Western Standard

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

00:00:21.440 Western Standard. Many of us are still wondering why Prime Minister Mark Carney decided to poke

00:00:26.520 U.S. President Donald Trump right as Canada and the U.S. were about to make a deal on trade.

00:00:32.560 First, he legislated supply management off the table. The 230% tariffs that Canada applies to

00:00:40.840 U.S. dairy products to keep Canadian product competitive are a known irritant to Donald

00:00:46.740 Trump. Then, right before the July 31st trade talks deadline, he promised, with conditions,

00:00:52.860 to recognize Palestine as a legitimate state. Trump is famously pro-Israel. Why would Carney do that?

00:01:02.480 With me today is Yaroslav Baran, co-founder of Ottawa's Pendulum Group of Political Consultants,

00:01:09.040 and in a past life communications director to PM Stephen Harper. Yaroslav led party communications

00:01:17.880 through three national election campaigns. They'd be the ones that Mr. Harper won, right, Yaroslav?

00:01:23.920 Yes. Well, the first one, in fairness, he knocked the other guys down to a minority,

00:01:29.880 but in the few subsequent ones, he won and increased his vote share every step of the way.

00:01:35.400 Some of us would say that when consultants can gain some part in a significant string of election

00:01:41.960 victories, we should take what they say seriously. So we want to hear from you tonight, Yaroslav,

00:01:47.260 about what Mr. Carney is doing. Some people say that he doesn't know what he's doing. Some people say

00:01:53.980 that he knows exactly what he's doing, but he hasn't shared the plot, a hidden agenda, in other words,

00:02:00.380 which would be kind of ironic, really, given the accusations that used to be made at the people

00:02:05.800 you worked for. What do you say about it, Yaroslav? Is he on the ball? Well, you know what? The trade

00:02:13.740 negotiations between Canada and the United States are not easy, and we can't pretend that they're

00:02:18.200 easy. These are highly complex, and probably the trading relationship between the United States and

00:02:23.280 Canada is more complex than between the United States and any other country, given the volume and

00:02:28.280 given the breadth of commodities and products and services that we do trade. Now, that said, let's take

00:02:34.220 stock of what happened. There was this big August 1st deadline that everybody was really focused on,

00:02:40.460 and that was the date when Donald Trump imposed a broad 35% across-the-board tariff on imports from

00:02:48.280 Canada. However, I would say, you know, the sky didn't actually fall just because our negotiating team

00:02:56.820 failed to finalize a trade agreement with the U.S., and the biggest reason for that is, I mean,

00:03:02.800 the victory lap should go not to the government itself, but to Canadian exporters. Because when

00:03:09.360 this trade war started some months ago, only about 38-39% of Canadian exports to the U.S. were covered

00:03:17.000 by the Canada-U.S.-Mexico Free Trade Agreement. But the reason it was so low is that many exporters

00:03:23.000 simply didn't bother filling out the paperwork to officially register their exports as being under

00:03:27.960 under KUSMA because there's an extra compliance burden, but with little incremental benefit to

00:03:33.920 doing so because there's already a relatively, you know, free trade environment. So knowing that this

00:03:39.620 deadline was coming, Canadian exporters from sea to sea to sea have been frantically filling out the

00:03:45.700 paperwork, doing forms, and becoming compliant so that their exports were covered and protected by the

00:03:53.960 free trade umbrella. So by the time we got to that August 1st deadline, somewhere around 85, 90, some would

00:04:01.560 argue 95% of Canadian exports were covered and protected by this KUSMA force shield over the Canadian

00:04:10.100 economy. So this is, you know, this is an accomplishment by Canadian exporters who became compliant to give

00:04:16.140 themselves that protection.

00:04:17.740 Now, that trade deal is, of course, up for renegotiation. Is it in about a year?

00:04:23.740 Yeah, it's supposed to start in July of 2026, but there's pressure now, most recently, from the United States to start that

00:04:31.540 renegotiation early. So that means we're not out of the woods. We could have additional chapters of this trade war. And even so,

00:04:40.240 regardless of when that KUSMA review begins, we're still not out of the woods. There are certain sectors

00:04:47.840 that are still being pummeled by US tariffs because they're, they're being treated as outside of that, of that KUSMA regime,

00:04:55.600 steel, aluminum, copper, softwood lumber. So these sectors are still being very, very hardly hit. And this is

00:05:05.440 now the focus of Canada's trade negotiators trying to find some relief for those sectors. Well, at the

00:05:11.360 same time, announcing domestic assistance packages, you know, loan guarantees and stuff like that,

00:05:16.320 as a temporary solution, until we can negotiate a way out of this morass.

