Trade with U.S. won't 'magically' go back in time, says Dominic LeBlanc

OTTAWA — While Canada remains optimistic that progress is being made in trade talks with the United States, Canada-U.S. Trade Minister Dominic Leblanc warned Thursday that Canadians shouldn’t expect trade terms between the two neighbours to revert back to the patterns of recent decades.

“I do believe this is resolvable,” LeBlanc told the Senate Committee on Foreign Affairs and International Trade, responding to a question from Nova Scotia’s John McNair. “(But) the relationship with the United States has fundamentally changed and it will not magically go back to what it may have been a year ago or 25 years ago.”

LeBlanc, the Carney government’s point person on trade with the U.S. and Mexico, also said that Canada and the U.S. have many common interests and that both countries are stronger and more prosperous with freer trade.

Interviewed after his committee appearance, LeBlanc told National Post that Canada has a two-track strategy in being open to either sectoral deals for industries such as steel, aluminum or softwood lumber, or a broader deal. “Both tracks are still in discussions.”

LeBlanc said it’s too early to say whether a sectoral or a more comprehensive deal is more likely but added that related issues such as energy security, critical minerals and defence may also be involved. “At one point, there may be an intersection.”

The minister also told the Senate committee that Canada is not without influence in talks with the U.S., pointing to the importance, for example, of this country’s dominant aluminum sector in the massive American auto industry. ”There are leverage points,” said LeBlanc, also responsible for intergovernmental affairs and internal trade. “There are so many lines of intersection.”

While he was careful to avoid any forecasts on what might happen in the trade talks, LeBlanc indicated that the Canadian strategy involved remaining open to a deal with the U.S. on either of the two tracks – sectoral or comprehensive – while keeping multiple lines of communication open with American and Mexican officials. Timing is also important, as Canada may be in an improved position if the Trump tariffs lead to significant inflation for American consumers.

The Carney government, meanwhile, is trying to prepare the Canadian economy for a world with more U.S. protectionism and where trade patterns in alternative overseas markets such as Europe and Asia are already well-established. Economists and trade analysts have warned in recent months that trade diversification, a Canadian challenge since before Confederation, is easier said than done.

Mark Manger, a professor of political economy at the University of Toronto’s Munk School of Foreign Affairs, said geographical proximity is critical in driving trade. “It’s extremely difficult to diversify trade.”

Although the 2020 CUSMA trade deal between the three North American countries (or USMCA, as it’s called in the U.S.) isn’t set to expire for more than a decade, it is set to be reviewed next year when it reaches its sixth anniversary.

U.S. President Donald Trump has imposed in recent months a wide range of trade tariffs on a wide range of countries, some of which have since reached negotiated tariffs arrangements for their exports entering the U.S. market. Canada has been sheltered to some degree by its pre-existing CUSMA deal, although some key sectors have been targeted by Washington and have since suffered.

Ottawa’s preparatory measures for the new trade landscape have included early efforts to improve ports, rail lines and pipelines to make Canadian exports more competitive, break down inter-provincial trade protectionism, and re-skilling programs for workers affected by the tariffs.

National Post

Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark nationalpost.com and sign up for our daily newsletter, Posted, here.