U.S.-Canada ties can survive trade friction, Trudeau says

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September 25, 2018 - The Canada-U.S. relationship will endure despite any possible friction between the two governments, Prime Minister Justin Trudeau said as he faces a looming deadline in trade talks.

Trudeau, speaking Tuesday at a Council on Foreign Relations event in New York, took aim at President Donald Trump’s tariffs on steel and aluminum and briefly addressed the North American Free Trade Agreement. He said there’s a “possibility” of building on a U.S.-Mexico deal to update the three-country pact but that it’s his job to stand up for Canada’s interests.

“The relationship between Canada and the United States is far deeper than between the Canadian government and the U.S. administration,” Trudeau said. “There will be moments where there is better alignment or worse alignment between our two governments, and the relationship will just continue to create, frankly, prosperity and opportunity and security for our citizens.”

The U.S. wants to publish text of a deal, with or without Canada, by Sept. 30 in order to sign it before Mexico’s incoming president takes office. Talks with Canada, however, are hung up on a few core issues, largely pitting Canada’s preference to retain provisions already enshrined in the original 1994 Nafta against American demands for change.

The U.S. and Mexico reached their own tentative deal last month. “I think there’s a possibility there to build on what they agreed, but we know that Canada’s interests are what we have to stand up for, and we will,” Trudeau said.

Metals Tariffs

Trudeau said Section 232 tariffs on steel and aluminum, enacted on grounds of national security, are “a tool that the president has to use and he is using them because I think there’s a sense that there are other tools that have to go through Congress that he doesn’t get to use.”

Canada had no choice but to respond with its own retaliatory tariffs, Trudeau said—making, U.S.-made Heinz ketchup more expensive versus its Canadian counterpart French’s, “which is great,” he said. “We don’t want to do this, we’re raising prices for consumers, but we cannot not respond to punitive tariffs that don’t make a lot of sense.”

Trudeau has said his focus on dealing with the Trump administration has been “simply not escalating, not opining, not weighing in.”

‘A Century Ago’

Trudeau appeared on the panel alongside Foreign Minister Chrystia Freeland, who is leading Nafta talks. The latest burst of Canada-U.S. talks began in August, “which seems like a century ago but was actually just a month ago,” she said.

She declined to specifically discuss issues but signaled that Canada is continuing to press to preserve some form of anti-dumping and countervailing duty panels, currently allowed under Nafta’s Chapter 19. The U.S. wants to eliminate the Chapter 19 panels, while Canada sees them as a crucial guarantee of fairness.

“For us, rule of law is an extremely important part of how we do things, including trade, and the prime minister has been very clear about that with Canadians,” Freeland said. “We are very aware of the importance of this trading relationship for us and we think it’s kind of important for you guys, too.”

Source: Bloomberg

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