Transcript: NAFTA Troubles | May 08, 2017

Steve sits in the studio. He's slim, clean-shaven, in his fifties, with short curly brown hair. He's wearing a gray suit, checkered white shirt, and spotted blue tie.

A caption on screen reads "NAFTA troubles. @spaikin, @theagenda."

Steve says DAIRY. SOFTWOOD LUMBER.
BUY AMERICAN OR BUY CANADIAN,
TRADE ACROSS THE 49th PARALLEL
IS NOT WHAT IT USED TO BE.
OR RATHER, IS IT HEADED RIGHT
BACK TO WHERE IT USED TO BE,
BEFORE THE ERA OF THE
U.S.-CANADA FREE TRADE
AGREEMENT, AND LATER ITS NORTH
AMERICAN COUSIN, NAFTA?
IN THESE UNCERTAIN TIMES, LET'S
ASK TWO VETERAN ECONOMIC
OBSERVERS:
CRAIG ALEXANDER, SENIOR
VICE-PRESIDENT AND CHIEF
ECONOMIST AT THE CONFERENCE
BOARD OF CANADA...

Craig is in his early fifties, clean-shaven, with receding gray hair. He's wearing glasses, a gray suit, blue shirt, and red plaid tie.

Steve continues AND INDEPENDENT ECONOMIST
ARMINE YALNIZYAN.

Armine is in her late forties, with shoulder-length wavy gray hair. She's wearing a flowery green blouse.

Steve continues WE'RE DELIGHTED TO HAVE OUR
DYNAMIC ECONOMIC DUO BACK IN
THOSE CHAIRS HERE IN OUR STUDIO.
WE HEARD FROM DAVID SCHNEIDERMAN
EARLIER IN THE PROGRAM, THE
U OF T LAW PROF, ABOUT THIS
SITUATION NOW, WHERE AMERICAN
INVESTORS ARE SUING THE CANADIAN
GOVERNMENT FOR CHANGES IN
GOVERNMENT POLICIES THAT THEY
THINK AFFECT THE PROFITABILITY
OF THEIR COMPANIES, AND
OBVIOUSLY THIS HAS THE POTENTIAL
TO EXPLODE INTO SOMETHING BIGGER
NOW THAT ALL BETS SEEM TO BE OFF
AS IT RELATES TO NAFTA.
ARMINE, I WANT TO GET A BETTER
SENSE OF I GUESS HOW CONCERNED
WE ALL OUGHT TO BE ABOUT THIS
PHENOMENON.

The caption changes to "Armine Yalnizyan. Economist."
Then, it changes again to "Investor-state dispute settlement."

Armine says WELL, WE
SEEM TO BE LOSING AN AWFUL LOT
OF THESE BETS, AS YOU HEARD
EARLIER.
WE'RE DOING A LOT WORSE AT
WINNING AT THESE CASES THAN THE
AMERICANS ARE.

Steve says YEAH, ARMS.

Armine says AND IT IS
A BIG PROBLEM WHEN WE'RE ABOUT
TO UNLEASH BILLIONS OF DOLLARS
IN FEDERAL INVESTMENTS IN
INFRASTRUCTURE AND 160 BILLION DOLLARS
OF PROVINCIAL INFRASTRUCTURE
INVESTMENTS AND WE'RE NOT CLEAR
ON HOW MUCH OF IT WE CAN GET TO
DO DOUBLE DUTY FOR AGREEMENTS,
FOR LOCAL JOBS AND ALL OF THAT.
THAT'S STILL UP IN THE AIR.
I AM CONCERNED ABOUT HOW WE'RE
GOING TO BE ABLE TO SHAPE OUR
OWN ENVIRONMENTAL AND LABOUR
POLICIES WITHOUT BEING
CHALLENGED BY THE AMERICAN
COMPANIES THAT MIGHT BE WANTING.

Steve says OBVIOUSLY WE WANT TO
KNOW WHAT THE HARD AND FAST
RULES ARE IN PLACE BEFORE WE GO
OUT AND SPEND 400 BILLION DOLLARS BUT
IT LOOKS LIKE THAT'S NOT ON.
SO IS THAT A PROBLEM?

The caption changes to "Craig Alexander. Conference Board of Canada."

Craig says WHAT I'D
DO IS I'D LIKE AT THE HISTORY,
AND THE HISTORY IS THAT WE
ACTUALLY HAVEN'T HAD THAT MANY
CASES.
IF WE ACTUALLY LOOK AT THE
DOLLAR VALUE ASSOCIATED WITH
THEM, THE FINES THAT HAVE BEEN
LEVIED HAVE BEEN RELATIVELY
SMALL.
THINK ABOUT IT IN TERMS OF, OVER
23 YEARS, WE HAD FINES OF
215 MILLION DOLLARS.
I MEAN, THIS IS POCKET CHANGE
WHEN YOU THINK OF A FEDERAL
GOVERNMENT WHOSE REVENUES IS
300 BILLION DOLLARS.
AND CANADA'S ONLY LOST, YOU
KNOW, SIX OR SEVEN RULINGS IN 23
YEARS.
SO I THINK THAT THERE'S A
LEGITIMATE QUESTION ABOUT WHAT
HAPPENS AS WE GO FORWARD.
ARE WE GOING TO SEE MORE
LITIGATION?
BUT THE HISTORY IS THAT THE
INVESTOR STATE DISPUTE MECHANISM
ACTUALLY HAS NOT BEEN A PROBLEM,
IT HASN'T PREVENTED CANADIAN
PROVINCES AND THE FEDERAL
GOVERNMENT FROM IMPLEMENTING THE
POLICIES THAT IT WANTS.
AT THE END OF THE DAY, IF YOU'RE
GOING TO HAVE A FREE TRADE
AGREEMENT WITH A COUNTRY, YOU'RE
GOING TO HAVE TO HAVE SOME SORT
OF MECHANISM TO RESOLVE
DISPUTES, AND I THINK IT'S
BETTER TO RESOLVE THEM THROUGH A
TRIBUNAL THAN, SAY, CANADA
HAVING TO GO TO THE U.S. COURT
SYSTEM.
SO THE ALTERNATIVE I DON'T THINK
IS VERY ATTRACTIVE.

