00:01:05.240Well, the big story around Ottawa these days, around federal politics, is Canada-U.S. trade.
00:01:11.860It's been a dominant thing for a year, but as you know, Nigel,
00:01:16.060July 1st was the deadline for Canada, the United States, and Mexico to extend the North American free trade agreement.
00:01:26.420July 1st came and went, and the deal was not extended.
00:01:29.940It's not just that it's not extended yet, but it was a one-day window to extend the deal, and the deal was not extended.
00:01:36.660So that means that we are technically now on a sunset track for the North American Free Trade Agreement to expire in 10 years.
00:01:47.780Now, it still could be extended a year from now or two years from now.
00:01:53.120There will be one-day windows popping up for each of those 10 years.
00:01:57.060But right now, we are officially now on a sunset track for the North American Free Trade Agreement to expire.
00:02:05.520Now, before we get too excited about that, you say it expires in 10 years.
00:02:11.680Mr. Trump has got another two and a half years, and a different president may see things very differently.
00:02:18.600Should we be lighting our hair on fire yet?
00:02:22.700Well, look, there is a real possibility still that this trilateral trade agreement could be salvaged.
00:02:30.960But if you're working in some specific sectors, notably things like steel or aluminum or automobiles or lumber, you're already laying your hair on fire because those commodities were not protected by the North American Free Trade Agreement and are currently under significant, significant tariffs.
00:02:51.560and Prime Minister Carney was elected as the great dealmaker.
00:02:58.020Arguably, probably everybody would agree that the reason he did win the election last year
00:03:03.040was that he was seen as the guy who could get a deal with Donald Trump.
00:03:08.340Right now, we're in a position where the window to cut that deal has come and gone
00:05:07.640Yeah, and in fairness, the 10% forced labour tariff did not single out Canada.
00:05:13.200It was a handful of countries that were collectively singled out.
00:05:18.500The government of Canada has introduced legislation to strengthen our controls to ensure that the forced labour products are not in our supply chain.
00:05:29.720There's been a consultation launched by foreign affairs on this question as well.
00:05:35.960But, you know, with tariffs, especially with Donald Trump, the accusation is made, the
00:05:42.380tariff is levied, and then, you know, you're scrambling to try to demonstrate that the
00:05:47.360allegations are not, in fact, correct.
00:05:55.200That's the reciprocal equivalent tariffs.
00:05:58.040Basically, it's alleging that Canada is discriminating against the U.S. on dairy, on vehicles, and on alcoholic beverages.
00:06:05.860Now, again, we can quibble about whether those allegations are factual or not,
00:06:10.960but a whole bunch of commodities as of August 19th are now going to face a new 50%, 5-0% tariff
00:06:20.320that will not be sheltered by the Canada-U.S.-Mexico Free Trade Agreement.
00:06:25.800So that's going to be a really big hit.
00:06:28.780So is that Mr. Trump laying down an arbitrary barrier so that he's got something to squeeze us with?
00:06:39.160Yeah, I mean, this appears to be his flexing of muscles against his own Supreme Court and against his own detractors domestically.
00:06:49.140There have been a number of instances where he's imposed tariffs.
00:06:52.080Courts have reversed those tariffs saying that they're unlawful or unconstitutional.
00:06:57.980And so he tries again through a different mechanism, through a different trade law using a different section.
00:07:04.660So he's always one step ahead of the game, ensuring that a tariff law continues to be erected because he sees that as, I mean, for Canadian governments historically,
00:07:19.180free trade or cutting new trade deals is something that you'd wear on your sleeve in going to face
00:07:26.800the voters. The MAGA movement seems to believe that tariff walls are political capital that
00:07:35.580will help them into the midterm elections this fall. Now, the car industry is starting to look
00:07:44.580like it's beyond salvage how say you uh well that's going to be a really difficult one i mean
00:07:51.320automobiles are a little bit complicated in that the tariffs applied to canadian cars only pertain
00:07:58.900to the non-american components i mean you've you've heard the statistics a typical car goes
00:08:04.360back and forth across the border about seven or eight times before it before it hits the uh the
00:08:09.660dealership. So basically every car in North America has some Canadian parts, some American
00:08:15.880parts, some assembly in Canada, some assembly in the States. That's a function of how integrated
00:08:22.100the supply chain and the manufacturing system is. So there are complicated formulas to determine
00:08:30.860how much of each vehicle is actually Canadian-made versus American-made. But one way or another,
00:08:37.380If these tariffs hold, either the current tariffs, let alone anything new that might be coming our way, if these are not negotiated away or negotiated down, it would be very difficult to imagine a domestic Canadian automobile industry surviving this in the longer term.
