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Month: January 2017

Trudeau will soon have to deal with a potentially hostile White House

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There are a couple of things Trudeau needs to do to chart a path forward with Trump. He needs to reassure the Americans that we have their back on security.
He also must demonstrate that the economies of both Canada and the U.S. have been served well by constant, constructive engagement. He must demonstrate that the relationship is not a zero-sum game, that what is good for Canada in the bilateral relationship is also good for the U.S., and vice versa.

TORONTO—Donald Trump’s successful campaign for the presidency of the United States didn’t so much rewrite the rulebook as burn it altogether. It remains to be seen how conventional and therefore predictable his presidency will be. The early signs indicate that Canada’s stewardship of the bilateral relationship will be tested as it hasn’t been since the last Trudeau was in office.

The sky hasn’t fallen.

In the weeks following the U.S. presidential election, the stock market was on fire, the nuclear arsenal had yet to be launched, more goods continued to cross the Ambassador Bridge between Detroit and Windsor than any other international border crossing in the world and Americans are still going to work and to school every day.

However, change is coming; change that affects Canada. And how Canada chooses to respond to the change will play a big role in the impact it has on our country.

This change will manifest itself in two ways. First, political campaigners will have to rewrite the rule book. Second, in terms of policy, Donald Trump will present several challenges to the Trudeau government because each has very different goals, including on current challenges such as the environment and refugees.

The unorthodoxy of the Trump campaign was astonishingly successful laying waste to the idea that cookie-cutter political campaigns are winning campaigns.

Trump threw out the campaign rule book because he had never read the rule book. In doing so, he created at least three new rules for elections to come.

First, the candidate with the best ground game no longer necessarily wins. Second, television advertising is not the key to success it once was. Third, authenticity no longer matters.

Throughout the campaign, Trump insisted he did not need to rely on traditional campaign tactics to win. Hillary Clinton used the data-driven, on-the-ground machine that propelled President Barack Obama to two straight electoral victories. Trump, meanwhile, pointed to the overwhelming nomination victory he achieved with a relatively small team on a tight budget, and he stuck to that strategy for the election campaign.

Then, Trump campaigned in a different way. Instead of spending millions of dollars on television advertising, he focused on old-school rallies, his message seeping through the free media coverage and his often ridiculous Twitter posts.

Finally, rather than strive for authenticity, he played a consistent role, just as he had done on his reality TV shows, The Apprentice and The Celebrity Apprentice.

Campaign professionals strive to create an authentic candidate to whom people can relate—one with a backstory that captures the essence of voters’ aspirations.

This was never going to happen with Trump, an unusually privileged son of a businessman, a billionaire who hasn’t paid federal taxes in years.

But what Trump lacked in authenticity, he made up for with consistency. His contrivance was perfectly constant, across all media, whether it was a major network interview, a stadium appearance in front of 10,000 adoring fans or a late-night Tweet.

The new campaign rule book fundamentally alters the political landscape. No longer should we equate electoral success with those with the deepest pockets, oldest party roots, the most endorsements or a perfect Norman Rockwell resume.

Looking ahead, and with regard to policy and the future of the U.S.-Canada relationship, many have argued that Trudeau’s mandate and many of his policy objectives are less likely to succeed with a Republican in the White House.

There is, however, another way to look at this—the Trump presidency might, just might, afford Canada economic good fortune.

In fact, it is not Trudeau’s legacy and progress that’s on the line.

Instead, more than a few policy tenets close to the hearts of past Conservative governments are the ones at stake. The North American Free Trade Agreement (NAFTA), the Trans-Pacific Partnership (TPP), American rapprochement with Cuba, the Syrian civil war, engagement with Russia, unconditional support for Israel—the list goes on.

Trump’s presidency poses a greater threat to former prime minister Stephen Harper’s trade and foreign policy legacy than Trudeau ever did.

Given this new world we find ourselves in, it’s important that Trudeau respond only to concrete policy proposals that Trump puts forward, and not to his abstract Twitter proclamations.

For the most part, Canadian governments have maintained a businesslike approach toward the United States, and such an approach will continue to serve Canada well with Trump in the White House.

There are a couple of things Trudeau needs to do to chart a path forward with Trump. He needs to reassure the Americans that we have their back on security.
He also must demonstrate that the economies of both Canada and the U.S. have been served well by constant, constructive engagement. He must demonstrate that the relationship is not a zero-sum game, that what is good for Canada in the bilateral relationship is also good for the U.S., and vice versa.

The new U.S. president and Canada’s prime minister have very different policy goals. However, whether they like it or not, they will be forced to work together on certain key bilateral issues.

