Building Together or Falling Apart: Canada’s Premiers Come to DC to Talk about Future Prospects for North American Trade

The backbone of the North American trading relationship - the North American Free Trade Agreement (NAFTA) - is under threat. The Trump administration has repeatedly threatened to withdraw from the 23 year-old agreement and has now pulled the trigger on renegotiations.

U.S. states and Canadian provinces have developed highly integrated and efficient supply chains. Canada is the largest buyer of exports from 35 U.S. states. Canadian products sold in the United States contain an average of 25 percent of U.S. value-added content. Mexico plays a key role in these supply chains as a production and investment partner and as a growing consumer market. 

With NAFTA negotiations looming and threats of new trade barriers being introduced, the future of the Canadian-American economic and trade relationship is uncertain.

• Will Canada retaliate against threats to established supply chains?
• Should Canada be pursuing new global trading partners in case the NAFTA falls apart?
• Will Canada and Mexico continue their trading relationship?
• Are there new prospects for cooperation that should be explored by all three partners to build North America’s competitiveness in the world?

On June 8, Canada Institute Director Laura Dawson hosted a group of Premiers from across Canada to talk about the country’s potential negotiating objectives and strategies in the upcoming talks.

The following premiers were in attendance:

-The Hon. Brian Pallister, Premier of Manitoba

-The Hon. Stephen McNeil, Premier of Nova Scotia

-The Hon. Dwight Ball, Premier of Newfoundland and Labrador

-The Hon. Brian Gallant, Premier of New Brunswick

-The Hon. Wade MacLauchlan, Premier of Prince Edward Island

-The Hon. Sandy Silver, Premier of Yukon

-The Hon. Bob McLeod, Premier of the Northwest Territories

Key Quotes:

Dwight Ball, Premier of Newfoundland and Labrador:

“We are not afraid to negotiate a new, modernized NAFTA. I call it ‘NAFTA 2.0.’ I know Canada is ready for this. I know the provinces are ready for this… We have had relationships with the U.S. long before NAFTA.”

“First of all, I don’t believe we will live in a world without NAFTA. I think the sophistication, the maturity we see on both levels – both in Canada and the U.S., and now in Mexico as well – we moved beyond the point where we’re willing to open up those markets because we’ve seen the benefits of this for over 20 years.” 

“NAFTA works for us right now. [That] doesn’t mean that it doesn’t need to be modernized, and that’s a discussion we’re willing to have… We want to get this done quickly. We want to get people back to doing what they do best – and that’s not negotiating. That is actually working together, creating jobs both in the U.S. and in Canada.”

Sandy Silver, Premier of Yukon:

“It’s so important that we take a look at North America as being cogs of a bigger machine. What affects our partners and our friends down in Mexico and our partners and our friends in America affects Canada as well… It is so important that we modernize NAFTA; it is so important that we keep what’s whole, what works in NAFTA… Whatever’s good for Canada is good for the United States as well.”

“[In] the manufacturing process of cars… they go back and forth between the border seven different times before they are manufactured… [That’s] how important it is to have a thin, thin border when it comes to our trade industry.”

“It’s the federal government [of Canada] that’s going to be figuring out the actual regulations and the rules and procedures, but it’s going to be each and every province and territory that’s going to be dealing with the ramifications of those actions. So, whether it be aerospace in Prince Edward Island or soft wood in British Columbia, or anywhere in between, it’s so important that all of our jurisdictions are here communicating with our counterparts in the states, talking with the Congress-folks, talking with the governors, talking with the senators, and making sure that our voice is being heard when it comes to the specifics.”

Bob McLeod, Premier of the Northwest Territories:

“If we don’t have NAFTA, we need to develop our potential, and we’ll look elsewhere. I’ve been to China five times and I know they’re some of our biggest visitors.”

Brian Pallister, Premier of Manitoba:

"[Our message in Washington this week has]been about not competing with one another as much as it has been about building things together, because the inter-relationships between our economies are absolutely undeniable and the strengthening of them over the last number of years… has resulted in amazing wealth-creation opportunities. There’s a danger though that we don’t understand certain fundamental things… interdependence is not a weakness. The trade agreements that we’ve been part of and benefited from are not about win-lose. They’re about win-win. And so we need to make NAFTA great again.”

“I want to see the proposals from my partners before I sign on in a hurry. I understand the benefits, indisputably, of resolution of discord and the certainty of capital flowing to areas of greater security and confidence. Absolutely, we all agree on this. But, I’ve seen people bully in negotiations before, and I don’t take kindly to that. I would say, fundamentally it’s a question of our belief in, and understanding of, the benefit of rules-based trade." 

"In sports, you like to understand the rules… They benefit the player. It’s true in trade as well... The United States is big. I’ve seen the United States bully. I’ve seen the United States hurt industries in Canada with bullying tactics. We’re in a relationship that needs rules.”

Brian Gallant, Premier of New Brunswick:

“We are, actually, relatively speaking, the province that depends the most on exports to the United States... Ninety percent of our exports go to the United States. So ensuring that we have robust trade between Canada and the United States is crucial to both economies. No doubt about that. Nine million jobs are created and are in the U.S. because of trade and investment with Canada, but there’s no doubt that for us, in New Brunswick, it’s that much more crucial.”

“We want to see NAFTA dealt with in a good way, in a solid way – a good deal – but also swiftly. We hope that we’re going to be able to come to something soon so we can ensure that people recognize that for years to come, Canada and the U.S. are going to continue their very strong trading relationship.”

Stephen McNeil, Premier of Nova Scotia:

“We’re not opposed to having NAFTA looked at. I think the fact that this agreement has been here for 25 years – it’s quite remarkable that we haven’t done that. If you look at yourselves personally, professionally, what relationship do you have that hasn't changed in 25 years? Let’s modernize it. Change is not bad. Let’s look at the opportunities for our respective countries." 

“It’s certainty – that’s what the agreement provides. There’s a lot of capital that’s put on the table when it comes to investing in products and companies and growing opportunity. But if there’s no NAFTA, then we don’t know what the rules are. The rules could be changed every year or every election, quite frankly.”

Wade MacLauchlan, Premier of Prince Edward Island:

“In the afternoon, we met with the [U.S.] assistant trade rep, and that was a little rocky at times, but it ended up by him telling us that he had his honeymoon in Prince Edward Island and that we both went to Yale Law School. So, there’s always something that you can do that reminds us that this is really about relationships.”

“Everybody we talk to recognizes the value and mutual prosperity that’s come from our trading relationship. I think it’s important that we continue to proceed and that we try to get it done as quickly as possible and to bear in mind what I think is the most important overall takeaway from this – that the role of government is to build confidence, to create an environment where people will do business, and [in which] there won’t be any reason to slow down because of uncertainty.”

Moderator:

Laura Dawson

Director, Canada Institute