00:08:55.460Do you have any idea how much Canadian auto production has already shrunk since the president started on the warpath back in January of last year?
00:09:05.760Yeah, and I'm not sure that we've got credible statistics just yet, but we have seen a number of announcements by major auto manufacturers putting a pause on previously announced investments into expanding their Canadian manufacturing operations.
00:09:25.740So that's usually the first sign that trouble is around the corner.
00:09:31.160It starts with saying, oh, that big plant, those billions we were planning to invest over the next decade, we're just going to put that on hold for a second.
00:09:41.080If that, again, if that doesn't get reversed, then it definitely signals long-term pain and possibly the end of a domestic car manufacturing industry.
00:09:50.660So, let's turn to the Gordie Howe Bridge, Yaroslav.
00:09:56.700That should have been a very good news story, but it seems to be not so.
00:10:02.560The best they can do with it from the domestic media point of view is take note that the
00:10:07.260Howe family, the descendants of the great Gordie Howe, were the first people to cross
00:10:12.580it, which was nice, but nobody really wants to talk about the deal Mr. Carney made to
00:10:21.320Yeah, I mean, the history here, the Windsor-Detroit border crossing is the single busiest border crossing in North America.
00:10:29.700And I've heard it referred to as the single biggest international trade crossing anywhere in the world.
00:10:36.700And until now, there's been one bridge that was opened up about 100 years ago in the hands of a private family.
00:10:44.720So this family with this precious asset that generates millions upon millions upon millions of dollars for that family, they've been guarding it.
00:10:55.620They've been very protectionist over that bridge, and they've tried to oppose the building of a new bridge.
00:11:00.100Under the Harper government back in 2012, a deal was made between Canada and the U.S. to build a new bridge.
00:11:07.600It had been discussed for a long time.
00:11:09.420the final deal was that canada would finance the bridge on its own and eventually there would be
00:11:15.180some uh some some toll sharing between the two countries now just as the bridge was finalized
00:11:21.980donald trump announced about a bit over a month ago that no he's not going to permit the bridge
00:11:27.580to be opened why because that wealthy american family owning the competition that donated a
00:11:33.980million to a super PAC that backed Donald Trump. In the end, a last minute deal was reached. Mr.
00:11:41.480Carney announced this while he was actually in your hometown in Calgary at the Stampede. He
00:11:46.860announced the deal had been reached, a win-win for everybody. The problem is that the devil
00:11:52.940was in the details. And when the actual texts of the deal was publicized, it contradicted what
00:12:00.420Prime Minister Carney said about the deal. He had said that there'd be very little sharing of
00:12:06.840tolls because first the tolls would pay for operations of the bridge and financing the debt
00:12:15.040that went into building the bridge in the first place. But that last part was not correct. It was
00:12:19.980not factual. I'm not going to impugn motive. I'm not going to suggest that it was a deliberate
00:12:25.840attempt at deception but it was a total game changer in terms of the dollars and cents so
00:12:31.760the new deal actually starts to share tolls right away without the debt financing of the bridge
00:12:40.960the cost of building the bridge being being deducted right away big difference and frankly
00:12:49.440objectively speaking the prime minister's had egg on his face he's been hounded by journalists over
00:12:53.760this issue for the last couple weeks saying why did you deceive why were you not truthful about
00:12:59.520about this deal when you first announced it so in politics that's the kind of thing we refer
00:13:04.160to as an unforced error there was a communications blunder that was completely avoidable and as re
00:13:11.520as recently as today nigel there was a special meeting of the house of common government
00:13:16.720operation committee with opposition mps calling for an investigation of this deal and the
00:13:22.240the communications around this deal, but the liberals on that committee used their newfound
00:13:27.260majority to block the proposed investigation. Well, okay. Let's be charitable to Mr. Carney
00:13:39.880and say, given what he is up against, could anybody have done any better or any different?
