President Trump’s approach to trade may have strained the U.S.-Canada relationship, but these “best friends and allies” are in no danger of breaking up, according to Canada’s top diplomat in the Southeast.
Nadia Theodore, a trade expert-turned-consul general, said both countries may be pursuing independent trade priorities, but the primacy of their neighborly relationship has never faded, at least on the Canada side.
“At the end of the day, the relationship between the Canada and the United States is of utmost importance to us, and nothing will jeopardize that because it can’t. We are actually, in my humble opinion, too big to fail,” Ms. Theodore said during a Global Atlanta Consular Conversation May 2.
There has been no shortage of strains since Mr. Trump took office in 2016. For more than a year leading up to May 17, Canada and Mexico failed to secure an exemption from Mr. Trump’s steel and aluminum tariffs, which had remained in place even during talks on revising the North American Free Trade Agreement. Partly because of this, there has been a drumbeat in Canada for greater diversification away from the U.S.
Ms. Theodore said both countries understood that the real problem was overcapacity in other countries (i.e., China), but “painting with a broad brush” and punishing Canada, especially with a tariff based on national-security grounds, was a “ludicrous” way to fix it.
“What Canada said was given what we know these countries are doing, it is actually even more important for Canada and the United States to work together to have an integrated industry as we do now,” she said. “In fact, the trade between Canada and the U.S. on steel is perfectly balanced, and on aluminum we sell and buy from each other different things. It’s complementary, in other words.”
Canada saw working together to counter China as a worthy goal and went so far as to adopt the U.S. standards for enforcing restrictions on the dumping of steel and aluminum.
The U.S. continued to use the metal levies as leverage over the new U.S. Mexico Canada Agreement, a combative approach Mr. Trump’s Republican allies are now praising as shrewd.
Ms. Theodore, interviewed before the tariffs on Canada were lifted, said multilateral pressure would have been more effective, echoing her European colleagues who say the EU has become “collateral damage” in the U.S.-China trade war.
“What I will say is that when it comes to international trade and to the global economy, no man or woman is an island. So whatever solution we come up with, it needs to be a solution that involves more than one party,” she said.
The USMCA trade deal has been signed and is awaiting ratification in all three countries, while China and the United Staes are facing another tense moment, with the next step in marathon discussions to avoid further tariff escalation remaining unclear.
As far as the new NAFTA is concerned, it does contain some key changes that were ironed out even though the three countries had very different starting points — the U.S. threatened to withdraw from the agreement altogether on multiple occasions.
Now it addresses e-commerce, which is a key aspect of small business success and a driver of globalization.
On the auto front, a full three-quarters of a car’s content now needs to be made in the NAFTA region to qualify for the tariff exemption, up from 62.5 percent in the old deal. The new pact even stipulates how much steel and aluminum for a car must be sources in the three countries. And all parties agreed to a provision requiring 40 percent of a car’s value to be created by people making more than $16 an hour, a measure clearly aimed at Mexico.
Ms. Theodore, a veteran trade negotiator, said the successful navigation of these tense negotiations is a testament to the strength of the relationship, noting that Canada’s focus has been balancing the issues of cost for consumers and support for its own domestic industry. Imports can help lower the prices of goods, which theoretically puts more money in consumers’ pockets, but they can also lead to negative job impacts.
Canada’s parliament tabled the text of the USMCA agreement in January but faces a June deadline to consider it before disbanding. Missing that date would mean no vote in Canada until next year. But Canada is not waiting around for the passage before working to boost interactions with Ms. Theodore’s region.
The country just opened its first ever U.S.-based Export Development Canada office in Atlanta, offering a physical presence in the South for the country’s largest export credit agency. EDC offers loans, guarantees and other instruments to help buyers sourcing from Canadian companies — whether back in Canada or subsidiaries operating here in the U.S. Banks in the South can benefit from partnering with EDC to offer services to clients, and both sides can profit — an approach Ms. Theodore believes is applicable to trade in general.
The South made sense for EDC’s office because of the strong ports, pro-business bent and hospitality toward the world, said Ms. Theodore. Atlanta in particular sits at the intersection of future-facing sectors like financial technology, the Internet of Things and much more.
“You have a very strong international business sense and community that makes it a perfect place to start,” she added.
This regional connection was already evident in the Southeast U.S. Canadian Provinces Alliance, which formed 12 years ago to help smooth the way for enhanced business interaction.
This year’s annual conference in Montreal is to focus on “smart mobility,” the use of artificial intelligence and other technologies in transportation sectors. On hand will be representatives of Canadian cities and utilities, as well as anchor companies like Bombardier that will be the bedrock of a slate of business-to-business meetings.
Ms. Theodore said the alliance is “a celebration of the fact that companies, when they do business, they don’t do business at the federal level. They do business at the state level.”
The annual event provides a strong reminder that the bilateral relationship is about more than just interactions in Washington and Ottawa — the stuff that tends to make the contentious trade headlines.
“Now more than ever, I don’t think we could have imagined the importance of having solid relationships at the sub-federal level. In my view, that is what will ensure our relationship that is too big to fail, never fails.”
During the hour-long discussion, Ms. Theodore also touched on competition and collaboration between the Georgian and Canadian film sectors, and an appreciation for the security assurances provided by the NATO alliance, the 70th anniversary of which was recently celebrated at a luncheon organized by the Canadian consulate.