by Ambassador Bruce Heyman
American Ambassadors Review, Spring 2019
Seeing the words “U.S.-Canada Trade War” in headlines is hard to imagine in any year, but to see them in 2018 was jarring. How is it possible that best friends and neighbors who have had the most successful trading relationship in the world now could have an association characterized by the word war? This is hard enough for the average American or Canadian to conceive of, but it was particularly hard for me to do so, as the U.S. Ambassador to Canada until January 20, 2017.
When I left Ottawa, I was confident that the U.S.-Canada relationship was strong—indeed, perhaps never stronger. In March 2016, we had a state dinner in Washington for Prime Minister Justin Trudeau, the first in nearly 20 years. Then-President Barack Obama later repaid the favor and addressed the Canadian Parliament for the first time in more than 20 years. Our two-way trading relationship was valued at a huge $670 billion per year, and while no longer our largest, it was the most balanced, with the United States having a slight but rare trade surplus in goods and services. Through an integrated supply chain, our companies and citizens worked together. On average more than 400,000 people legally crossed our 5,525-mile non-militarized border daily for work and tourism.
But the U.S.-Canada relationship was and is much larger than trade. Canadian and American troops have fought and died together from the beaches of Normandy to the mountains of Afghanistan, and our countries are founding members of the North Atlantic Treaty Organization (NATO). The North American Aerospace Defense Command (NORAD)—a unique Canadian-American partnership—patrols the skies above our shared continent. Our intelligence and law enforcement agencies constantly exchange information on threats from terrorism, nuclear proliferation, espionage and complex crimes. Our two countries work together to protect the environment and provide stewardship of the magnificent Great Lakes, where cities such as Toronto and my own Chicago are located.
This dense web of mutually beneficial cooperation is based on a shared set of values. Both our countries settled the vast North American continent, providing undreamt-of opportunities to millions of immigrants. Both our countries have an abiding commitment to democracy and the rule of law, and when we fall short, we make the needed changes. Beyond our countries’ being next-door neighbors, the largest number of Americans living abroad live in Canada and the largest number of Canadians living abroad live in the U.S. We are best friends, but more important, we are family.
Candidate and then President Donald Trump’s harsh rhetoric towards Canada came as a shock. Tapping into the frustration of American workers who felt the American Dream was slipping out of their reach, especially in the midwestern Rust Belt, he railed against the North American Free Trade Agreement (NAFTA), the quarter-century-old trade agreement that links the U.S., Canada and Mexico.
During the Presidential transition and while I was still Ambassador, Canada recognized the importance Trump placed on addressing NAFTA’s shortcomings and was a willing partner in working to update and improve it. In fact, meetings were taking place in New York between the Trump transition team and the Canadian government. All seemed on track for a normal negotiation, friendly but tough. However, from the beginning, President Trump set a harsh tone, calling NAFTA “the worst deal ever negotiated.” He proclaimed to be a fan of trade wars, saying they are “good and easy to win.” It must be understood that the U.S.-Canada relationship is larger than trade, it is one based on a partnership of historic proportions.
President Trump’s view of negotiation seemed to be taken from his experience in the New York real estate world where for him, winning is all that matters even if it means forcing concessions from across the party table. He showed little interest in embracing long-term institutions and relationships, such as NATO, NORAD, and NAFTA. In Canada, where support for multilateralism runs strong, President Trump’s abandonment of the Trans-Pacific Partnership (TPP) and the Paris Climate Agreement seemed to indicate a propensity for only short-term thinking and boded serious challenges for the renegotiation.
Trade negotiations are never easy. The 25-year-old NAFTA was ready for an update. Tough talk and public posturing are part of the trade negotiating game, especially if partners are to be convinced to take on their own entrenched domestic special interests. But adding to the disenchantment on the Canadian side was the Trump administration’s decision, separate from the broader trade talks, to apply tariffs against imports of Canadian steel and aluminum. Particularly galling was the use of Section 232 of the Trade Expansion Act of 1962, which allows such tariffs to be imposed only where there is a threat to “national security.” Given that Canadians have fought and died side-by-side with Americans, this was especially troublesome. Perhaps for the White House and United States Trade Representative (USTR), invoking the national security clause was just another hardball trade tactic, but in Canada, it was equivalent to a knife in the back.