Steve says I GET YOU.
BUT THERE'S NOW A PRESIDENT WHO
SEEMS TO WANT TO BLOW UP
EVERYTHING EVERY OTHER DAY AND
THEN DO SOMETHING DIFFERENT ON
THE OFF DAY, YOU KNOW.
THE POLICY STATEMENTS COMING OUT
OF WASHINGTON ARE NOT EXACTLY
CLEAR THESE DAYS.
BUT ON THIS THING ABOUT INVESTOR
STATE DISPUTE SETTLEMENT,
ISDS... DIFFICULT ACRONYMS...
WHERE ARE YOU ON THIS AND WHAT
SHOULD WE BE DOING ABOUT IT?

Armine says A COUPLE OF ISSUES.
CRAIG SAYS THERE HAVEN'T BEEN
MANY WE'VE LOST, WE'VE LOST 29
AND THE U.S. HAVEN'T LOST ANY OF
THEM.
AND WE HAVE OTHER CASES WAITING
IN THE PIPELINE TO COME THROUGH.
SO WE ARE IN THEIR SCOPE TO
BEGIN WITH.
AND WHAT THIS PRESIDENCY DOES IS
EMBOLDEN COMPANIES WHO WISH TO
THROW THEIR WEIGHT AROUND TO SEE
WHAT THEY CAN GET AND WHAT THEY
CAN QUASH TO MAXIMIZE THEIR OWN
PROFITABILITY.
AND FRANKLY WHAT THAT DOES ALSO
IS CREATE A CHILL EFFECT OF
GOVERNMENTS THAT MIGHT OTHERWISE
HAVE DONE CERTAIN THINGS AND
DOES NOT WANT TO RAISE THE IRE
OF COMPANIES THAT MIGHT BE
TENDERING.
SO I THINK THERE'S THAT PROBLEM.
IN ADDITION TO WHICH, I MEAN, WE
HAVE PROTECTIONS FOR INVESTORS,
THOUGH THOSE PROTECTIONS... ISDS
WAS BROUGHT INTO PLAY BECAUSE OF
CONCERN ABOUT THE CORRUPTION OF
MEXICAN COURTS.
THERE'S NOTHING WRONG WITH OUR
COURT SYSTEM OR THEIR COURT
SYSTEM.
IN FACT, INVESTORS IN THE UNITED
STATES AND IN CANADA GO TO THE
COURT SYSTEM WHEN THEY FEEL
THEY'VE BEEN WRONGED BY PUBLIC
POLICY.
THAT'S EXACTLY WHY EUROPEAN
COMPANIES WERE SAYING, WHAT'S
WRONG WITH OUR COURT SYSTEM?
THERE'S NOTHING WRONG WITH IT.
WE DON'T NEED A PARALLEL COURT
SYSTEM TO DEAL WITH THESE
PROBLEMS.

Steve says WE'VE BEEN CAUGHT UP
IN THIS WHOLE MEXICAN PHENOMENON.

Armine says I THINK
ONE OF THE ISSUES IS WHEN YOU'RE
GOING TO PROTECT INVESTORS SO
MUCH, WHY DON'T WE HAVE PARALLEL
PROTECTIONS TO INVEST THE
ENVIRONMENT.
MAYBE THE COURT SYSTEM IS GOOD
ENOUGH FOR THIS.

Steve says YOU'VE ASKED THE
QUESTION.
DO YOU WANT TO FOLLOW UP ON WHAT
YOU THINK THE ANSWER IS?

Armine says I ACTUALLY THINK YOU EITHER
GET RID OF ALL OF THESE,
INDIVIDUAL PARTY VERSUS STATE
DISPUTE RESOLUTION MECHANISMS OR
RELY ON THE COURTS OR YOU START
INTRODUCING MINIMUM LABOUR
STANDARDS BASED ON ILO PLUS OR
MINIMUM ENVIRONMENTAL STANDARDS
FOR ALL PARTIES SO YOU CANNOT...
INSTEAD OF DUMPING PRODUCT, YOU
CAN'T DUMP BAD CORPORATE
PRACTICE IN DIFFERENT NATIONS.

Steve says CRAIG?

Craig says WELL, I
THINK THAT THE CHALLENGE HERE IS
THAT THE ISDS HAS NOT BEEN A
PROBLEM IN THE PAST.
BUT ONE OF THE THINGS I WOULD
SAY IS A COMPLAINT IS THAT THE
TRIBUNAL FINDINGS HAVE BEEN
INCONSISTENT AT TIMES.
SO WHEN YOU HAVE THE DIFFERENT
ARBITRATORS LOOKING AT THE
ISSUE, YOU KNOW, THEY DON'T
NECESSARILY EACH TIME REACH A
CONCLUSION THAT'S CONSISTENT
WITH THE ONES THAT CAME BEFORE
THEM.
SO I THINK THERE IS ACTUALLY
SCOPE TO IMPROVE THE ISDS, AND
IN FACT WHEN CANADA WAS
NEGOTIATING CETA AND THERE WAS...

Steve says THIS IS THE
CANADIAN-EUROPEAN.