00:13:49.240does mr trump have a peculiar dislike for canada's liberal party and the people that
00:13:57.720elects to lead would it have been different under a conservative government basically
00:14:03.860when the president says we're going to do things this way that tends to be the way they get done
00:14:09.380do we have as a country no leverage is there nothing that we have that they want
00:14:16.360this this is an interesting set of questions and you know i'll try to answer it as dispassionately
00:14:23.440and as objectively as i can from my from my perspective um canada does have leverage and
00:14:30.240we have used leverage for example we had the digital services tax we had things like requirements
00:14:36.760for uh for for tech giant streaming companies in the states to pay into uh into a canadian
00:14:43.420culture fund. We have things like the F-35, the fighter jet contract that we're still waiting
00:14:51.560for a final decision from the government of Canada on whether it's going to do the full order of the
00:14:56.720American jets or do maybe a mixed fleet of some American jets and a bunch of Swedish jets. So
00:15:04.300there are points of leverage. We also, Canada dominates internationally on commodities like
00:15:11.280potash or aluminum, for example, half more than half the aluminum that the US economy uses is
00:15:18.520imported from Canada. There's a whole bunch of energy exports from Canada to the United States.
00:15:24.140So yes, we do have leverage. That said, there appears to be a particular disdain
00:15:31.500by Donald Trump against Canada. And many analysts are saying that that is because
00:15:38.980Canada is one of the few countries that retaliated when U.S. tariffs were announced and that has tried to use leverage rather than just sort of capitulating and trying to cut the best deal we can.
00:15:52.360So as a Canadian patriot, on the one hand, I have to acknowledge that it's good to see our country putting the elbows up and retaliating when we ought to retaliate when we're faced with unfair tariffs.
00:16:11.340But objectively, other countries that were also facing U.S. tariffs had a much easier road to negotiating a less painful deal because they did not take that kind of elbows up approach and they did not retaliate.
00:16:28.240They did not counter with their own tariffs against the United States, and they did not try to jam Americans by using using the leverage that they had.
00:16:57.380And the U.S.-Mexico negotiations are going far more smoothly than the U.S.-Canada negotiations because Mexico has taken a different approach.
00:17:06.980So the Mexicans have more or less said, well, what do you need?
00:17:10.080Give it to you and they're on their way?
00:17:13.380I don't think it's fair to say that they're capitulating,
00:17:16.880but they're definitely taking a far less retaliatory approach.
00:17:21.800Now, mind you, Canada is far more exposed to U.S. tariffs than any other country.
00:17:28.66076% of our exports go to the United States.
00:17:32.340No other country is that trade exposed to one trading partner, at least not to my knowledge, at least not to that degree.
00:17:39.320So the stakes are higher for Canada than for other countries.
00:17:46.200We'll see if the failure to get a deal and for the, frankly, currently worsening trade situation is going to eventually, in the longer term, translate into a political liability for Mr. Carney, who was elected as the great dealmaker.
00:18:01.700And, you know, Nigel, just the other day, Angus Reid came out with a poll showing that Canadians' confidence in Prime Minister Carney to secure a good deal for Canada has dropped significantly compared to a few months ago.
00:18:19.100So Canadians are starting to lose faith that this government can secure a good deal for Canada.
00:18:24.700Well, you can see why. Now, some of the commodities that you mentioned that we supply, we supply oil, we supply aluminium, we supply potash, is the American demand for that only met by Canada? They could buy elsewhere, perhaps.
00:18:46.860Question then, is there something that they want, and I'm thinking perhaps of strategic minerals, that they can only get from us?
00:18:57.100Yeah, I mean, there is a critical mineral race going on right now.
00:19:01.120Currently, China is the world's biggest exporter of critical minerals.
00:19:07.160There are components that are required for the future, for the contemporary high-tech industry, for semiconductors, for microchips.
00:19:16.860that only come from a select number of countries.
00:19:20.040China is producing and exporting them in spades.
00:19:23.720Canada is sitting on a mountain of critical minerals.
00:19:46.860It's a good sort of tantalizing theme to try to get the Americans on side because the Americans do continue to see China as the number one geopolitical adversary.