Trump’s foreign policy acknowledges the fatigue that Americans feel about foreign military interventions. This sets the stage for the country to take a pass on multilateral conflicts.

Trump has already mused about scaling back American treaty obligations in Asia and with NATO, an alliance that he has attacked as ‘obsolete.’ Meanwhile, he has exchanged kind words with Russia, NATO’s old nemesis.

On a more concerning note, Trump has threatened to ignore any invoking of Article 5—the principle of collective defence—by NATO allies who do not meet the minimum spending on defence. Canada spends less than half of the minimum.

On trade, Trump has expressed a desire to renegotiate NAFTA. If Canada or Mexico object, he could withdraw from the deal entirely—closing off the lucrative American market. That means that Brian Mulroney’s 1987 free trade agreement with the United States goes back into effect, but Trump may want to renegotiate that, too.

The dealmaker-in-chief will not be content to let the status quo in trade continue, and he won’t stop at NAFTA. Leaked transition documents show that he’s taking aim at Canada’s softwood lumber and beef industries, through country-of-origin labelling.

On taxes, Trump touts an aggressive plan to attract investment that could put Canadian business in peril. His tax plan features tax cuts across the board, with the hope that individuals and businesses will have more money to invest. Personal taxes would be simplified to three brackets, while corporate taxes would be reduced to 15 per cent from 35 per cent.

RBC Capital Markets reports that the move will boost the American economy, which would be positive for Canada. However, those moves would make Canada’s Harper-level corporate taxes less competitive and make a southward brain-drain more likely.

And finally, Trump would put global climate agreements in jeopardy. He has declared that he doesn’t believe in the science of climate change. He has said he intends to withdraw from the Paris Agreement on climate change, end carbon emission limits on American power plants, and deregulate coal, natural gas and offshore oil drilling. Trudeau was an enthusiastic signatory of the Paris agreement, and if Trump follows through, the prime minister will face a choice between keeping his word or making adjustments to guarantee Canadian competitiveness.

American energy independence is a core tenet of Trump’s philosophy, and he will try to reduce reliance on oil from countries he views as antithetical to the American experience. On the bright side for Canada, he has voiced support for the Keystone XL pipeline.

Earlier this year, The Economist listed the possible election of Donald Trump as one of the top 10 risks facing the world. He was rated as posing a greater risk than Britain leaving the European Union, or an armed clash in the South China Sea.

Trump’s election to the Oval Office is a sign that choppy waters are straight ahead. Canada, like the rest of the world, has no choice but to sail right through.

John F. Kennedy, commenting on the relationship between the U.S. and Canada in his address to Parliament in 1961, famously said: ‘Geography has made us neighbours. History has made us friends. Economics has made us partners and necessity has made us allies.’ Words now graven in stone in the lobby of the U.S. Embassy in Ottawa.

Less than a decade after JFK uttered those words, prime minister Pierre Trudeau had to deal with an American president who was overtly hostile to the Canadian government.

In the peculiar way history repeats itself, Pierre’s son will soon have to deal with a potentially hostile White House.

Conservative strategist Jaime Watt is a member of CBC’s popular Insiders panel on The National, and executive chairman of Navigator Ltd. jwatt@navltd.com

This piece was first published in the January/February issue of Policy Magazine, edited by L. Ian MacDonald.

Dark clouds threaten Justin Trudeau’s sunny ways in 2017

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The coming year will prove a challenge for the prime minister as he faces tough issues and must please increasingly upset provinces.

It has been, to use a shopworn clich’, beginning of a winter of discontent for Prime Minister Justin Trudeau’s government.

As temperatures began to sink in late November, the Prime Minister’s polling numbers — previously untouchable — also dipped. It seemed that the government was hit by news story after news story that threatened to damage the upbeat year that had been 2016.

Let’s not make any mistake: the Liberals’ numbers have only moved from sky high to high. But the barrage of negative stories, coming as they did together, cannot have been good for Liberal morale.

A stop-and-start bid to reform our electoral system that had no plan and no message. A heartfelt eulogy for Cuban dictator Fidel Castro that went viral and was mocked on Twitter. The decision to approve two pipelines that earned the government the ire of environmentalists. A holiday visit to a private island that ended with calls for an investigation by the ethics commissioner.

It would have been a frustrating several months for any government, but was no doubt even more so for a government that had received little public pushback since its stunning election victory.

Looking to turn the page, the prime minister has shuffled his cabinet and is off on a listening tour, aimed at reaching Canadians who may have become disenchanted by the negative media attention. Make no mistake, the Liberals are determined to reset things for 2017.