Craig says THE CANADIAN-EUROPEAN FREE
TRADE AGREEMENT, THERE WAS
CONCERNS ON THE EUROPEAN FRONT
ABOUT THE ISDS, AND SO THEY CAME
UP WITH AN IDEA OF A ROSTER
SYSTEM THAT WOULD ACTUALLY
BASICALLY CREATE A GROUP OF
PANELISTS THAT WOULD BE CREDIBLE
ARBITRATORS, AND THEN YOU WOULD
RANDOMLY PICK THEM TO ARBITRATE
CASES.
I MEAN, IN MY MIND, THOUGH, YOU
KNOW, GETTING RID OF THE
ARBITRATION AND GOING TO THE
COURT SYSTEM IS PROBABLY NOT
OPTIMAL.
WE DO HAVE LABOUR ARBITRATION
AND LABOUR ARBITRATION SEEMS TO
WORK, SO I DON'T KNOW WHY WE
CAN'T HAVE TRADE ARBITRATION ON
ISSUES.
SO IT ISN'T A CASE... I WOULD
ACTUALLY BE MORE NERVOUS ABOUT
CANADA GOING TO FIGHT ISSUES IN
THE U.S. COURT SYSTEM THAN I
WOULD ABOUT GOING TO TRADE
EXPERTS TO BASICALLY DEAL WITH
ARBITRATION.
AND, YES, THE COMPANIES CAN ASK
FOR LARGE SUMS.
BUT WHEN YOU ACTUALLY LOOK AT
THE SETTLEMENTS THAT ACTUALLY
COME OUT OF THEM, LIKE THE
RECENT WIND FARM ISSUE IN
ONTARIO, YOU KNOW, THE COMPANY
WAS ASKED FOR 500 MILLION DOLLARS.
WHAT DID THEY GET?
THEY GOT 25 MILLION DOLLARS BECAUSE
ONTARIO BROKE A CONTRACT WITH
THE COMPANY.
I DON'T ACTUALLY THINK THAT THIS
IS UNREASONABLE.

Armine says BUT,
FRANKLY, THERE HAVE BEEN CASES
WHERE AN AMERICAN COMPANY HAS
OVERRIDDEN OUR OWN ENVIRONMENTAL
POLICIES.
A CASE IN NOVA SCOTIA WHERE
EVERY LEVEL OF GOVERNMENT HAD
DONE THEIR ENVIRONMENTAL
ASSESSMENT, SAID THIS PARTICULAR
MINING AND EXTRACTION PROCESS
WAS NOT IN THE INTERESTS OF THE
COMMUNITY.
GOT OVER RIDDEN AT A TRIBUNAL.
IT DOES RAISE QUESTIONS ABOUT
OUR ABILITY TO MAKE SOVEREIGN
DECISIONS ABOUT WHAT WE WANT IN
OUR OWN COMMUNITIES.
THERE'S NO QUESTION ABOUT THAT.
AND, YOU KNOW, IT TRUMPS, IF
YOU'LL EXCUSE THE EXPRESSION,
BUSINESS INTERESTS, TRUMP OVER
OTHER INTERESTS.
I'M NOT SURE THAT THAT'S OPTIMAL.

Steve says DO YOU THINK WE NEED
AN ISDS TYPE THING, NOT ONLY FOR
INVESTORS BUT LABOUR STANDARDS
AND ENVIRONMENTAL STANDARDS AS WELL?

Craig says ABSOLUTELY.
I THINK ARBITRATION WORKS FINE.

Steve says THAT'S NOT THE
ANSWER I THOUGHT YOU WERE GOING
TO GIVE BECAUSE THAT MEANS YOU
AGREE WITH HER.
YOU GUYS DON'T USUALLY AGREE ON
THIS.
WELL, YOU AGREE ON A LITTLE BIT,
BUT NOT EVERYTHING.

The caption changes to "Craig Alexander, @CraigA_Eco."

Craig says LISTEN, THE ARBITRATION OF
THE ISDS IS SPECIFICALLY
SUPPOSED TO BE AROUND, HAVE YOU
BROKEN THE TERMS OF THE FREE
TRADE AGREEMENT.
RIGHT?
SO, YOU KNOW, IF A GOVERNMENT
CHANGES POLICY IN A WAY THAT'S
GOING TO IMPACT A COMPANY
ADVERSELY AND IT'S NOT FAIR AND
EQUITABLE TREATMENT... IN OTHER
WORDS, IT'S BASICALLY BEING
DISADVANTAGED DELIBERATELY BY A
GOVERNMENT... THEN YOU NEED SOME
SORT OF DISPUTE RESOLUTION
SYSTEM.
AND I THINK THAT THE ISDS SYSTEM
THAT WE HAVE CAN BE IMPROVED.
I THINK WE NEED TO IMPROVE HOW
IT GOES ABOUT MAKING ITS
DECISIONS SO THAT WE END UP WITH
MORE CONSISTENT OUTCOMES.

The caption changes to "Connect with us: @theagenda, TVO.org, Facebook, YouTube, Periscope, Instagram."

Steve says ALL RIGHT.
LET'S LOOK AT THIS OTHER EXAMPLE
OUT OF SOFTWOOD LUMBER.
WE DO HAVE A DISPUTE RESOLUTION
SYSTEM FOR SOFTWOOD LUMBER, AND
YET I DON'T KNOW THAT WE'VE EVER
REALLY RESOLVED THIS DISPUTE
DESPITE... I MEAN, I THINK WE'RE
IN THE FIFTH ROUND NOW OF THE
AMERICANS SLAPPING TARIFFS ON
OUR SOFTWOOD LUMBER IMPORTS TO THEM.
THE ISSUE JUST NEVER SEEMS TO GO AWAY.
DO YOU THINK THE AMERICANS
UNDERSTAND THAT BY TRYING TO PUT
TARIFFS ON OUR SOFTWOOD LUMBER,
IT'S GOING TO COST THE AVERAGE
AMERICAN HOUSEHOLD A THOUSAND
BUCKS TO BUY A NEW HOUSE BECAUSE
THEY'RE GOING TO BE BUYING MORE
EXPENSIVE WOOD?

