Prime Minister Justin Trudeau is accusing the Trump administration of trying to divert business investment from Canada to the United States by insisting on a five-year “sunset clause” in a renegotiated NAFTA agreement, saying no investor would inject capital in this country if they feared Canada’s preferential access to the massive U.S. market could be disrupted within half a decade.
“What company is going to want to invest in Canada if five years later there might not be a trade deal with the United States?” Mr. Trudeau told NBC News in an interview that aired Sunday.
“That quite frankly is probably part of the whole point of the United States to say, ’Well, we don’t want anybody investing in our NAFTA partners; we want people investing in us.’”
Mr. Trudeau levelled the charge while speaking to the U.S. TV network Sunday in an interview he employed to step up the campaign against hefty import taxes that U.S. President Donald Trump has imposed on Canada, Mexico and the European Union in the name of national security.
Last week, the Prime Minister revealed that a White House meeting with Mr. Trump and Mexican President Enrique Pena Nieto to close a deal on NAFTA was scrapped after the United States demanded Mr. Trudeau agree to a sunset clause, a provision that would automatically terminate the deal in five years unless all three countries agreed to extend it.
We’re going to be polite but we’re also not going to be pushed around.— Prime Minister Justin Trudeau
Daniel Ujczo, an Ohio-based trade lawyer with Dickinson Wright, said he thinks the continuing uncertainty over NAFTA renegotiation is dampening enthusiasm for business investment in Canada right now.
Canada has spent years positioning itself as a springboard into the U.S. market, Mr. Ujczo said. “If there is uncertainty surrounding the NAFTA, it really does make Canada’s trading relationships around the world more vulnerable,” he said.
Mr. Ujczo thinks however the chief reason for the Trump administration wanting a five-year sunset on NAFTA is that it would give the White House more control over the deal in the future.
Mr. Trudeau also told NBC he finds it “frankly insulting” that Mr. Trump has imposed hefty import taxes on Canadian steel and aluminum in the name of national security, saying that is not how close allies should treat one another.
The Prime Minister revealed to NBC News’ Chuck Todd that last year Mr. Trump had even privately agreed with him that it would wrong to hit Canadian steel and aluminum with this very same national security tariff.
Mr. Trudeau also warned the United States in the interview that American workers are going to be hurt by the trade battle, including the huge retaliatory trade action Canada is taking against $16.6-billion of U.S. goods starting July 1.
“We’re going to be polite but we’re also not going to be pushed around,” Mr. Trudeau said.
Foreign Affairs Minister Chrystia Freeland appeared on CNN to voice the incredulity and anger that Canadian officials feel toward Washington.
“I would just say to all of Canada’s American friends … Seriously: Do you really believe that Canada, your NATO allies, represent a national-security threat to you?” Ms. Freeland told CNN.
The Trump administration triggered a trade war last week when it imposed hefty tariffs on steel and aluminum from Canada, Mexico and the European Union. Mr. Trump justified it as necessary to ensure U.S. “national security” because restricting these imports under Section 232 of the U.S. Trade Expansion Act would expand the United States’ own capacity to construct its own tanks and warships.
Mr. Trump, however, remained unmoved over the weekend by criticism of the tariffs, and celebrated the protectionist move against Canada, the European Union and Mexico on Twitter, saying that “Stupid Trade” is not fair trade.
“The United States must, at long last, be treated fairly on Trade,” Mr. Trump tweeted on Saturday.
A senior Trump adviser, meanwhile, said Mr. Trudeau is blowing this dispute out of proportion and called it merely a “family quarrel” between neighbours.
“I think he’s overreacting,” White House economic adviser Larry Kudlow said of Mr. Trudeau on the Fox News Sunday program.
Mr. Trudeau however, told NBC that in 2017 Mr. Trump had told him it would be disrespectful to hit Canada with such a measure.
“A year ago, when I talked with the President about the possibility of 232 tariffs on steel and aluminum, he agreed that it would be insulting to consider Canada as part of the national-security concerns.”
Separately, Ms. Freeland told CBC News the government is in talks with provinces, companies and unions on a package of government support for steel and aluminum workers and firms affected by the Trump tariffs.
Chad Bown, senior fellow at the Washington-based Peterson Institute for International Economics, has estimated the U.S. tariffs will cost Canada US$3.2-billion in trade losses a year.
Meanwhile, an advance meeting of Group of Seven finance ministers and central bankers ended with sharp public criticism on Saturday over Mr. Trump’s steel and aluminum tariffs.
A final chairs’ message from Finance Minister Bill Morneau said the ministers and central bankers asked Treasury Secretary Steven Mnuchin to “communicate their unanimous concern and disappointment” to Washington.
The Prime Minister also revealed to NBC that Canada had been close to granting the United States better access to the heavily sheltered Canadian dairy market in NAFTA talks. Foreign dairy imports normally face massive Canadian tariffs.
“We were moving towards flexibility in those areas that I thought was very, very promising,” Mr. Trudeau said.
With files from Bill Curry in Whistler, B.C. and Reuters