00:05:21.280 So the first question is, can you say again, what proportion of Canadian US trade is covered by

00:05:28.640 the US Mexico Canada trade agreement? Well, it's a moving target, because different exporters are still

00:05:36.640 coming online. And you know, some exporters are being scrutinized and maybe deemed not compliant. So

00:05:43.360 different analysts have different figures. But the figures I keep hearing from reputed sources are

00:05:48.480 somewhere between 85 and 95%. But so that, so the steel, the aluminum, the softwood lumber,

00:05:57.360 the copper, that's the 5%. Yeah, that would be outside of that. And they're still being hit

00:06:02.400 very, very hard with, in the case of the three metals, 50% tariff. And in the case of softwood,

00:06:08.800 it's a little bit different. They're not technically tariffs, they're duties, they're, you know,

00:06:13.120 they're levied under different, different legislation from the US. And it is different depending on who the

00:06:18.320 exporter is, in some cases, it's 34%. In other cases, it's higher, in other cases, it's lower.

00:06:24.080 So where is the auto industry in this division of Canadian assets?

00:06:30.240 Well, this is also still a moving target, the audio sector is still being negotiated by both sides. But

00:06:37.600 steel and aluminum are really big components in auto manufacturing. And we've all heard the, you know,

00:06:44.400 heard the adage that the typical automobile on average goes back and forth across the Canada-US

00:06:51.520 border eight times before it's ready to be sold. So imagine having that 50% cariff leveled on steel

00:07:00.400 and aluminum parts every single time that it crosses the border. It's just, ultimately, this is not a

00:07:05.440 sustainable model to continue to have a viable auto sector in Canada, if this isn't fixed.

00:07:11.600 All right. Well, I mean, I think we all understand now that in Mr. Trump's view of the world, he needs

00:07:19.520 to have certain strategic industries located within the United States. And I think that means within the

00:07:26.880 lower 48%. If I could double click on copper for a second, because yeah, what you're saying is

00:07:34.960 absolutely correct. And the steel, the steel tariffs, for example, are motivated by a desire to cultivate

00:07:41.760 and reinforce a domestic US steel industry. Sure, that, you know, makes sense from a, from a,

00:07:48.080 from a strategic point of view. But copper is kind of funny. Canadian copper faces a 50% tariff when going to

00:07:55.360 the US. But the US barely has a domestic copper industry. Canada currently exports four times as

00:08:03.840 much copper to the US than Americans produce copper domestically. So I would argue the Americans are 0.96

00:08:13.520 really shooting themselves in the foot. They are still going to be hugely dependent on Canadian copper

00:08:18.320 imports, except they're now going to be paying a much higher price of their own making because they 0.98

00:08:23.280 don't really have a domestic industry yet to be able to offset those volumes.

00:08:27.280 But presumably, the idea of these tariffs is to force US copper users to develop the industry that

00:08:36.080 Trump believes should be there in the, in the United States.

00:08:40.080 Sure, but that's a long term game. And that's a lot of pain in the meantime for, for the US market.

00:08:44.880 All right. Okay. Trade is, is on the line. Mr. Carney is doing his best, we, we must assume to keep it

00:08:53.840 there. But I still come back to the, the original question, which was, if you are in the middle of

00:09:01.360 these complex negotiations, why would you, as Prime Minister of Canada, provocatively say, we are really

00:09:10.560 proud of our communist system of producing dairy and eggs. So we're not even going to talk about that,

00:09:18.720 whatever you think about it. And by the way, I know you will support Israel, sir, but we, we think it's

00:09:25.920 time that Palestine was recognized as a state. Why would you do that two days before the trade deadline?

00:09:33.600 Is there a method in this matters? Or is it really just a kind of dumb thing? 0.98

00:09:37.440 Yeah, I, I, to be honest, I don't think that that is part of a master strategy in, in trade negotiation.

00:09:44.160 I think that these are both kind of one offs. I mean, dairy industry, supply management.

00:09:50.160 Mr. Carney's hands were somewhat tied by the passage of legislation by, by Canada's parliament in June.

00:09:56.720 Now it started off as a block Quebecois private members bill, but it was supported by members of all parties.

00:10:02.720 So this thing passed basically unanimously. And that, what that bill does is it forces the government

00:10:10.320 to keep supply management off the table in these trade negotiations and in all other trade negotiations.

00:10:16.400 It's basically a, it reaffirms the position of industries like dairy as a sacred cow, if you will,

00:10:24.480 and keeps them exempt from, from being whittled away in, you know, in negotiations.