The caption changes to "Armine Yalnizyan, @ArmineYalnizyan."
Then, it changes again to "Softwood lumber."

Armine says WE'VE
ALREADY SEEN, BEFORE THESE
TARIFFS GOT SLAPPED, SINCE THE
BEGINNING OF THE YEAR, THE COST
OF SOFTWOOD LUMBER GOING UP BY
22 percent IN THE UNITED STATES AND,
YEAH, THAT HAS BEEN THE INCREASE
THAT'S ALREADY BEEN PRICED IN,
SEEMS TO BE SAYING THAT A NUMBER
OF PARTICULARLY FIRST-TIME
BUYERS ARE GOING TO GET NUDGED
OUT OF THE MARKET BECAUSE AN
ADDITIONAL THOUSAND DOLLARS HERE
AND AN ADDITIONAL 1,500 HERE,
IT STARTS TO ADD UP AND AT THE
MARGINS SOME PEOPLE ARE GOING TO
GET PUSHED OUT.
BUT I THINK THIS STORY IS ABOUT
A HANDFUL OF PRODUCERS IN THE
UNITED STATES THAT WANT,
FINALLY, AFTER A DECADE, THE
HOUSING MARKET HEATING UP AGAIN
AND HOMES BEING BUILT AGAIN,
THEY WANT A BIGGER SHARE OF THE
MARKET AND YOU CAN'T PUT A HARD
CAP ON IT, SO THIS IS THE WAY
THEY'RE DOING IT.

Steve says ONE OF THE, I GUESS,
LONG-TERM SOLUTIONS AROUND THIS
PERPETUAL PROBLEM IS FOR US TO
BE LESS RELIANT ON THEM AS OUR
TRADING PARTNER, AND I CAN
RECALL PRIME MINISTER TRUDEAU,
AND I'M NOT TALKING ABOUT THE
ONE IN OFFICE NOW, BUT HIS
FATHER, 40 YEARS AGO TALKING
ABOUT THE NEED TO DIVERSIFY OUR
TRADING PARTNERS AND NOT BE SO
DEPENDENT ON THE UNITED STATES,
AND IT NEVER SEEMS TO HAPPEN.
HOW COME?

Craig says WELL, I
THINK THAT WE ACTUALLY SHOULD
SEE MORE DIVERSIFICATION.
BUT THAT ISN'T HOW THE COMPANIES
HAVE ACTUALLY BEEN PERFORMING.
IN ACTUAL FACT, IN RESPONSE TO
THE SOFTWOOD LUMBER DISPUTE THAT
THE COMPANIES COULD SEE COMING
DOWN THE PIPELINE WHEN THE
CURRENT DEAL WAS GOING TO
EXPIRE, WHAT WE'VE SEEN IS
CANADIAN LUMBER PRODUCERS
BASICALLY BUYING OPERATIONS IN
THE UNITED STATES IN ORDER TO
BASICALLY DIVERSIFY THEIR
PRODUCTION MIX THAT WOULD LIMIT
THE IMPACT OF NEW DUTIES BEING
PUT ON THEIR PRODUCT.
SO I WOULD ARGUE THAT CANADA
DOES NEED TO DIVERSIFY OUR
MARKETS.
I THINK THERE COULD BE A LOT OF
DEMAND GLOBALLY FOR HIGH QUALITY
CANADIAN LUMBER.
BUT AT THE END OF THE DAY WE DO
SHARE A BORDER WITH THE UNITED
STATES, IT IS A HUGE MARKET,
THEY USE AN AWFUL LOT OF...
LIKE, WE EXPORT ABOUT 60 percent OF ALL
OF OUR SOFTWOOD LUMBER... 75 percent OF
IT TO THE UNITED STATES.
I THINK THAT NUMBER SHOULD BE A
LOWER PERCENTAGE, BUT
UNDERSTAND, THE U.S. IS ALWAYS
GOING TO BE OUR DOMINANT MARKET.
SO WE DO NEED TO MAKE PROGRESS
ON THIS.
THE CHALLENGE IS THAT WHEN YOU
HAVE TWO COMPLETELY DIFFERENT
ECONOMIC SYSTEMS TO BASICALLY
COME UP WITH THE PRICING, WHEN
YOU'RE DOING APPLES-TO-ORANGES
COMPARISON, THERE'S ALWAYS GOING
TO BE A VULNERABILITY THAT THE
AMERICANS ARE SAYING YOU'RE
SUBSIDIZING, EVEN THOUGH WHAT
WE'RE SEEING TIME AND TIME
AGAIN, WHEN THERE HAS BEEN AN
EVALUATION, EITHER CANADA HAS
WON, THAT WE'RE NOT SUBSIDIZING
AT THE WORLD TRADE ORGANIZATION
OR NAFTA TRIBUNALS HAVE ARGUED
THAT THE DEPARTMENT OF COMMERCE
OVERESTIMATES THE SIZE OF THE
SUBSIDY AND AS A RESULT, YOU
KNOW, WHAT TENDS TO HAPPEN IS WE
GET A BIG DUTY PUT ON AND
INCREMENTALLY OVER TIME IT GETS
REDUCED, REDUCED, REDUCED TO THE
POINT IT'S DEM INITIALED AND
GETS DROPPED AND THE DISPUTE
COMES AROUND AGAIN AND WE'VE
BEEN DOING THIS FOR 35 YEARS.

Steve says INDEED WE HAVE.

