Foreign Affairs Committee on May 4th, 2017

[The Chair, Liberal, Bob Nault]

Thank you.

Mr. Levitt, please.

[Conrad Black]

As you know, there is always in the American administration some tension between those elements in the U.S. government and the Congress and the administration who put particular heavy emphasis on the observation of human rights in other countries and those who adopt a somewhat [Technical difficulty—Editor]. As long as things don't reach the level of colossal atrocities, they feel that those are essentially internal matters of other countries and not a place for the United States to [Technical difficulty—Editor].

I think maybe the Carter administration was the most activist in terms of using rights and the observation and respect of rights in different countries as a criterion for the forthcoming goodwill of the United States in response to those countries. The Nixon administration perhaps was on the other end of the scale. While it took notice of these things, it essentially dealt with whoever was there unless they were so morally opprobrious that it was beneath the dignity of the United States to do it.

I would say that this administration would be somewhat closer to the Nixon model, and well away from the Carter model. I think President Trump feels that in general, American interventionism recently, indeed since the Korean War, when its military intervention has, with some exceptions, not been overly successful and has not been easily justified as a geopolitical investment.... In the Middle East, virtually the entire conventional ground forces military capability of the United States was tied up in that area for over a decade. Approximately $2 trillion were spent, an immense humanitarian crisis was generated, and scores of thousands of casualties occurred in the case of the United States, and much larger numbers in other populations. Geopolitically, the U.S. doesn't have much to show for it. That was quite prominent in the comments that the candidate took prior to the election, and it certainly resonated well with his voters.

I'm sure that when you were in Washington you would have encountered indications that this is an administration that takes note of the degree to which rights are observed, but it is not going to become overly demonstrative or insistent about that subject unless it really becomes an atrocious situation on a vast scale. I think that this administration, and any American administration from now on, from either party, would be much more responsive than the Clinton administration was to what went on in Rwanda, for example, or the Carter administration to what went on in Cambodia.

I am hopeful, as I'm sure you are, that the world in general has gotten to a point where it will take radical measures to prevent another Darfur, or any of these horrible disasters where huge numbers of people perish or are dislocated.

But in terms of determining their policy, I think this administration will cut a fair bit of slack to almost any plausible government, other than a failed state, that whatever it is doing it has a right to do within its own borders. Now, it will become much more demonstrative about the exportation of aggression, and particularly of terrorism. I think what you'll get, in general, is an administration that tries to give a much clearer definition of U.S. national interests, rather in the way that President Truman and Secretary Acheson did just prior to the Korean War, and make it clear what the United States regards as its national interests. It will be a much less ambitious definition than the George W. Bush administration had, and at much less pacifistic and passive one than the Obama administration had, but at least it will be clear.

In the human rights area, I think this is an administration that would only really assert itself and use American political strength in the case of violations of human rights on such a scale that they would be repulsive to the American public.

[Michael Levitt, Liberal, York Centre, ON]

I think we probably saw that with the lashing out at Syria after the chemical weapons attack. That would probably fit the characterization.

[Conrad Black]

That was magnified by that appalling episode with the red line, followed by triumphalist noises in Washington that without any violence at all they had succeeded in having all the sarin gas removed, which of course was not the case. The country was lied to by the Syrians and the Russians, so you had an element of betrayal involved as well.

[Michael Levitt, Liberal, York Centre, ON]

Thank you.

Do I have a little more time?

[The Chair, Liberal, Bob Nault]

No.

[Michael Levitt, Liberal, York Centre, ON]

Okay.

[The Chair, Liberal, Bob Nault]

Go ahead, Mr. Fragiskatos.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Mr. Chair.

Thank you, both of you, for being here today.

Ms. Greenwood, you made an interesting comment earlier that Canada's corporate tax rate puts us, as a country, in a very competitive position. I wasn't planning on asking about corporate tax rates, but I was intrigued by the comment and I wonder if you could follow that up.

[Maryscott Greenwood]

Absolutely. Thank you for the question.

Today Canada enjoys a lower relative corporate tax rate than the United States. If the U.S. lowers its rate in a significant way, which I believe will occur—I don't know what level it will go to, that will be the subject of a negotiation—I think that has the potential to have a big effect on Canadian competitiveness.

It's not just about tax rates, although that's really important. If in two years in the United States we have a lower corporate tax rate, some version of a border adjustment tariff, and some incentive to repatriate funds that come from overseas, and you combine those with a preference for American inputs and manufacturing and “buy and hire American”, that's a fundamental challenge to Canadian corporate competitiveness.

That's why we strongly advocate for Canada and the United States to go at this together and have a complementary economic system, because that's what we've had not just since the NAFTA, not just since the Canada-U.S. Free Trade Agreement, and not even just since the 1965 Canada-U.S. Autopact—which is what kind of started all of this—but since back in the forties, when we started free trade in agricultural equipment, like tractors, combines, and things like that. That's the approach we need to take, in my opinion, so that we are an economic unit, and that's the way business deals with it. If policy-makers could get closer to that so that we can take on competitive challenges around the world, that would be better. However, if we diverge, and the United States under the Trump administration, the Republican leadership, and the 115th Congress goes at what it says it's going to do, that creates some important questions for Canadian policy-makers, to be sure.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

In January of 2017, you said the following in a CTV interview—

[Maryscott Greenwood]

Here we go.

