Trade deal will draw investment in Manitoba, predicts Canada’s ambassador in U.S. By: Dylan Robertson Posted: 7:00 PM CDT Tuesday, Oct. 16, 2018

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This article was published 15/10/2018 (2264 days ago), so information in it may no longer be current.

OTTAWA — Canada’s man in Washington says he’ll be luring American business to Manitoba, after the province’s manufacturers claimed they’d been undercut by investor uncertainty during months-long negotiations for a new North American trade deal.

“One of our primary areas of focus is going to be to promote investment in Canada,” David MacNaughton, Canada’s ambassador to the United States, told the Free Press. “There’s a huge amount of interest in Canada, I think, given the reduction of uncertainty.”

In a wide-ranging phone interview from Washington, MacNaughton offered a frank assessment of the United States-Mexico-Canada Agreement, a deal he’s been intimately involved in crafting since U.S. President Donald Trump’s election in November 2016.

Manitoba sold just under $9 billion in goods to the U.S. last year, accounting for 71 per cent of its exports. USMCA has secured the province’s access to the world’s largest economy, but it comes after a year of tense negotiations.

Groups such as Canadian Manufacturers and Exporters have noticed a drop in investment during the talks, with companies opting to open plants in the U.S. because it wasn’t clear how much they’d pay to import from Canada.

MacNaughton feels the new deal will help the five sectors that make up the bulk of Manitoba’s exports to the U.S.: agriculture products, planes/aircraft parts, pharmaceuticals, automotive parts and non-passenger vehicles (such as tractors and firetrucks).

He’s particularly encouraged the deal was positively received by groups representing Manitoba’s pork, grain and beef farmers.

In June, at the end of the G7 meeting in Quebec, Trump threatened to ramp up existing tariffs on Canada. Obama-era U.S. ambassador to Canada Bruce Heyman urged Manitoba’s agriculture producers to ask their American clients to stress Canada’s importance to their political representatives.

MacNaughton couldn’t recall whether specific groups such as Keystone Agricultural Producers followed through with that approach, but he said a slew of business groups, unions and premiers were a key part of a sustained, cross-border charm offensive that included representation from Manitoba.

“A lot of that was just reaching out to their partners in trade, and I think that made a big difference,” he said. “I don’t think we would’ve been able to get it if we’d just been on our own.”

Yet supply-managed sectors have decried USMCA for undercutting a system that strictly regulates Canada’s pricing, import and production quotas for dairy, eggs and poultry. Those industries exert heavy lobbying pressure on Canada’s three main political parties.

Allowing more U.S. imports came after demands from Trump to end supply management, as well as key Congress members, including House Speaker Paul Ryan and Democratic Sen. Chuck Schumer.

“Given where they were, there was just no way that we were going to get this deal renewed without giving something on dairy,” MacNaughton said.

USMCA ended a pricing category for industrial milk ingredients known as Class 7, which dairy farmers say will make redundant a newly opened Dairyland facility in Winnipeg, while opening supermarket shelves to products from hormone-fed American cows.

When asked if dairy farmers’ concerns are overblown, MacNaughton simply repeated that Canadian producers still have access to 90 per cent of the Canadian market. “It’s a pretty positive package,” he said.

The Conservatives have homed in on Canada’s concessions, declaring them a “failure” that will hurt the economy. Tory Leader Andrew Scheer claimed he would have signed a better deal, without explaining how.

MacNaughton defends USMCA for preserving the dispute-resolution mechanism while eliminating a clause that favoured the U.S.

“Is that really a win? Well you know what: in today’s world, creating certainty around the investment climate and the trading climate is a win. It’s hard to see any areas where there isn’t uncertainty,” he said.

The ambassador says now spends “almost 100 per cent” of his time trying to end American tariffs on steel and aluminum, which weren’t resolved in the Sept. 30 deal.

“We could have done it as part of the renegotiation of the NAFTA. But the terms they were proposing were just not acceptable to us, and we didn’t have enough time to actually deal with it. And frankly, our view is that those are unwarranted and illegal tariffs in the first place.”

MacNaughton spoke with four senators Monday and has “a whole bunch of other people in Congress and the administration that I’ll be calling for the rest of the week,” he said.

MacNaughton admits it’s taking some time to get used to calling the deal “USMCA.” He claimed he likes the ring the acronym gives, comparing it to the Village People’s 1978 hit song, Y.M.C.A.

On Monday, Prime Minister Justin Trudeau referred to the deal as the “new NAFTA” at a Toronto business forum, prompting the moderator to ask if that’s what he calls it.

“No, I call it the USMCA, ’cause that’s a great new name that I think makes a real difference in the quality of the accord,” Trudeau said in a heavily sarcastic tone.

dylan.robertson@freepress.mb.ca