Foreign Affairs Minister Chrystia Freeland said Monday she warned at the start of the trade talks last year there would be moments of drama: ‘And there have been’

Tom Blackwell – Financial Post
October 1, 2018

On a pressure-filled weekend fuelled by multiple fast-food runs, it was a welcome respite.

As a small, elite team of Canadian officials huddled in the Prime Minister’s Office and negotiated what would become a new North American free trade deal, the husband of Katie Telford, Justin Trudeau’s chief of staff, came to the rescue.

Public affairs consultant Rob Silver and his son delivered homemade brisket.

“Everybody was pretty happy about having something real, rather than running out and getting coffee and donuts,” said David MacNaughton, Canada’s ambassador to the United States.

But he said more important relief came late Saturday, when the U.S. finally confirmed it would take off the table one of its most challenging demands — scrapping NAFTA’s Chapter 19 dispute resolution tool.

By the next afternoon, MacNaughton was fairly sure that a deal would be reached with American counterparts gathered in Washington — including presidential son-in-law Jared Kushner. The two countries finalized the pact a few hours later, bringing to a close an extraordinary few days of talks that could shape Canada’s economy for years to come.

“I’ve never felt such responsibility,” said MacNaughton, former chair of the StrategyCorp consulting company. “It’s not like playing chess or, you know, betting on a golf game. It’s serious stuff and it affects people’s lives and livelihoods. It’s quite an awesome responsibility.”

Foreign Affairs Minister Chrystia Freeland said Monday she warned at the start of the trade talks last year there would be moments of drama. “And there have been,” she said.

The United States Trade Representative’s office did not respond to a request for an interview on negotiations from the American perspective.

The agreement gives the United States significant new access to the Canadian dairy market, increases patent protection for some brand name drugs and, in a side letter, protects Canada from the “national security” tariffs President Donald Trump had threatened to impose on auto imports.

The road to that accord began 13 months ago, as Trump insisted on opening up what he called the worst trade deal the U.S. had ever signed.

The initial rounds ended this May with no resolution, though the U.S. dropped its initial insistence that 50 per cent of autos it imports be American-made. That concession was the key turning point in the process, Freeland said Monday. “From then on we felt that the outline of a deal was there.”

But instead of more three-way talks, the U.S. and Mexico launched five weeks of bilateral negotiations in July, while keeping Canada on the outside. The unusual situation led to suggestions that U.S. Trade Representative Robert Lighthizer felt a personal antagonism for Freeland.

More recently, Trump said his administration didn’t like Canada’s representative in the talks.

The minister dismissed the notion of a personal clash Monday, saying Lighthizer is someone “I consider a friend.”

Tempers frayed at times, but it was nothing unexpected, said MacNaughton, who calls Lighthizer a “pro” who understood Canada’s needs, even as he took a tough stance on behalf of his own country.

Regardless, Mexico promised it would “punt” issues Canada considered important to later, trilateral talks.

But then near the end of August Trump announced a wide-ranging new deal that would have, among other things, evaporated Chapter 19 — the mechanism prized by Canada for resolving disputes over anti-dumping and anti-subsidy duties.

Was there anger at the Mexicans? “There were frank discussions that did take place,” MacNaughton said.

Canada rushed to negotiate its way into the agreement, with deadlines imposed by the U.S. in a bid to get the deal signed by the outgoing Mexican president before Dec. 1.

The new, more urgent talks were aided by a “most important” decision: that neither side would negotiate in public.

“It really helped move things along because up until that point, there wasn’t mistrust, but there wasn’t the trust you need,” said the ambassador.

By last Thursday, MacNaughton said, the potential of a deal truly seemed real, and the next day plans to release the text of the U.S.-Mexico agreement were put on hold, as eleventh-hour talks with Canada resumed in earnest.

One source regularly briefed on the negotiations by U.S. administration officials said Lighthizer had issued an ultimatum: join the accord by a Sunday deadline or face dire consequences, including possible auto tariffs. Sunday was when American law required the deal’s text to be released in time for a Nov. 30 signing.

But there was no ultimatum, says the ambassador, who insists that Lighthizer was willing to let the talks continue into next year.

Regardless, MacNaughton, Freeland, Telford, key Trudeau adviser Gerald Butts, chief negotiator Steve Verheul and others hunkered down in the PMO. In Washington, Lighthizer, his staff and Kushner gathered in the U.S. Trade Representative’s office. The two sides were “in constant contact” by telephone.

Kushner served as a ready conduit to Trump, said the ambassador. Butts and Telford played a similar role in Ottawa, letting the Americans know they were serious, too, he said.

From the outside, Flavio Volpe of the Automotive Parts Manufacturers Association could sense a deal was close as calls from the Canadian team picked up pace.

“The frequency of contact, the testing of items, asking for more empirical data, really was much more than normal Friday and Saturday,” he said.

Then on Saturday afternoon, American negotiators agreed in writing to drop the demand to kill Chapter 19. “That really made the mood significantly better from Saturday on,” said MacNaughton.

The ambassador said he was fairly sure that a deal had been reached by Sunday afternoon but, after 13 tumultuous months, was not about to relax.

“I think Chrystia said to me, ‘We’re on the one-yard line right now.’ But I’ve watched football games when people have four downs and can’t get across,” he said with a laugh. “You worry that something is going to happen that kind of blows it all up.”

By 9:30 that night, however, Trudeau had arrived on Parliament Hill. Jacket slung over his shoulder, he headed inside, ready to brief his cabinet on a new trade deal.


Via: Financial Post