Canada needn’t be ‘enormously worried’ about U.S. trade reset: Trump official


CALGARY, Alberta—Prime Minister Justin Trudeau need not be “enormously worried” about a looming overhaul in U.S. trade policy under Donald Trump, an adviser to the new administration said Monday, as the Liberal government held a cabinet retreat aimed at finding its bearings in the shifting Canada-U.S. relationship.

Stephen Schwarzman, who leads the president’s Strategic and Policy Forum, said Canada is well regarded and will be in a good position should there be a renegotiation of the North American Free Trade Agreement.

“There may be some modifications, but basically things should go well for Canada in terms of any discussions with the United States,” said Schwarzman, whom Foreign Affairs Minister Chrystia Freeland has described as a “longtime good friend.”

Schwarzman—the CEO of the Blackstone Group investment firm—met privately with Trudeau and with ministers as part of the two-day retreat in Calgary.

Trump has famously promised a new trade relationship with the world focusing on American interests—indeed, he made good on one part of that promise Monday by signing an order removing the U.S. from the Trans-Pacific Partnership trade deal.

Schwarzman said the Trump administration is more concerned with agreements in which there are big trade imbalances, which is not the situation with Canada.

International Trade Minister Francois-Philippe Champagne said it was good to have someone at the “top of the pyramid” hear from ministers.

“I think we have someone who has a very deep understanding of the relationship between the United States and Canada,” he said after the daylong meeting.

The Trudeau government is looking to mitigate the risks of the unpredictable new U.S. administration, from promoting the well-connected Freeland from her previous International Trade post to rethinking its approach to trade.

David MacNaughton, Canada’s ambassador to the United States, has suggested bilateral agreements outside of NAFTA are a possibility as Canada tries to avoid suffering economic harm through a potential border tax or unfavourable trade agreement changes.

It is vital to have a good economic relationship with the U.S., he said. And while some matters may be dealt with inside the controversial Canada-U.S.-Mexico agreement, which Trump has promised to revisit, others may be better handled outside it.

On Monday, White House spokesman Sean Spicer suggested Trump will meet with both Trudeau and Mexican President Enrique Pena Nieto in the next month or so to talk about how best to proceed on renegotiations.

Blowing up the agreement might not necessarily have to happen, he hinted.

“Now, if they come in and express a willingness to (renegotiate), you could negotiate it within the current parameters and update it through the existing structure,” Spicer said during his first official media briefing as press secretary.

“If they don’t and he decides to pull out, then we will have to go back to the drawing table in the future.”

The danger, MacNaughton warned, is that Canada becomes “collateral damage” as Washington takes aim at what it sees as predatory trading partners.

“We will co-operate on trilateral matters when it’s in our interest and we’ll be looking to do things that are in our interest bilaterally,” MacNaughton said. “Some of them may be within NAFTA and some of them may not be.”

Freeland said Canada has a strong relationship with Mexico and is happy to be part of NAFTA, but noted its dealings with the United States are mostly bilateral.

Trump’s policies are expected to have an impact on a host of cabinet portfolios, but ministers did their level most to project a business-as-usual signal on their way into Monday’s meeting—notably Finance Minister Bill Morneau, whose federal budget is expected next month.

“The necessity for us to work together in a collegial fashion with the United States is no different today than it was last year or will be next year,” Morneau said.

Environment Minister Catherine McKenna said the Trump and Trudeau governments can work together—”he’s a businessman,” she said—even though the U.S. president is a staunch supporter of coal and has in the past expressed doubts about the science of climate change.

Renegotiating NAFTA offers a chance to address its flaws, said Canadian Labour Congress President Hassan Yussuff—who takes particular issue with a chapter that allows investors the ability to sue foreign governments.

The group is meeting with other unions Tuesday in Ottawa to gird for the coming talks.

“We’re optimistic that something positive can come out of this,” Yussuff said. “But … we are dealing with a president who is quite erratic and we are not sure exactly what it is that he wants to do.”

—with files from Kristy Kirkup in Ottawa