00:19:56.400So they should be interested in partnerships on critical minerals.
00:20:00.240Now, that said, it is leverage that right now is a little bit more theoretical than real because we are not extracting very much volume of critical minerals right now.
00:20:14.540It's more of something we can do rather than something we're doing a lot of right now.
00:20:19.480And then other things like potash is a great example.
00:20:24.420The other countries that produce a lot of potash other than Canada are Russia and Belarus.
00:20:30.560So if we were to try to use potash as leverage, say maybe a boycott of potash exports to the United States to try to flex our muscles,
00:20:39.760Well, all that we would be doing would be facilitating a greater relationship between the U.S. and our geopolitical adversaries, Russia and its vassal state, Belarus, because at the end of the day, American agricultural producers are going to need fertilizer.
00:21:02.380They're going to get it one way or another. So it's a little bit precarious to try to use leverage, even when you do have it.
00:21:09.760Okay, we're very rapidly running out of time, Yaroslav, which is a shame because I wanted to ask you about so many things.
00:21:15.960However, advice to Mr. Carney, you're in the business of strategic advice.
00:21:21.900If he would listen to you, what would you tell him?
00:21:26.560I would probably tell him, okay, first of all, the Gordie Howe thing, totally avoidable, totally avoidable.
00:21:32.420Do not shoot from the hip when you're announcing a new agreement between two countries.
00:21:37.160make sure you get it right. Make sure you get it factual. And if you don't get it right the first
00:21:43.740time, get it right the second time. Don't wait until the sixth or seventh attempt to explain it
00:21:48.940and then still be caught up by reporters for having not been accurate. So that's one thing.
00:21:55.800But on the trade side of it, my advice would just be however possible, try to keep the temperature
00:22:02.520down try to be try to try to not be pokey in in the tone of your um any kind of a discourse about
00:22:13.160the u.s or about the canada u.s negotiation process while still holding as many cards close
00:22:21.220to your chest as you can i mean the fighter jet procurement decision is one of the the best levers
00:22:26.240that we have i'm not sure i'd be broadcasting it as prime minister oh you better give us a good
00:22:31.040trade deal or we're going to take our multi multi-billion dollar fighter jet deal somewhere
00:22:36.300else but don't play that card um until until you have to because there's been i think some fair
00:22:43.680criticism so far that on a number of issues where we did have leverage we gave it away just to keep
00:22:51.300the negotiations going and didn't get anything in return and that's ultimately not a very good look
00:22:56.440It does not come across as you being, you know, the dealmaker, negotiator that everybody thought you would be.
00:23:04.040I noticed you didn't tell them to drop supply management.
00:23:08.300Well, that would be a really thorny issue that could explode the detente that we have right now between our provincial premiers.
00:23:19.300We've got significant forces in Canada calling for an end to supply management and dairy and others saying over my dead body.
00:23:26.440we probably don't need those kinds of internal bowels right now when we're trying to port
00:23:31.080solidaries so that's a sticky one it really is sticky you're probably right but cheaper cheese
00:23:36.040would be good but you know what guys if you can give me 10 more seconds there are things we can
00:23:42.680do on supply management or on access to dairy to the dairy market without tearing up the whole
00:23:49.480system. Canada recently cut a deal with New Zealand, which also had complaints about supply
00:24:00.120management. And through some creative re-evaluation of who is entitled to quota, we were able to
00:24:09.320satisfy New Zealand without having to completely re-engineer or re-orchestrate or tear up our
00:24:14.920supply management system so there is some maneuverability in negotiating while keep still
00:24:20.920keeping supply management in place uh that that does that does allow our trade partners to feel
00:24:26.520that they're getting a better uh fairer access to the canadian market okay well let's hope they use
00:24:33.960that ladies and gentlemen yarislaf baran strategic advisor to prime ministers and aspiring prime
00:24:40.840ministers as well, talking to us from Ottawa about the trade mess. Thank you, Yaroslav.
00:24:46.620It is such a pleasure to have your perspective.
00:24:48.820Always a pleasure, Nigel. Looking forward to coming back soon.
00:24:53.320And you will. Ladies and gentlemen, for the Western Standard, I'm Nigel Hannaford.