00:10:29.440 Now that doesn't mean that there are certain, that there's some tinkering that can be done around the edges

00:10:34.960 and there probably will be some, but the system itself cannot be dismantled.

00:10:39.600 I'll give you an example of this recently. I mean, there was a longstanding dispute going on for geez,

00:10:46.480 five, six, seven years between Canada and New Zealand over, over dairy.

00:10:51.840 And it was finally resolved in June, but it was resolved in a way that did not dismantle or

00:10:57.360 fundamentally alter the supply management system. But New Zealand is happy with the outcome and it's

00:11:03.040 just administrative reinterpretations of the implementation of this system, which, which,

00:11:09.680 which satisfied the New Zealanders to give them more access to the Canadian dairy market. So

00:11:14.320 some fixes are possible, but not a structural overhaul.

00:11:17.520 If you will. Now, Palestine is something different. And, um, you know, there's- 0.98

00:11:22.800 Before we go to Palestine, figuratively speaking, I just sort of want to make one comment on that,

00:11:27.520 Yaroslav. Mr. Carney is often represented by those who don't care for his politics as a sinister mastermind, 0.99

00:11:37.280 you know, a Svengali character playing the puppets. And you were saying that this incredibly powerful,

00:11:44.160 sinister PM with some say a hidden agenda, couldn't stop a bill going through parliament that he didn't

00:11:52.400 like with all the, with all the, uh, levers of, of manipulation that he has at his disposal?

00:11:58.560 Well, I think it's because he did like it. Uh, the, the political value of protecting supply

00:12:04.480 management is huge in Canadian politics.

00:12:06.560 Okay. So it wasn't this, it wasn't that he was out maneuvered. It's just that he sort of let,

00:12:11.120 I don't know what things happen and somebody else is responsible.

00:12:13.680 Not at all. If he were to, if he were to oppose a bill or stop this bill, it would be,

00:12:18.480 many argue that it would be political suicide for him in the next election in Tibet,

00:12:22.480 that he would lose all of his Quebec seats or at least everything outside of Montreal.

00:12:25.360 Oh, right.

00:12:25.840 Oh yeah. Supply management is hugely politically, uh, important, especially in Quebec and, and to some

00:12:32.160 degree in Eastern Ontario.

00:12:33.200 Okay. Palestine. Why did he do what he did? 0.78

00:12:36.400 Well, oh geez. Um, I, I honestly do not believe that this was a trade negotiation maneuver.

00:12:43.680 Not at all. Uh, there's been a significant pressure, international pressure in, in recent

00:12:49.600 weeks, given what's been happening with the, with the stunted delivery of humanitarian aid in Gaza.

00:12:55.520 And this was really started by French president, Macron, uh, Macron, who by the way, has a massive,

00:13:01.920 uh, Arab and Muslim constituency in France. And that, you know, and that translates into political

00:13:07.680 pressure. He started the ball saying, um, you know, we've had it. It's something must be done

00:13:12.960 with this humanitarian crisis. And we will have to, we France will, will recognize the Palestinian

00:13:18.560 state when the UN general assembly opens up in September. And he started to court other world

00:13:24.160 leaders such as Keir Starmer in the UK and Mark Carney in Canada to follow suit, to create sort of a

00:13:30.080 united front. Now, Mr. Starmer said, uh, he sort of came out with a compromise solution. He said,

00:13:36.960 if something is not done, if humanitarian aid doesn't flow and flow big, then we will follow

00:13:42.800 France's lead and we will do likewise. Mark Carney took a, uh, you know, a third more nuanced, uh, approach.

00:13:51.120 He, he came closer to France's position and said that Canada will recognize a Palestinian state,

00:13:58.480 but with certain conditions. For example, that, uh, Palestine would have to disarm, that there would 0.96

00:14:04.320 have to be free and fair elections, that all the hostages, that hostages would have to be released,

00:14:08.880 and that Hamas would be forbidden from contesting the elections. Now, keep in mind, there's also a very

00:14:16.560 significant voter base in Canada that is applying the kind of similar pressure on, on, on the Liberals

00:14:22.560 that, uh, that, um, President Macron has felt in France. Remember, for former Foreign Minister

00:14:29.760 Melanie Jolie, you know, she was the first one seized with this issue, and she personally had a

00:14:35.040 disproportionately high number of Arab and Muslim voters in her own riding. So that kind of internal 0.57

00:14:42.560 political pressure is pretty massive. And I would argue that that is really what is,

00:14:46.800 what is motivating this. He's trying to walk a balanced line because on the surface, it seems

00:14:52.880 like a reasonable proposal. It is aligned with longstanding Canadian foreign policy that a two

00:14:59.040 state solution is ultimately the way forward. So it's not a technically a departure from that policy.

