WASHINGTON – The Canadian government has begun a wide-ranging exercise to plan for the potential effects of the American election, including the possibility of a President Donald Trump threatening to scrap the North American Free Trade Agreement.
The government is mapping out a complex array of outcomes for various results including a Democratic presidency; a Republican presidency; and either a Congress where both parties split power, or one dominates.
The process involves the embassy in Washington, Canada’s dozen consulates in the U.S., numerous federal departments, and it is being centrally co-ordinated by the ministers on the cabinet committee for Canada-U.S. relations.
“If I tried to show you an organizational chart it would take up an entire wall,” Canada’s ambassador to the U.S., David MacNaughton, said during an interview in his office overlooking Capitol Hill.
“It’s a big enough job that there’s lots of work for everybody to do.”
There are two broad components to this quadrennial exercise in planning for the transfer in power of Canada’s next-door neighbour, and behemoth of a trading partner. The first is researching the issues and players.
The second is outreach — building contacts with campaigns, congressional power-brokers, state governments, industry, and labour groups. Amid a surge of protectionist sentiment, the government is seeking allies.
In trips to Colorado, Massachusetts and California, MacNaughton is spreading the word about the nine million U.S. jobs he says rely on trade with Canada. He cites agriculture as an example, with that industry’s $25 billion a year in exports to Canada.
He’s also listing the implications of different election results for important files.
Some issues will be deeply affected — the ones where U.S. parties disagree. Climate change is an obvious example. A Trump win might end some joint climate projects; on the other hand, it could spell a new start for the Keystone XL pipeline which he favours. Other issues aren’t partisan. For instance, the election is less likely to affect pilot projects to reform border-crossing.
“We have to be well-prepared for any eventuality,” MacNaughton said.
“And we have to be realistic about what the opportunities are and what the problems are going to be.”
Looming over everything is the continental trade deal.
Both presidential candidates favour revising NAFTA. Only one, however, has explicitly threatened to rip it up if he doesn’t get what he wants: “A total renegotiation,” Trump said last week. “And if we don’t get a better deal, we will walk away.”
The government is considering the potential results of:
—NAFTA being renegotiated. MacNaughton avoided being pinned down on Canada’s willingness to talk. No document is eternal, and improvements are always possible, he said, but added: “Is a renegotiation a renegotiation? Because if a renegotiation is a real renegotiation, (that) means it’s give and take on both sides.”
—NAFTA being cancelled. It’s unclear if the original 1987 Canada-U.S. free-trade agreement would snap back into place. MacNaughton said he’s attempted to get that question answered five times — and received five different answers.
“Trust me — I’ve asked,” the ambassador said. “It is a complicated piece of machinery… If Mr. Trump wins I’m sure there will be more than one legal expert opining on that.”
—NAFTA being a non-issue. It wouldn’t be the first time NAFTA got discussed during an election, then ignored. That’s one reason the government is reluctant to make any drastic noises during the campaign.
“Let’s wait until after the election and see how much of the rhetoric is rhetoric and how much is serious,” MacNaughton said.
“In the meantime, we have to prepare for any eventuality and do our homework.”
A Toronto trade lawyer agreed that cancelling NAFTA would be confusing. He cited different ways it might end up in court: “This election and Brexit are keeping trade lawyers on our toes,” Mark Warner said.
NAFTA is now part of web of trade and tariff rules that would be difficult to disentangle, he said. Warner said the U.S. president could certainly withdraw from it, therefore ending its dispute-settlement panels.
But he said it’s unclear what would happen to ongoing cases — like the Keystone XL suit against the U.S. government.
Tariffs are another story. Warner said it would be up to Congress to reintroduce them, with no guarantee they’d pass. On top of that, he said, some product tariffs could not be restored because they were eliminated in other international agreements that followed NAFTA.
Finally, there’s that question that vexed MacNaughton: Could the original 1987 Canada-U.S. Free Trade Agreement just be re-introduced? It’s not an issue most Americans are aware of, or care about, and it hasn’t been raised in this campaign by Trump or anyone else.
Canada lists the old agreement as suspended, not terminated. It’s unclear what the U.S. position is, Warner said. Ultimately, he said, the president would make the call — “and that could also easily be the subject of litigation.”