.640 does is it forces the government to keep supply management off the table in these trade negotiations

00:10:14.400 and in all other trade negotiations. It's basically, it reaffirms the position of industries

00:10:20.720 like dairy as a sacred cow, if you will, and keeps them exempt from being whittled away

00:10:27.580 in negotiations.

00:10:29.680 Now, that doesn't mean that there's some tinkering that can be done around the edges,

00:10:35.020 and there probably will be some, but the system itself cannot be dismantled.

00:10:39.700 I'll give you an example of this.

00:10:41.160 Recently, I mean, there was a longstanding dispute going on for, geez, five, six, seven

00:10:47.380 years between Canada and New Zealand over over dairy and it was finally resolved in June but

00:10:54.500 it was resolved in a way that did not dismantle or fundamentally alter the supply management system

00:11:00.580 but New Zealand is happy with the outcome and it's just administrative reinterpretations of

00:11:06.020 the implementation of this system which uh which which satisfied the New Zealanders to give them

00:11:12.020 more access to the Canadian dairy market. So, some fixes are possible, but not a structural

00:11:17.060 overhaul, if you will. Now, Palestine is something different. And, you know, there's... 0.99

00:11:22.820 Actually, before we go to Palestine, figuratively speaking, I just sort of want to make one comment

00:11:27.140 on that, Yaroslav. Mr. Carney is often represented by those who don't care for his politics as a

00:11:34.980 sinister mastermind you know a svengali character playing the puppets and you're saying that this 0.99

00:11:43.140 incredibly powerful sinister pm with some say a hidden agenda couldn't stop a bill going through

00:11:51.380 parliament that he didn't like with all the all the uh levers of of manipulation that he has at

00:11:57.860 his disposal well i think it's because he did like it uh the the political value of protecting supply

00:12:04.500 management is huge in Canadian politics.

00:12:06.640 Okay. So it wasn't

00:12:08.060 that he was outmaneuvered, it's just that he

00:12:10.480 sort of let good things happen

00:12:12.380 and somebody else is responsible. Not at all.

00:12:14.640 If he were to oppose

00:12:16.460 a bill or stop this bill, it would be 0.82

00:12:18.520 many argue that it would be political suicide

00:12:20.400 for him in the next election in Quebec.

00:12:22.660 That he would lose all of his Quebec seats or at least

00:12:24.460 everything outside of Montreal.

00:12:26.700 Yes, supply management is hugely

00:12:28.240 politically important, especially

00:12:30.380 in Quebec and to some degree

00:12:32.520 in eastern Ontario. Okay.

00:12:34.320 Hey, Palestine, why did he do what he did? 0.99

00:12:37.400 Well, oh, geez.

00:12:38.980 I honestly do not believe that this was a trade negotiation maneuver.

00:12:43.640 Not at all.

00:12:45.100 There's been significant pressure, international pressure, in recent weeks,

00:12:50.220 given what's been happening with the stunted delivery of humanitarian aid in Gaza.

00:12:55.440 And this was really started by French President Macron.

00:12:58.440 Macron, who, by the way, has a massive Arab and Muslim constituency in France, and that

00:13:06.760 translates into political pressure.

00:13:08.700 He started the ball saying, you know, we've had it, something must be done with this humanitarian 1.00

00:13:13.960 crisis, and we will have to, we, France, will recognize a Palestinian state when the UN

00:13:20.080 General Assembly opens up in September.

00:13:22.840 And he started to court other world leaders, such as Keir Starmer in the UK and Mark Carney

00:13:27.480 in Canada to follow suit to create sort of a united front. Now, Mr. Starmer said he sort of

00:13:34.320 came out with a compromise solution. He said, if something is not done, if humanitarian aid

00:13:39.320 doesn't flow and flow big, then we will follow France's lead and we will do likewise.

00:13:45.240 Mark Carney took a, you know, a third more nuanced approach. He came closer to France's

00:13:53.620 position and said that Canada will recognize a Palestinian state, but with certain conditions.

00:14:00.260 For example, that Palestine would have to disarm, that there would have to be free and fair

00:14:05.300 elections, that all the hostages would have to be released, and that Hamas would be forbidden

00:14:10.760 from contesting the elections. Now, keep in mind, there's also a very significant voter base in

00:14:18.080 canada that is applying the kind of similar pressure on on on the liberals that uh that

Western Standard - August 15, 2025

Crunch coming between government control and your rights

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