Opposites Attract

The US and Canada Meeting tomorrow.

On the surface one would think that sparks could fly at the first Trump/Trudeau meeting. But that would be an gross overstatement and a very  cursory review of the situation . While both men disagree on a number of issues and are very different personalities, there are many things that the two countries have together that they will not want to see disappear,  the trading relationship being the top one. At over 500 billion dollars( $545 billion two way trade in 2016)  with 35 states ( many in the rust belt, a Trump support area ) having Canada as their main importer. The Americans will be careful to see that continue. And then there is the many complex supply chains that have developed as a result of this trading relationship.

On energy , contrary to Obama’s position , Trump has already supported the XL pipeline and the proponent has made a fresh application. Given the speed of the approval of the Dakota pipeline I suspect the Americans will do as much as possible to get it going. Interesting isn’t it that the person the Canadians dislike of the two , Trump, has already done more positive things on energy related to Canada than Obama did after 8 years.  

Of course,  there are irritants that could potentially cause real problems. For sure Trudeau did not help matters by throwing more money at that chronic mismanaged company ,Bombardier. And there is the small matter of living up to our commitment with NATO –the US does , we do not . Really not a small matter .  I suspect Canada will have to start to spend more on NATO. They are spending less than one per cent of GDP when under the agreement they are suppose to spend two per cent. The US is spending a little over two per cent. So the US is really carrying a lot of countries in this organization, including Canada.

Then again the dubious environmental Paris Treaty Trudeau has hailed and in which he has thrown hundreds of millions ; not the kind of thing that a Trump administration is eager to do. Then there are our agriculture supply boards , a non capitalistic approach to development . At some point we are going to have to stop propping up eggs. cheese and milk. Let’s not forget that Canada needs the US more than the US needs Canada.

It will be interesting to see if the whole softwood lumber issue arises at this first meeting . Given that it was a separate agreement outside of NAFTA , where it will rank in this first meeting will be an early sign of the approach the Americans are likely to adopt. It maybe  be that they want to continue as in the past and negotiate outside of NAFTA and that might be best for Canada. A US panel  has already ruled there are grounds to investigate that Canada was getting an unfair advantage in past deals, given the large tracts of crown land ( provincial governments) that forest companies use. I suspect this issue will continue to be a thorny one and to reach a new agreement, the old one has expired, will be very difficult.

Oh, and I understand the American Government has already contacted former PM Mulroney. Now , to all you anti Mulroney types out there , better be careful , we might need him —–again.

Noitwithstanding all this , tomorrow will set an positive tone given the large and intricate strong trade ties that exist. Likely a commitment by both to work to improve NAFTA and move on.

 

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