Armine says I'D JUST
LIKE TO ADDRESS YOUR QUESTION
ABOUT WHY IT IS WE DON'T
DIVERSIFY.
I THINK WE HAVE DIVERSIFIED OVER
THE LAST 40 YEARS.
WE DO A LOT MORE BUSINESS
BECAUSE OF THE GROWTH OF
EMERGING MARKETS, CHINA AND ALL
OF SOUTHEAST ASIA.
WE'VE BEEN SHIPPING A LOT MORE
RAW MATERIALS TO THOSE
JURISDICTIONS.
WHAT I FIND REALLY INTERESTING
IS A STUDY THAT ONE OF OUR
COLLEAGUES DID A FEW YEARS AGO,
DOUG PORTER AT BMO, HE DID IT
FOR McDONALD LAURIER, AND HE
SHOWED THAT PRE AND POST NAFTA,
WE WENT FROM 17 percent OF OUR GDP
BEING SHIPPED TO THE UNITED
STATES BEFORE NAFTA, IT PEAKED
IN 2001 AT 33 percent... A THIRD OF
EVERYTHING WE PRODUCE GOT
SHIPPED TO THE UNITED STATES...
AND NOW WE'RE BACK DOWN TO 19 percent.
HE WROTE THAT IN 2012.
IT'S BEEN FLAT SINCE 2012.
AND THIS IS PARTLY GLOBAL TRADE
GROWING.
BUT THEN, AGAIN, YOU KNOW,
FLATTENING OUT.
THIS HAS BEEN THE PROBLEM WITH
SLOTH AROUND THE WORLD...

Steve says SLOTH IS SLOW GROWTH?

Armine says SLOW OR NO GROWTH.
WE'VE BEEN WORRIED ABOUT SERIAL
DISAPPOINTMENTS, I THINK IS THE
PHRASE THAT THE BANK OF CANADA
BANK OF CANADA GOVERNOR STEPHEN
POLOZ USES IS THAT WE KEEP
EXPECTING THIS FALLING CANADIAN
DOLLAR TO PICK UP THE EXPORT-LED
GROWTH.
IT'S NOT MATERIALIZING BECAUSE
TRADE AROUND THE WORLD IS
SLOWING BECAUSE OF THESE
INCREASING PROTECTIONIST
SENTIMENTS.
AND I THINK THAT'S WHERE WE HAVE
TO GO BACK TO.
DO WE HAVE ENOUGH TRADE WITH THE
UNITED STATES OR SOME PLACE
ELSE?
REALLY WHAT'S HAPPENING IS A
BACKLASH AGAINST EXPORT-LED
GROWTH BEING THE ONLY TYPE OF
GROWTH THAT GOVERNMENTS SEEM TO
WANT TO PURSUE INSTEAD OF
WAGE-LED GROWTH, DOMESTIC-LED
GROWTH, AND I THINK THAT'S A
FRICTION WHERE... I THINK WE'RE
AT SOME KIND OF PIVOT POINT HERE
IS TALKING ABOUT WHAT
GOVERNMENTS DO, JUST SUPPORT
EXPORTERS OR SUPPORT THEIR OWN CITIZENS?

Steve says WHAT DO YOU SEE IN
TERMS OF THE OVERARCHING PLAY
THE UNITED STATES IS DOING HERE?
WE'VE SEEN WHAT'S HAPPENED ON
SOFTWOOD LUMBER NOW, RIGHT, THE
FIFTH TIME THIS HAS COME AROUND.
PRESIDENT TRUMP IS TARGETING
DAIRY PRODUCERS, PARTICULARLY IN
CENTRAL CANADA.
AND WE CAN ADD, NOW WE'VE SEEN
THE COAL ISSUE GET SWEPT UP IN
THE BRITISH COLUMBIA ELECTION IN
THE DYING DAYS OF THAT CAMPAIGN
AS THE PREMIER OF BRITISH
COLUMBIA, WHO WANTS REELECTION,
OBVIOUSLY, TRIES TO BRING THAT INTO PLAY.
WHAT'S THE BIGGER THEME THAT'S
HAPPENING HERE SOUTH OF THE BORDER?

The caption changes to "What's up with POTUS?"

Craig says WELL, IT
PICKS UP A LITTLE BIT ABOUT WHAT
ARMINE WAS JUST TALKING ABOUT.
WHAT WE HAVE IS AN INCREASE OF
NATIONALISM AND PROTECTIONISM
AND IT'S A BACKLASH BECAUSE MANY
PEOPLE HAVE NOT BENEFITED FROM
THE ECONOMIC GROWTH WE'VE HAD.
EVEN WITH SLOW GROWTH, SOME
PEOPLE HAVE BEEN LEFT BEHIND.
YOU KNOW, I THINK PART OF IT IS
A MISDIAGNOSIS.
THERE ARE A LOT OF COMPLAINTS
ABOUT GLOBALIZATION, I THINK
IT'S TECHNICAL CHANGE THAT'S
HAVING THE BIGGER IMPACT.
FOR EVERY JOB THAT'S BEEN
DISRUPTED THROUGH GLOBALIZATION,
FOUR OR FIVE HAVE PROBABLY BEEN
DISRUPTED THROUGH TECHNOLOGICAL
CHANGE.

Steve says AUTOMATION.

Craig says AUTOMATION
IN THE MANUFACTURING SECTOR, FOR
EXAMPLE, HAS HAD A BIGGER IMPACT
THAN PROBABLY ANYTHING ELSE IN
TERMS OF THE LABOUR MARKET
OUTCOMES...

Steve says YOU WOULDN'T KNOW THAT.
THE POLITICIANS TEND TO FOCUS
ON... YOU KNOW, LIKE TRUMP SAYS,
THIS TRADE AGREEMENT IS A
DISASTER.
HE DOESN'T TALK ABOUT
AUTOMATION.

