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It’s time for Canadian industry to knock on U.S. doors: Canada Institute director

A cyclist passes U.S. and Canadian flags placed side-by-side on the Eisenhower Executive Office Building next to the White House in Washington.


While Donald Trump may not have Canada directly in his trade-negotiation crosshairs, long-time economic and trade analyst Laura Dawson says that as the President hopes to renegotiate broader trade agreements, it's crucial for Canadian industry to get in the face of American politicians to remind them just how deep the countries' trade relationship runs.

During a Wednesday morning speech at the Canadian Association of Petroleum Producers Scotiabank Investment Symposium in Toronto, Dr. Dawson told a crowd of upstream oil-and-gas personnel and industry investors that there's reason for optimism under President Trump, provided Canadians constantly remind their biggest trade partner how crucial their products are.

"The challenge now is to go from being the visiting Canadian to the ubiquitous Canadian – so that Canadians are everywhere," said Dr. Dawson, director of the Canada Institute at the D.C.-based Wilson Center think tank, in an interview after the presentation.

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That means knocking on doors everywhere from Washington to Billings, Mont., and Bismarck, N.D. – the latter two being crucial to Alberta's energy industry – to remind politicians and influential bureaucrats at their doorsteps that Canada supports millions of U.S. jobs and serves as its No. 1 petroleum importer.

Dr. Dawson's non-partisan think tank does precisely that: nudge Washington decision makers about the importance of Canada and its relationship with the United States. Canadian politicians have recently begun fanning out across the U.S., too, to spread the gospel of Canadian trade. Now, she said, it's time for industry to get out there and do the same.

"We're now in a position where we need to hear from particular sectors, from energy, agri-foods, aerospace, so that U.S. legislators and the White House are very clear on the specific aspects of the relationship, so we don't actually get hit," she told the crowd.

While the North American free-trade agreement might not contain many direct measures related to energy, she suggested that shedding the agreement – as Mr. Trump hopes to do – could have enormous ripple effects across the "economic engine" driven by the two countries' integrated supply chains, with drastic fallout for the continent's energy competitiveness.

So the message from Canadians, she said, needs to be about the security and reliability of the Canada-U.S. trade relationship as fuel for American economic growth.

The messaging was consistent at the conference Wednesday morning. Dr. Dawson was introduced by Dieter Jentsch, Bank of Nova Scotia's group head of global banking and markets, with a video branding North America as "the energy continent," deliberately grouping Canada, the U.S. and Mexico as a collaborative force.

Dr. Dawson said she has faith in the experience of Commerce Secretary Wilbur Ross and Trade Representative nominee Robert Lighthizer: "We know they're going to work within the rules, so that gives us some comfort."

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Delays, meanwhile, will work to Canada's advantage. Mr. Lighthizer has yet to be confirmed into his trade-envoy position, preventing much traction on trade negotiations from the American side. Even when he's in place, all three North American countries would need to begin long consultations before coming to the table. "The best estimate is probably next spring," Dr. Dawson said.

Meanwhile, a border adjustment tax – much-feared among U.S. trade partners, and even among Dr. Dawson's colleagues at the Canada Institute – "makes no logical or economic sense," she said. "It's complicated and may not deliver what [the U.S.] wants, and may result in retaliatory tariffs of up to $100-billion from trading partners."

The hardest-hit demographic from a border-adjustment tax, she said, would be low-income Americans – a major Trump voting base, and one he would be loath to hurt if the right message was driven across. These Americans "buy a lot of important products, like through Costco and Dollar Tree," Dr. Dawson said. "And because the tax could be applied to gasoline, those Americans who drive non-efficient vehicles that have to drive 25 to 30 miles a day to a low-wage job, the amount they're spending on transportation every day is going to increase significantly."

Some changes to decades-old NAFTA may benefit Canada – "Canadians have been asking for NAFTA to be reopened for years, and previous U.S. administrations have been reluctant to do so," she said – but that long-time "irritants" like the Canadian dairy industry may be targeted.

But a lot of provisional changes to NAFTA, she said, wouldn't bring back many jobs to hard-off states such as Indiana, Ohio or Michigan, which Mr. Trump has promised – and which Canada could use to its advantage by suggesting prosperity through better co-operation.

Mexico, meanwhile, will vote on a new government this summer, and left-leaning anti-Trump candidate Andres Manuel Lopez Obrador is expected to have a strong chance to win the presidency. Given that Mr. Trump's NAFTA furor stems in part from its trade imbalance with Mexico, renegotiation talks will almost certainly be terse. And here, too, Dr. Dawson said Canada can play a key role as a stern broker, in turn ensuring favourable trade terms.

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"The only honest broker [and] flexible partner [at the table] is Canada," she said. "And I think that's a really important role."

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