It is certainly a serendipitous year for the government to regain a positive foothold: as Canada celebrates its 150th birthday, there will be no shortage of funding and photo opportunities.

The government also has policies in store that will continue its efforts to break from the Harper government years. Legislation legalizing marijuana, renewed health agreements with the provinces, and shovels in the ground on numerous infrastructure commitments, all promise to show the government is working hard on behalf of middle-class Canadians.

However, challenges await. We know of those posed by the change of administration in the United States, but there are a number on the domestic front, as well.

Trudeau’s first year in government was defined by the remarkable compliance of provincial governments. The premiers, often happy to go to war with the federal government, were quite conciliatory toward the prime minister’s activist government. On issues from environment to pensions to infrastructure, there was a harmony that has rarely been reached in the federal-provincial relationship.

This harmony, which previously had been punctured only by the occasional objections of Saskatchewan Premier Brad Wall, promises to be disrupted in the next year.

Wall, who early in the Trudeau government’s mandate was the only conservative premier left standing, has been joined by Manitoba Progressive Conservative Premier Brian Pallister, a former member of the Harper government. Pallister has joined Wall in criticizing the federal government’s carbon pricing plan and has sharply criticized the government’s approach on health funding.

The two premiers recently won mandates, and are all-but-guaranteed to stick around for the rest of the Liberals’ mandate.

A quick survey of upcoming provincial elections is not particularly promising for the federal government, either. British Columbia Premier Christy Clark, a hesitant ally of the federal government, currently trails the B.C. New Democrats, who have staked out ground as sharp critics of the federal government’s position on pipelines and are advocates of increased federal health transfers.

The Liberal governments of Nova Scotia, Newfoundland and New Brunswick have been steadfast allies of the Trudeau government. But the implementation of carbon pricing has affected that support in provinces where energy costs are already among the highest in the country. The three governments, while relatively stable, have less reason today to be as sympathetic as they have been.

The premiers of Canada’s two largest provinces find themselves under fire in the latter half of their mandates. Premier Kathleen Wynne of Ontario and Premier Phillippe Couillard of Quebec are polling either behind or tied with opposition parties as they try to extend the mandates of governments that have been in power for years.

Wynne and Couillard, once partners and allies of Trudeau, have little room to manoeuvre. On issues such as health-care transfers, they have little option but to push the government, lest they provide fodder to their opposition at home.

With 2017 comes opportunity for the federal Liberals to turn the page on the last few months. However, the road ahead is significantly rockier than it was when they were elected in October 2015, and the pastures along the way don’t look to be getting any greener.

Jaime Watt is the executive chairman of Navigator Ltd. and a Conservative strategist.

Splinter

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Noun:
A small, thin, sharp piece of wood, glass, or similar material broken off from a larger piece.

Verb:
1 Break or cause to break into small sharp fragments
1.1(of a group or organization) separate into smaller units, typically as a result of disagreement.

Fragmentation—whether social, political, economic, or all three—has been the subject of considerable hand-wringing over the past few years. In 2016, the flashpoints of the Brexit referendum, the bitter U.S. presidential campaign and separatist stirrings in Hong Kong heightened the collective angst about special interest groups and splinter factions.

But those who aggressively challenge the status quo and its monolithic structure are not a new force. Social media may have amplified their provocative words, actions and agendas, but the likes of Boris Johnston and Donald Trump have been around since humans first clustered together in protective groups.

The dynamic that broadly drives fragmentation and consolidation cycles makes perfect sense: In the face of a common threat, large groups form for protection. Small differences are overwhelmed by a greater, shared need. Over time, as the large groups prosper and feel secure, differences emerge and disrupters gain momentum.

Political, economic or social divisions tend to be regarded with alarm because their leaders attack received wisdom and deliberately lurch toward the unknown. For example, in a world where global trade blocs and geopolitical alliances have become the entrenched norm, those who advocate a different course are considered downright dangerous. An anti-free trade position, for example, is modern day heresy.

Ironically, in business, alternating rounds of fragmentation and consolidation have been long accepted—even embraced—for the opportunities each cycle creates.

In the resource sector in particular, it’s a well-established story: A company starts small and grows organically. As it becomes bigger and well-capitalized it becomes cheaper to buy incremental growth. Over time, those acquisitions result in accumulation of various non-core assets. That corporate clutter usually drags down the value of the venture, shareholder pressure mounts and the small bits are spun off to create a host of new, highly focused companies.

Canada’s economy is rooted in that cycle of fragmentation and consolidation because of its traditional reliance on a resource-based economy. While it may be a case of making a virtue of necessity, our social history is characterized by
the accommodation of and collaboration with the special interests and agendas that are so threatening in other jurisdictions.