00:15:04.960 And the conditions seem very reasonable on the surface, you know, release the hostages,

00:15:09.920 Hamas cannot contest elections and so on. The issue here is that it is a big, big deal to bestow 0.95

00:15:18.800 official diplomatic recognition of another state, for example, state of Palestine. And you cannot

00:15:24.960 bestow and revoke that, you know, every couple months based on circumstances on the ground. So once

00:15:30.960 that recognition is given by Canada, it's basically permanent. So what's to stop a new Palestinian 1.00

00:15:37.760 government from, for example, agreeing to these conditions? And then two years later, three years

00:15:42.960 later, suddenly we see Hamas resurface as a major political party contesting elections. Like Canada 0.84

00:15:49.360 can't really, you know, bestow and revoke diplomatic recognition like turning off and on a light switch.

00:15:56.080 It just, it doesn't work that way. So there's, this is a really big move and should not be taken

00:16:00.800 very lightly. Do you suppose that, let's just play with the idea that, that Mr. Carney was,

00:16:11.520 had trade on his mind, but this was more on his mind. Maybe there wasn't a deal with the Americans

00:16:19.040 in the offing anyway. So it didn't really matter whether he upset them by offering this conditional

00:16:25.200 recognition of Palestine. Could that be the case? It seems to me that this recognition of Palestine

00:16:31.680 move was entirely separate from trade, that he was trying to satisfy, you know, domestic political

00:16:37.680 pressure in certain quarters, as well as genuinely in his mind, trying to address the acute humanitarian

00:16:46.320 crisis in Gaza. The problem is that this announcement has really antagonized Israel and a whole lot of

00:16:53.920 Israel supporters. Many argue that it's, that it rewards the October 7th attack, that it rewards

00:17:00.960 terrorist activity. As one analyst from the McDonnell Laurier Institute recently wrote that it,

00:17:08.080 that it effectively creates a forward operating base for Iran right on Israel's doorstep. So these 0.83

00:17:14.720 are some of the implications, albeit unintended for Mr. Carney, of taking this kind of a bold step. And

00:17:21.280 even though Donald Trump has not said that it will impact Canada-US trade negotiations, the fact

00:17:29.920 remains Canada is one of few countries still without a deal. And Mr. Trump did publicly criticize Mr. Carney's

00:17:38.640 announcement that he will recognize Palestine. So implicitly, it's pretty reasonable to conclude that it is

00:17:46.640 having an impact on the Canada-US trade negotiations. Fair enough. Let's move the, move the, move the window a little bit, 0.57

00:17:55.600 Jaroslav. We've now had a little more than three months of Mr. Carney post-election plus a month before. He has made a number of bold

00:18:09.200 promises, promises that we're going to build, build Canada, build Canada strong. There will be this,

00:18:17.840 there will be that, there will be subsidies for steel, they'll keep the, we'll look after the softwood

00:18:23.920 lumber, we're going to build houses, we're going to build so many houses. It's almost starting to sound

00:18:29.840 like Mr. Trump in full flow. He's made a lot of promises. And yet when the basic wealth generators,

00:18:40.480 like pipelines, like the energy industry to be more specific, are very much still in the balance.

00:18:49.680 And you know that deep down in his heart, he doesn't like the energy industry because he thinks it's

00:18:55.040 responsible or so he says he thinks it's responsible for global warming. When you put it all together,

00:19:03.120 is there actually a viable plan there or is this government by announcement Trudeau style?

00:19:09.600 Well, it would appear at least now that Mr. Carney has accepted the, you know, the realism of current

00:19:18.400 circumstances and is harking his hostility towards Canada's energy sector because he's saying

00:19:24.800 all the right things in terms of the need to build things like pipelines and other nation building,

00:19:30.880 economic facilitating projects, you know, things like east-west electrical grids and others. But

00:19:37.040 pipelines and the petroleum industry are massive to Canada's economy and he has not been at all hostile

00:19:44.640 to them outwardly the way that his predecessor Justin Trudeau was. But we'll see if that sticks.