After siloing Canada and Mexico in negotiations, the U.S. negotiated first with Mexico and then pressured Canada to accept a new NAFTA or “U.S.-Mexico-Canada Agreement” (USMCA). New NAFTA (USMCA) is not all that different from old NAFTA plus language from President Obama’s TPP negotiations: it would preserve the basics of market access, plus provide some marginal relief on long-standing irritants such as slightly increased access to Canada’s highly protected dairy sector and new protections for the auto sector.
But could a new, updated trade agreement have been reached without aggressive posturing, without unilaterally imposing tariffs on dubious, indeed, insulting national security grounds? Absolutely yes. President Trump’s model for a negotiation is a binary one in which one side wins and the other loses. But there is another model, a symbiotic one, which I have seen work time and again in business and in government. That is, one can look out for one’s interests and simultaneously treat one’s partner with respect and fairness. And today’s successful deal can be the foundation for other, even more important ones down the road.
Right now, our relationship with Canada has been damaged. The wry joke in Canada is that USMCA stands for “the U.S. Made Canada Accept.” The Environics Institute Focus Canada Survey taken late last year showed that Canadian regard for the U.S. is at an all-time low, with an approval rate of 37 percent, compared with a peak of 83 percent in 1983. Repairing the relationship will take a while, so it is imperative we start now, not only because it is the right thing to do but also because it is also the smart thing.
The aggressive tones—coupled with threats to walk away from NAFTA and to impose tariffs on the Canadian auto sector, plus the actual imposition of steel and aluminum tariffs—have resulted in Canadian anger. It does not seem like the behavior one expects from a friend. It was not so long ago that tripartite North American summits were held. I look forward to the day when the North American leaders come back together and once again call these meetings the “Three Amigos Summits.”
A smart first step in healing the relationship would be to remove the steel and aluminum tariffs on Canada. The national security justification lacks a basis in fact. We need to clear the decks of useless irritants as we prepare for passage of USMCA in the legislatures of all three countries. I am cautiously optimistic that it will pass, but politically, it’s not going to be easy.
I fear that the Trump administration has made the job of getting the agreement through the U.S. Congress unnecessarily difficult. Had the agreement been completed and signed in 2017 or even early 2018, as then-Speaker Paul Ryan implored, it would have been passed by a Republican-controlled Congress. Now we have a different Congress, with the Democrats controlling the House of Representatives. This Congress, rightfully, will want to make sure the agreement is fair and enforceable, and this may require some changes. We have underway a 2020 presidential race in which candidates are positioning themselves on trade; we have a Parliamentary election in Canada in October and of course, we have a brand-new Mexican government. The Trump administration will have to show a finesse and regard for the other party’s interests.
There is so much potential for North America. The agenda ahead for the short-to medium-term future is clear. The Trump administration must step back from the rancorous rhetoric that characterized the period before USMCA was signed. It needs to take the steel and aluminum tariffs off the table, and it must begin the hard work of getting the needed bipartisan buy-in from Congress to approve the agreement. Beyond these steps, it needs to return to the understanding that characterized previous administrations—that the three North American countries, with our abundant natural resources and our strong, hard-working people, can do so much more working together, and that cooperation among us is an asset, not a liability.
My partner, Vicki, and I, in our upcoming memoir about our time in Canada, The Art of Diplomacy (Simon & Schuster), open the book by saying, “Relationships between countries are like relationships between people. They take work and commitment. They are based on honesty and trust. When that trust breaks, the relationship will show signs of stress. And if those stresses become too grievous, the relationship will suffer.” Our country’s relationship with Canada—so important, and with so much potential yet unrealized—has shown some undeniable signs of stress. But the negotiation of USMCA gives us a chance to draw a line between the recent past and a future that is full of possibilities. Let’s hope we are wise enough to do it.