[Peter Fragiskatos, Liberal, London North Centre, ON]

No, no, don't worry. Your words are fine, but I do want to quote them back to you.

[Maryscott Greenwood]

Sure.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Speaking from an American's perspective, you said:

Well, who’s our biggest export partner? It’s Canada. So literally millions of American jobs are dependent on our relationship with Canada…. I think the president-elect and his team are beginning to understand that.

Do you believe that is still the sense in Washington and, quite frankly, across the United States?

[Maryscott Greenwood]

I do believe the education level is rising. Let me just take a moment to compliment. There's something called the Canada-U.S. “war room” inside the Prime Minister's Office. It's led by a gentleman named Brian Clow. He has a terrific team. They're really smart and really good, and they are helping guide...along with Ambassador MacNaughton, who is enormously talented, and members of all parties and a former prime minister, so this is not a partisan or a government-only comment.

I do think there has been a lot of progress made in raising awareness, but you have to keep it up. You have to keep coming to Washington, and not just Washington but all over the United States. I think there have been more than 125 touchpoints in the first 100 days of the administration from Canadian policy-makers to U.S. policy-makers. That feels like a lot from up here, but you have to keep it up, because every single interest group in the United States camps out on Capitol Hill. If you have 125 touchpoints, the American meat producers have 10,000, and they are constituents.

Facts are important, the reality is important, and millions of American jobs and the American prosperity do rely on our interconnected economy with Canada. That needs to continue.

The President said he decided not to tear up NAFTA after phone calls from Prime Minister Trudeau and the President of Mexico. I think that's partially true, but I think another big factor was that Sonny Perdue, the former governor of Georgia who is now the U.S. Secretary of Agriculture, came with an infographic to say that in the agriculture sector, if we were to tear up NAFTA, that would be a giant detriment to American farmers. I think that resonated as much with the President of the United States as any argument that a foreign leader made, as important as those were.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

I have one last question, and it's for Mr. Black.

Mr. Black, I wonder what you would make of arguments that suggest that Canada ought to really diversify its economy. We've heard this argument for decades, and we've pivoted in this direction, obviously, with respect to Europe and the recent CETA. Talk for a moment, if you would, on the issue of China and perhaps even India and free trade agreements along those lines.

[Conrad Black]

Mr. Fragiskatos, I believe at the height of the intimacy in trade terms between the United States and Canada, approximately 85% of Canada's foreign trade was with the United States, and roughly half that figure was the percentage of [Technical difficulty—Editor] tied up in that, which I would have thought was as great a level of integration with the U.S. economy as the State of California possessed at that time.

I believe that number now, the 85%, is down to 73% or something [Technical difficulty—Editor]. It is gradually happening, and I think it is a good thing. It's not that we want to get away from trade with the United States, but it is generally a good thing to be more broadly based in international transactions, and it is a natural trend anyway.

I would make two points, if I could, related to your previous question to Ms. Greenwood. The one area where I think we should be prepared for a real divergence, but I'm not exactly sure and haven't enough competence to say how determined our government is in this matter, is on all this business about carbon taxes and activities based on presumptions about global warming. We are not going to be operating on a parallel line with the present American administration on that point. I think that is clear from directives that have already been implemented in respect of the Environmental Protection Agency.

I also want to make the point that in tearing up NAFTA and so forth, Donald Trump has never expressed any problem at all with Canada-U.S. free trade. I mean, a slight tweaking I believe was his expression when the Prime Minister and others visited him. His problem is that he's not a protectionist. He is actually in favour of trade. What he does not like is trade that consists of a net sizable exportation of unemployment to the United States. He's well aware that there are 12 million jobs in the U.S. dependent on exports, but he's also aware that there are between 30 million and 40 million jobs elsewhere in the world dependent on exports to the United States. He just wants to reduce that imbalance. He doesn't want to lift the drawbridge and pull down the blinds and take “America first” as a policy in the sense meant by Colonel Lindbergh in 1940. He just wants fair trade.

We're not dealing with a monster here. We're dealing with a reasonable person who just wants to do a good job for his country. Well, so do all national leaders. In that sense he's not unusual.

[The Chair, Liberal, Bob Nault]

Colleagues, I want to wrap up this very interesting discussion this morning by thanking Ms. Greenwood and Mr. Black for coming before the committee. It's always too short. I wish we could do this all afternoon. It beats being in the House of Commons, I think, but this is part of the House of Commons. This is an extremely important debate and one that we will continue.

On behalf of the committee, thank you for making the time and putting the effort into being here today.

[Conrad Black]

Thank you for having me, Mr. Nault.

I'm sorry I was a bit late. It wasn't an accident, it was the John Tory traffic miracle in Toronto.

[Voices]

Oh, oh!

[The Chair, Liberal, Bob Nault]

I appreciate that clarification, and we'll make sure Mr. Tory fixes that. The Scarborough subway is on its way.

[John McKay, Liberal, Scarborough—Guildwood, ON]

The Scarborough subway will solve it—

[The Chair, Liberal, Bob Nault]

Colleagues, we'll go in camera for a couple of minutes, if you don't mind. I have a couple of motions that I have to get completed, one in particular; otherwise, we can't send invitations.

[Proceedings continue in camera]