Craig says THAT'S WHERE I THINK PART OF
THE MISDIAGNOSIS IS, RIGHT?
SO I THINK TRUMP'S BASIC FOCUS
IS ON THE LOSS OF U.S. JOBS TO
LOW WAGE COUNTRIES.
YOU KNOW, HE TALKED A LOT ABOUT
MEXICO AND CHINA.
BUT WHEN IT COMES TO CANADA,
THERE HAS BEEN LONGSTANDING
TRADE DISPUTES WITH CANADA
AROUND SUPPLY MANAGEMENT AND
AROUND SOFTWOOD LUMBER.
THESE THINGS ARE NOT NEW AND
THEY ACTUALLY PRECEDE THE TRUMP
ADMINISTRATION.
I DO THINK CANADA GOT PUT BACK
IN THE CROSSHAIRS IN RECENT
WEEKS WHEN TRUMP WAS APPROACHING
THE END OF HIS 100 DAYS AND
HADN'T REALLY APPEARED TO HAVE
ACCOMPLISHED MUCH AND HE REALLY
WANTED TO REITERATE A COUPLE OF
CORE THINGS THAT HE RAN ON.
WE GOT A BIG STATEMENT AROUND
HIS TAX REDUCTION... DRAMATIC
TAX REDUCTION POLICY.
BUT HE ALSO WENT AFTER CANADA
AROUND SUPPLY MANAGEMENT, AND WE
HAD AN ANNOUNCEMENT FROM THE
DEPARTMENT OF COMMERCE ON
SOFTWOOD.
SO, AGAIN, THIS FITS INTO THE
BROADER NARRATIVE.
I STILL THINK THAT ULTIMATELY
WE'RE GOING TO END UP IN NAFTA
NEGOTIATIONS.
THE REAL QUESTION IS GOING TO
BE, YOU KNOW, WHAT SORT OF
ENGAGEMENT DOES THE NEW
ADMINISTRATION HAVE WITH US ON
TRADE?
I THINK THERE'S A LOT OF SCOPE
TO IMPROVE NAFTA AND MAKE IT
BETTER FOR CANADA, THE UNITED
STATES, AND MEXICO, AND WE CAN
HAVE A CONSTRUCTIVE DIALOGUE.
WHAT I'M WORRIED ABOUT IS
WHETHER THE CONVERSATION IS
GOING TO BE CONSTRUCTIVE OR
WHETHER IT'S JUST GOING TO BE
ONE-SIDED.

Steve says LET ME FOLLOW UP
WITH YOU ON THAT.
ALL OF THE COMPLAINING THAT
WE'RE HEARING ABOUT NAFTA THESE
DAYS COMES STATE-SIDE AND IT'S
ALL ABOUT HOW THE U.S. IS
GETTING JOBBED BECAUSE OF THIS
DEAL AND THEY WANT TO
RENEGOTIATE IT BUT ON TERMS THAT
ARE MORE FAVOURABLE TO THEM.
CAN YOU IMAGINE A SITUATION
WHERE WE RENEGOTIATE THIS TREATY
AND GET IMPROVEMENTS FOR US?

Armine says NO, NOT REALLY, I CAN'T
ACTUALLY SEE THAT, NOT WITH THIS
ADMINISTRATION WHICH IS NOT
ABOUT GETTING A DEAL FOR
EVERYBODY, IT'S ABOUT GETTING A
DEAL FOR THE U.S. AND TO BE SEEN
CLEARLY AS HAVING SCREWED
SOMEBODY ELSE TO BE ABLE TO GET
THOSE BENEFITS.
BUT I DO WANT TO GO BACK TO THIS
IDEA THAT PEOPLE DON'T
UNDERSTAND HOW THEY'RE BEING
SCREWED, THAT THEY'RE ACTUALLY
BEING SCREWED BY THE MACHINES,
RATHER THAN BY LOW WAGE WORKERS,
BECAUSE, YOU KNOW, WE CALL IT
DEINDUSTRIALIZATION.
IT MEANS THAT THE INDUSTRIAL
REVOLUTION IS GOING TO LOWER
WAGE PLACES.
I REMEMBER GETTING MY FIRST JOB
IN 1987 STILL DEALING WITH THE
DEINDUSTRIALIZATION OF THE
TORONTO LABOUR MARKET AND WHAT
THAT MEANT FOR PEOPLE, WHAT IT
MEANT FOR THE MEN THAT LOST THE
JOBS AND THEIR WOMEN WHO TOOK
MUCH LOWER PAYING JOBS, WOMEN
WHO HADN'T BEEN TRADITIONALLY IN
THOSE JOBS, THINKING CATERPILLAR
IN LONDON.

Steve says THAT MEANS WE
STOPPED MAKING TO HAVE STUFF.

Armine says FRIDGES, STOVES, TIRES.
IT WENT ON AND ON BEFORE WE
STOPPED BEING A MANUFACTURING
CENTRE.
AND IT IS HAPPENING IN THE
UNITED STATES WHERE YOU'VE GOT
NOW HALF OF THE UNITED STATES
THAT ARE NOW RIGHT-TO-WORK
STATES.
EMPLOYERS ARE GOING OVERSEAS
BECAUSE IT IMPROVES THEIR PROFIT
MARGINS TO GO SOME PLACE WHERE
THEY CAN PRODUCE THESE THINGS
CHEAPER, AND PEOPLE ARE REALLY
NERVOUS ABOUT... IF I CAN AFFORD
A CHEAPER THING, THAT'S COOL.
BUT IF I DON'T HAVE A JOB AT
ALL, I CAN'T AFFORD THAT CHEAPER
THING.

