By Canadian Press

Tariffs could jeopardize new NAFTA deal in Parliament, Garneau warns

Feb 24, 2019 | 6:15 AM

WASHINGTON — Parliament will struggle to ratify the new North American trade deal if U.S. tariffs on steel and aluminum exports aren’t lifted soon, Canada’s transport minister warned Sunday during a high-profile gathering of American state lawmakers.

Marc Garneau said time is running out for the federal government to get the United States-Mexico-Canada Agreement ratified before the House of Commons rises for the summer break, and it remains an open question whether it will happen without the tariffs being lifted.

“This will present us with real challenges as we begin the process of ratification in Canada, and I don’t know if we’re going to get there,” Garneau told a free-trade panel during the winter meeting of the National Governors Association in Washington.

“I’m making a plea here to the governors. I’m making a plea here that you bring up with the president of the United States the fact that these tariffs are a serious impediment to us moving forward on what is the best trade deal in the world.”

Larry Kudlow, President Donald Trump’s economic adviser and one of Garneau’s fellow panellists, acknowledged the tariff issue, which the minister raised multiple times.  

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“We are hard at work on that to solve that issue,” Kudlow told Garneau.  “I got the message loud and clear.”

Following the panel, Kudlow struck a positive tone on hopes for finalizing USMCA, but more commonly in Canada as the “new NAFTA.” He even told a story about how Prime Minister Justin Trudeau embraced him in a hug when the three countries gathered in Argentina last year to sign the deal.

“We’ve had a great coming together in Argentina,” he said, recalling the animosity that erupted last spring after the G7 meetings in Quebec, when Trump lashed out at the prime minister on Twitter over comments he made about the ongoing trade talks.  

“In Argentina, he came up to me — this is a true story — after the USMCA ceremony, he walked across the hall to come up and grab my hand and give me a hug,” Kudlow said. “I asked him if we could please turn the page on any of that stuff that happened last spring, and he said, ‘Absolutely,’ and then we started having some policy discussions.”

Kudlow had his own request of the governors gathered Sunday: to lobby members of Congress to support the agreement, which has received decidedly mixed reviews on Capitol Hill, particularly among Democrats who want to see sharper enforcement teeth for the deal’s labour and environmental provisions. A number also oppose extending protection for drug patents by two years.

And afterward, Kudlow urged Canadians to be patient, acknowledging the anxiety the tariffs have caused. Garneau “mentioned it 13 times in our meeting,” he joked.

“I acknowledged that he’s correct, and that we’re working on that, and I believe he knows that,” Kudlow said. “We’re negotiating for a vote in Congress, and we’re negotiating with our friends in Canada and Mexico on that subject.”

Garneau called it “illogical” that the White House is using national security to justify the tariffs, which were imposed last May and remain in place despite the signing last year of USMCA.

But he also said Canada would move quickly to approve the agreement once the tariffs are lifted.

“We want to see USMCA ratified in Canada,” Garneau said. “If the tariffs on steel and aluminum are removed, Canada will move expeditiously towards ratification of the USMCA; we believe very strongly in it.” 

Garneau also said Canada would lift its own tariff countermeasures on $16.6 billion worth of U.S. imports, “which we know are affecting many American companies.”

Canada’s ambassador to the U.S. David MacNaughton said last week he believes the tariffs could be lifted in a matter of weeks, but refused to provide additional details.

Trump ended a Canadian exemption from the tariffs last spring in a move he later acknowledged was a negotiating tactic, and the president has also said the tariffs would be lifted once the deal was signed.  

Kudlow was asked why, since the deal was signed late last year in Buenos Aires, the tariffs remain in place and what role they serve.

After a pause, he said: “It’s part of the rules of the game, that’s what I’ll say.

“There’s no animosity, it’s just that if you flip switches on and off, you really can’t do that … the steel and aluminum tariff discussion is an integral part of the larger legislative picture discussion, and don’t take that negatively. It’s actually a positive. We’re going to figure it out.”

James McCarten, The Canadian Press