From the outset, we’ve had Quebec—a distinct society, language and culture—enshrined at the heart of our society. Our population has grown almost exclusively through successive waves of immigration. Our geographic sprawl and relatively sparse population means that regional identities and economies are very strong and diverse. The Canadian Constitution and our interpretation of federalism gives provincial governments considerable power.

Hence, as the emerging belief that economic concentration is undesirable and national agendas serve none well, Canada has a first-adopter competitive advantage. We’re already accustomed to demands for political autonomy from sub-national groups. We’re the country that funds and sends separate provincial delegations to UN climate change summits, by way of example.

But while we may be experienced at dealing with fragmentation at home, what remains to be seen is how we manage with it in other jurisdictions.

In dealing with our largest trade partner, we already chafe when dealing with the disparate rules of U.S. states on issues like power exports, environmental standards and scores of non-tariff trade barriers. But if our trade partners become more splintered and contentious, that could challenge—and re-define—our own loose version of national cohesion.

That said, it’s unlikely to change the Canadian course.

The late American politician Tip O’Neill famously observed that “all politics is local,” that people judge policies by their impact on those closest to them. As the world becomes more intertwined, the impact of new policies becomes greater—and so does the scale and complexity of what they aim to achieve. The surprise, in the end, is not that fragmentation continues to exist, but rather that against all odds, it has not yet won the day.

Fragmentation—whether social, political, economic, or all three—has been the subject of considerable hand-wringing over the past few years. In 2016, the flashpoints of the Brexit referendum, the bitter U.S. presidential campaign and separatist stirrings in Hong Kong heightened the collective angst about special interest groups and splinter factions.

But those who aggressively challenge the status quo and its monolithic structure are not a new force. Social media may have amplified their provocative words, actions and agendas, but the likes of Boris Johnston and Donald Trump have been around since humans first clustered together in protective groups.

The dynamic that broadly drives fragmentation and consolidation cycles makes perfect sense: In the face of a common threat, large groups form for protection. Small differences are overwhelmed by a greater, shared need. Over time, as the large groups prosper and feel secure, differences emerge and disrupters gain momentum.

Political, economic or social divisions tend to be regarded with alarm because their leaders attack received wisdom and deliberately lurch toward the unknown. For example, in a world where global trade blocs and geopolitical alliances have become the entrenched norm, those who advocate a different course are considered downright dangerous. An anti-free trade position, for example, is modern day heresy.

Ironically, in business, alternating rounds of fragmentation and consolidation have been long accepted—even embraced—for the opportunities each cycle creates.

In the resource sector in particular, it’s a well-established story: A company starts small and grows organically. As it becomes bigger and well-capitalized it becomes cheaper to buy incremental growth. Over time, those acquisitions result in accumulation of various non-core assets. That corporate clutter usually drags down the value of the venture, shareholder pressure mounts and the small bits are spun off to create a host of new, highly focused companies.

Canada’s economy is rooted in that cycle of fragmentation and consolidation because of its traditional reliance on a resource-based economy. While it may be a case of making a virtue of necessity, our social history is characterized by
the accommodation of and collaboration with the special interests and agendas that are so threatening in other jurisdictions.

From the outset, we’ve had Quebec—a distinct society, language and culture—enshrined at the heart of our society. Our population has grown almost exclusively through successive waves of immigration. Our geographic sprawl and relatively sparse population means that regional identities and economies are very strong and diverse. The Canadian Constitution and our interpretation of federalism gives provincial governments considerable power.

Hence, as the emerging belief that economic concentration is undesirable and national agendas serve none well, Canada has a first-adopter competitive advantage. We’re already accustomed to demands for political autonomy from sub-national groups. We’re the country that funds and sends separate provincial delegations to UN climate change summits, by way of example.

But while we may be experienced at dealing with fragmentation at home, what remains to be seen is how we manage with it in other jurisdictions.

In dealing with our largest trade partner, we already chafe when dealing with the disparate rules of U.S. states on issues like power exports, environmental standards and scores of non-tariff trade barriers. But if our trade partners become more splintered and contentious, that could challenge—and re-define—our own loose version of national cohesion.

That said, it’s unlikely to change the Canadian course.

The late American politician Tip O’Neill famously observed that “all politics is local,” that people judge policies by their impact on those closest to them. As the world becomes more intertwined, the impact of new policies becomes greater—and so does the scale and complexity of what they aim to achieve. The surprise, in the end, is not that fragmentation continues to exist, but rather that against all odds, it has not yet won the day.