Steve says CRAIG, I WANT TO
JUST TAP INTO WHAT YOU KNOW
ABOUT SOME TALKS THAT RECENTLY
TOOK PLACE BETWEEN THE PREMIER
OF ONTARIO AND THE GOVERNOR OF
NEW YORK.
AND OBVIOUSLY THERE'S POLITICS
AT PLAY HERE.
THE GOVERNOR OF NEW YORK IS A
POTENTIAL PRESIDENTIAL CANDIDATE
IN... HOW LONG HAS TRUMP BEEN IN
NOW?
HALF A YEAR.
STILL THREE AND A HALF...

Armine says JUST OVER 100 DAYS IS ALL I
CAN REMEMBER.

Steve says SO IN THREE AND A
HALF YEARS' TIME, GOVERNOR CUOMO
MIGHT BE THE DEMOCRATIC NOMINEE
AND HE WOULD WANT TO TAKE A
POSITION ON THIS THAT WOULD BE
THE OPPOSITE OF DONALD TRUMP'S.
CUOMO SAID TO PREMIER WYNNE,
DON'T WORRY, WE'LL KEEP TRADE
OPEN BETWEEN OUR JURISDICTIONS.
WHAT DO YOU THINK ABOUT THAT?

The caption changes to "tvo.org/theagenda."

Craig says I THINK THERE'S A STRONGER
APPRECIATION OF THE IMPORTANCE
OF CANADA-U.S. TRADE AND THE
INTEGRATION OF OUR ECONOMY IN
PARTS OF THE UNITED STATES.
IF WE THINK ABOUT CANADA, WE
BASICALLY DEVELOPED ALONG
NORTH-SOUTH LINES.
WE DO FAR MORE NORTH-SOUTH TRADE
THAN WE DO EAST-WEST ACROSS OUR
PROVINCES AND CANADIAN
BUSINESSES ARE PLUGGED INTO A
NORTH AMERICAN SUPPLY CHAIN THAT
IS ACTUALLY DOMINATED BY THE
U.S. BECAUSE OF THE SIZE OF THE
U.S. MARKET.
CANADA IS ONLY THE SIZE OF
CALIFORNIA.
AS A RESULT, WE ARE TIED INTO
THE U.S. SYSTEM, AND THERE IS A
STRONG APPRECIATION BY THE FIRMS
THAT ARE PART OF THAT SUPPLY
CHAIN THE VALUE OF HAVING CANADA
PART OF IT.
AND ACROSS THE NORTHERN... YOU
KNOW, THE NORTHERN PART OF THE
UNITED STATES, THERE'S A STRONG
APPRECIATION OF THE POSITIVE
ECONOMIC BENEFITS FROM
CROSS-BORDER TRADE.
HOWEVER, I WOULDN'T SAY THAT
THERE'S AN EQUAL APPRECIATION
ACROSS ALL OF THE UNITED STATES.
WHEN I'VE BEEN ON BUSINESS AND
I'VE GONE, YOU KNOW, DOWN TO THE
U.S. SOUTH, THEY DON'T ACTUALLY
THINK ABOUT CANADA.
WHEN THEY TALK ABOUT NAFTA, THEY
REALLY THINK ABOUT...

Steve says MEXICO.

Craig says MEXICO-U.S. TRADE, NOT
CANADA-U.S. TRADE.
SO A GOVERNOR FROM NEW YORK
STATE IS GOING TO THINK A LOT
MORE ABOUT CANADA THAN SAY A
GOVERNOR FROM TEXAS.

Steve says THE PREMIER MET WITH
THE GOVERNOR OF ILLINOIS AS
WELL. CLEARLY THIS IS A BIG
DEAL FOR HER AND FOR US.

Armine says I JUST WANT TO GO BACK TO HOW
DID THAT DECISION GET MADE.
BECAUSE WHEN THAT BUDGET, WHEN
THE NEW YORK STATE BUDGET WAS
FIRST TABLED, IT WAS BUY
AMERICA.
AND IT WAS ONLY REVERSED AT THE
11TH HOUR.
IN FACT, EVERYBODY WENT PHEW.
I'M NOT SURE EXACTLY WHAT
HAPPENED, BUT PREMIER WYNNE WAS
THERE.
THERE WAS ACTIVE AND VERY
VIGOROUS LOBBYING TO SAY, THIS
IS GOING TO BE BAD FOR BOTH
SIDES OF THE TABLE.
BUT YOU CAN SEE WHERE THIS
POLITICKING IS COMING FROM
BECAUSE PEOPLE ARE FEELING LIKE,
IF I'VE ONLY GOT 100 TO SPEND,
WHY WOULDN'T I SPEND IT ON
HIRING SOMEBODY RIGHT HERE WITH
MY PROCUREMENT LAWS, WHICH IS
LIKE WHAT GOVERNMENTS BUY.
WHERE AM I GOING TO BUY IT FROM?
IF I BUY IT FROM COMPANIES AND
WORKERS IN NEW YORK STATE, THE
MONEY STAYS HERE.
WHY SHOULD I DO IT WITH YOU?
THIS IS WHERE WE'RE ALL
WORRYING.
BECAUSE OF SLOW GROWTH, THERE
ISN'T A LOT OF ACTION OUT THERE.
WHEN GOVERNMENTS DO HAVE MONEY
TO SPEND, THERE IS A HUGE DESIRE
TO BE SEEN AS SPENDING IT ON
THEIR OWN PEOPLE.
SO THIS IS A BIGGER ISSUE THAT
WE'RE GOING TO BE SEEING
HAPPENING STATE AFTER STATE, I
AGREE WITH YOU, AND I THINK IT
WILL BE AFFECTING THE WAY CANADA
IS VIEWED BY ALL SORTS OF BORDER
STATES.