00:19:51.200 Many would argue that his actions now are irreconcilable with what he has spent the last 10 years

00:19:57.520 talking about on the international lecture circuit, saying we need to aggressively move towards

00:20:04.640 a Trudeau model carbon tax internationally, that that is the way forward to fight climate change. And that

00:20:10.320 would be antithetical to Canada's energy sector. So it seems that, you know, he is, he's being motivated by

00:20:17.280 real politic by the, you know, the realism of circumstances right now. And on the one hand,

00:20:23.600 that's positive. On the other hand, you cannot blame political watchers for being a little bit

00:20:30.240 skeptical that this is going to last. Moreover, if he really wants to demonstrate leadership that he

00:20:37.920 is going to build these massive nation building projects like pipelines, I would argue it's incumbent

00:20:44.160 upon him to work on people like the premier of Quebec and the premier of British Columbia,

00:20:52.320 who are still saying no pipelines, no pipelines through my territory. And, you know, and wrestling

00:20:59.040 them to the ground saying this is necessary and you've got to, you've got to play ball on this.

00:21:04.480 Otherwise we can end up in a situation where he's saying, Hey, I'm the good guy. I'm the one pushing this.

00:21:10.000 It ain't me. It's a premier stopping it. So he gets the best of all worlds. He gets the public

00:21:14.320 relations benefit for theoretically supporting the energy sector without any pipelines actually

00:21:19.440 being built.

00:21:20.000 Steve McLaughlin Constitutionally speaking here in Alberta, we take the view that

00:21:25.360 the federal government in the person of Mr. Carney now, but before him, Mr. Trudeau has no business in

00:21:34.000 certain parts of provincial jurisdiction. Premier Smith famously uses the line that the federal

00:21:41.600 government should stay in its lane. And we hold to that very, very firmly. But now when it comes to

00:21:48.960 getting a pipeline through to the coast, we actually wouldn't mind if Mr. Carney gone into BC's lane and

00:21:57.280 into Quebec's lane. So where is the constitutional authority really lay for things like this?

00:22:03.440 Well, constitutionally, provinces control things like pipelines, provided that that pipeline is

00:22:08.880 entirely within that province's boundaries. Once that pipeline or other things, highways, whatever,

00:22:15.120 cross a provincial boundary, then it becomes the dual jurisdiction issue. Now, provinces still have

00:22:22.640 blocking authority. And that's why that moral suasion from the prime minister can become a very

00:22:27.280 powerful tool to win over those premiers. But you know what? It's also becoming a more

00:22:32.560 competitive environment. If British Columbia, for example, continues to block pipelines of Alberta

00:22:40.080 and Saskatchewan products to overseas markets, Manitoba is saying, heck, send it here. We'll build

00:22:46.880 a deep sea port in Churchill and export via the Hudson Bay. I mean, Premier Ford is talking about a deep

00:22:53.600 sea port near Moussigny on James Bay. Again, using Hudson's Bay as an export tool to get products out to market.

00:23:02.480 We're just about out of time, Arislav. But when Parliament resumes in September,

00:23:12.240 tell me three things you expect to see in the throne speech.

00:23:15.040 Well, actually, I don't think we're going to get a different throne speech. I think it's going to

00:23:20.640 be technically a continuation of the previous session, but it's going to be very different

00:23:25.680 in that Pierre Poilier is going to be back in the House of Commons. He's got a by-election coming up,

00:23:29.840 which I expect he'll win handily. So we're going to be back to a traditional dynamic of government

00:23:36.880 and opposition leaders sparring in Parliament because Carly largely got a pretty free ride in June. 0.85

00:23:42.800 So that's going to be the biggest difference. There's also going to be intense political

00:23:46.720 pressure from the United States for the Carney government, for Parliament to pass C2, the Border

00:23:54.960 Control Act, which will, it's going to be contentious. Yeah, it does some good things

00:23:59.600 about strengthening the border and tackling cross-border crime, but there are also some

00:24:04.800 significant civil liberties implications in that bill. Those are probably the two big ones.

00:24:09.600 And the final one is we're going to see how this whole nation-building projects thing evolves. The

00:24:15.600 premiers are so far collecting project ideas that they are going to pitch to the federal government,

00:24:21.040 but it's ultimately going to be the federal government that decides which of these projects

00:24:25.520 are going to move forward under this new federal fast-track legislation. So get ready for possibly some

00:24:33.280 fireworks and horse trading between the provinces and the federal government for access to the Bill C5

00:24:39.840 nation-building fast track. We'll all be gathered around the television watching it when it happens.

00:24:45.680 Don't worry. Yaroslav, as always, it's been a great pleasure to hear your insights. You have much wisdom

00:24:52.000 to give us. Thank you for joining us. For the Western Standard, I'm Nigel Hannaford.

HANNAFORD： Crunch coming between government control and your rights

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