Craig says IT'S ALSO
INTERESTING IN TERMS OF THE
INTERACTION WITH THE TRUMP
ADMINISTRATION.
IT'S INCREDIBLY VOLATILE.
AND SO AT FIRST HE TALKS ABOUT
RIPPING UP NAFTA.
THEN AFTER HE GOT ELECTED, IT
WAS WE'RE GOING TO TWEAK NAFTA.
AND SOME OF HIS CORE ADVISORS
AND MEMBERS OF HIS TEAM THAT
CAME TO CANADA OR WERE
COMMENTING ON CANADA-U.S. TRADE,
THEY DID SEEM TO ACTUALLY GET
THE IMPORTANCE OF THAT ECONOMIC
RELATIONSHIP AND THEY DID SEEM
TO UNDERSTAND THAT CANADA IS NOT
A LOW WAGE CENTRE, WE'RE NOT...
YOU KNOW, OUR TRADE WITH THE
UNITED STATES IS MORE BALANCED
THAN TRADE BETWEEN MEXICO AND
THE UNITED STATES.
SO A LOT OF THE CORE ISSUES THAT
THAT ADMINISTRATION IS TRYING TO
DEAL WITH, YOU KNOW, IS NOT
ACTUALLY ROOTED HERE IN CANADA.
IN FACT, WE HAVE AN IMPORTANT
ECONOMIC RELATIONSHIP.
THE PROBLEM IS WHEN THE POLITICS
GETS IN THE WAY, AND THEN ALL OF
A SUDDEN IT'S LIKE, OKAY, YOU
KNOW, IT'S POLITICALLY EXPEDIENT
TO GO ATTACK CANADA.
THEN ALL OF A SUDDEN CANADA
COMES IN THE CROSSHAIRS.
AND THIS MAKES IT
EXTRAORDINARILY DIFFICULT FROM A
TRADE NEGOTIATION POINT OF VIEW
BECAUSE YOU JUST DON'T KNOW WHAT
YOU'RE GOING TO GET.
ARE WE GOING TO GET THE
NEGOTIATORS WHO UNDERSTAND THE
TRADING RELATIONSHIP AND THE
IMPORTANCE OF KEEPING THAT
BORDER OPEN AND LOOK FOR WAYS TO
ACTUALLY IMPROVE TRADE BETWEEN
CANADA AND THE UNITED STATES, OR
ARE WE GOING TO END UP WITH THE
POLITICALLY EXPEDIENT
NEGOTIATORS WHO ARE JUST LOOKING
TO SCORE POINTS?
THAT'S GOING TO HAVE A VERY BIG
IMPACT IN TERMS OF HOW THINGS
TURN OUT.

Steve says CAN I GET YOU IN OUR
LAST 30 SECONDS TO WEIGH IN ON THAT.
WE SAW DONALD TRUMP SAY I THINK
JUST A WEEK AGO I WAS PLANNING
TO INVOKE THE 6-MONTH
NOTIFICATION THAT I WANTED TO
RIP NAFTA UP AND JUSTIN TRUDEAU
GAVE HIM A PHONE CALL AND HE
SAID HE CHANGED HIS MIND.
THAT'S THE WORLD WE LIVE IN, APPARENTLY.

Armine says IF THERE IS A HALL MARK OF
THIS PRESIDENT, WE DON'T KNOW
WHICH END IS UP AND SOMETIMES IT
LOOKS AS THOUGH HE DOESN'T KNOW
WHICH END IS UP EITHER AND HIS
OWN ADMINISTRATION, HIS OWN
ADVISORS ARE DIVIDED ON WHICH
WAY TO GO AND HE'S NOT THE GREAT
HEALER OF THOSE RIFTS.
I THINK WE HAVE A THREE AND A
BIT YEARS TO DO A LOT OF ZIGGING
AND ZAGGING AND TRYING TO
RESPOND.
I THINK THAT'S WHAT'S GOING TO
SLOW DOWN ECONOMIC GROWTH,
ACTUALLY, BECAUSE OF THE
INABILITY OF BUSINESSES TO KNOW
WHAT TO INVEST IN AND WHEN TO
INVEST, AND THAT IS GOING TO
SLOW DOWN THE NECESSARY
INVESTMENT FRAMEWORK...

Craig says I THINK IT'S ALREADY SHOWING
UP IN THE ECONOMIC DATA.
I THINK PART OF WHAT'S
RESTRAINING CANADIAN BUSINESS
INVESTMENT IS THE UNCERTAINTY AS
TO WHAT THE RULES OF THE GAME
ARE. WHY WOULD YOU MAKE
LARGE-SCALE INVESTMENTS THAT
WERE AIMED AT SELLING INTO THE
U.S. MARKET WHEN YOU DON'T KNOW
WHAT THE RULES OF THE GAME ARE
GOING TO BE?

Armine says I GUESS IT'S A QUESTION OF
WHETHER WE'RE THE 51ST STATE IN
REALITY OR AN EPISODE OF
"SOUTH PARK," BLAME CANADA.
IT'S UNSURE WHICH VERSION OF
CANADA AS FRIEND OR FOE WE'RE
GOING TO BE FACING IN THE
NEXT FEW YEARS.

The caption changes to "Producer: Meredith Martin, @MeredithMartin."

Steve says I THOUGHT BUSINESS
LOVED UNCERTAINTY. NO, WAIT.
IT'S NOT TRUE AT ALL. ARMINE
YALNIZYAN, CRAIG ALEXANDER,
GREAT TO HAVE BOTH OF YOU BACK
ON THE PROGRAM. APPRECIATE IT.

Both guests say THANK YOU.

Watch: NAFTA Troubles