First of all, it's a distinct honour for me to be here to talk with you about something that is always important, Canada-U.S. relations, but that probably at this point is as important as it has been in a very long time.
I wasn't quite sure about my instructions, so I tried briefly to respond to each of the questions. I guess I was given the option to choose questions, but I didn't do that. I'm sure I have not responded adequately to any of the questions, but I'm going to give you my brief response. It's exactly as I printed the thing out.
First, Canada, in my modest judgment, ought to attempt to tread lightly with President Trump, especially in interpersonal relations. Despite his public image of disputatiousness, he doesn't like interpersonal antagonisms, especially in his physical presence. It makes him uneasy. On the other hand, Canada ought, in my judgment, to state its interests clearly and firmly. He listens. Be prepared for tough bargaining on issues of top priority.
I would think that trade and investment will get top attention. Industrial supply lines, as your parliamentary secretary very adequately, very nicely, and clearly expressed yesterday in Washington, are very sensitive. Mr. Trump needs to be reminded how important an open border is to both our countries. He also needs to know how well policed this border is in actuality, and what a record of co-operation and security it has established. I know he knows these things. He just needs to be reminded of the value of them. Yet—this is the bottom line here—some of the most important policy impacts for Canada will not have anything to do with foreign relations, but because of the integration of the economies some of the most important impacts will be from internal American policy decisions, such as the possibility of a large corporate tax reduction, vast increases potentially in infrastructure spending, and concerns over changes in immigration and refugee policy.
Here is my response to the second question. In response to concerns Canada might have with commercial relations with Trump, I think the Trump administration could usefully be reminded that trade deficits and financial imbalances must be dealt with in a multilateral fashion, not primarily bilateral. That said, when balances are large, persistent, and negative for the United States, this particular government in Washington will complain, especially when the imbalances are not just structural. But trade between the United States and Canada is quite balanced. Anybody looking at this in the last two years can see this. The larger U.S. problems by far are with Mexico and China.
In response to the third question, in the past Canada has sought a greater emphasis on bilateral relations with the United States. Fen Hampson and I have looked at this. He has actually been more involved in it, certainly on this side, but there's a history of discussion about it.
Although NAFTA renegotiation is starting, or at least is slated to start, these relations in many issues now are predominantly bilateral relations. It appears that the United States will seek to strengthen rules of origin provisions—at least it would like to. The United States may seek to alter dispute panel procedures. I may as well admit to you that as a strong proponent of NAFTA, I had something to do with the discussion of these dispute panels a long time ago. The current government in Washington is unhappy with them. The government has said something about giving greater attention to labour issues. I think I know what is involved there, but it really involves Mexico. It doesn't involve Canada and the United States.
With regard to the fourth question—again, truth in advertising—I have been a long-time advocate of enlarging the scope of NORAD NORTHCOM responsibilities in the Arctic and offshore. I do know that its responsibilities are only with surveillance and with monitoring, but that is key. That is absolutely key. No two other countries in the world have coordinated this with the level of trust that Canada and the United States have. Actually, I think almost 100% of Americans don't know anything about how it operates. I trust that you do. But I see little interest in moving in the direction that I am advocating.
On a different topic, the United States is very concerned that Canada spends only 1% of its GDP on defence. The United States puzzles over—and I'm sure I don't understand—how Canada could argue that it is unable to spend part of its proposed military budget, pushing forward these expenditures, as is it understood south of the border, over a 20-year period. From the U.S. side, from the U.S. perspective, these budgetary manoeuvres, I will candidly tell you as an academic, look like budgetary manoeuvres to try to avoid an increase in current defence expenditures, however wrong that interpretation may be.
Five, I believe the United States will continue to favour close coordination of monitoring and surveillance. There's just no doubt about that. I just got through with participating in an Arctic task force with the Council on Foreign Relations and we got into all of this. One of the things we learned is that there seems to be more disagreement bureaucratically inside the United States regarding how to respond to things than there is between Canada and the United States about surveillance. I guess that's good news. I don't know if it's good news or bad news, but I'll tell you this much: when push comes to shove, they always figure out which planes to send up. I don't think there's going to be a real problem there.
As the Arctic melts, more transits are occurring, more mining and oil drilling sites are opening up, and more commercial activity is taking place. Problems are multiplying. The Arctic Council has passed a forward-looking strategic statement on the preservation of Arctic fish stocks, yet the countries with the largest fishing fleets—China, Taiwan, and Japan—are not members of this agreement. I know there are parallel talks going on here about fisheries, but I can tell you, looking at the size of that Chinese fishing fleet and looking at the subsidies—we all subsidize, to some degree, the fishermen, because they're always complaining—the fact is that with the amount of subsidies the Chinese have poured into those fishing fleets, those boats are going to have to go someplace, and I think, unfortunately, they have their eyes on the Arctic.
Closer coordination of security is inevitable involving the United States, Canada, and Greenland. Let's not forget about Greenland and Denmark. Russia is rapidly moving forward with reopening all of its old airfields in the Arctic. It has, as you know, some 20 icebreakers, including heavy icebreakers. The United States has barely three. I say barely because I'm not sure they can all get out there at the same time. That's the way it is. Changes will be required, but so far the Arctic has not received a lot of attention from the Trump administration. That could change. Things change very fast down there.
Six, the Trump administration has, in my opinion, a first-rate set of appointments at the cabinet level and an excellent national security council. Now, all my academic friends say that's ridiculous; there are no academics there. How could that be? What kind of experience do these people have? Let me tell you: Tillerson has done more deals and talked with more people and thought about international politics more effectively than have most people who were nominees for that position. One shouldn't underestimate that kind of talent. They aren't very good at getting the other appointments in place. That's taking a while.
The Trump administration hopes for improved relations with Russia—shock—but so far has been quite disappointed in matters involving Syria. Of course, it all got involved in campaign issues. The press and the opposition—well, opposition comes from a lot of sides—have made this issue something that makes it very difficult to actually look at what is going on here. But I don't think the Trump administration is naive about this. They simply wonder why they have to have these battles with Putin all the time. They realize that part of it is over status, because previously it was said, by somebody, that Russia was only a regional power. Now, if you want to irritate the Russians, that's the way you do it. In my opinion, they're a great power that is on hard times, certainly in economic terms.
Russia is a controversial issue in Washington right now. Russia bungled the sarin gas affair. There's just absolutely no question or doubt about it. I don't know if they had previous information. I'm sure they wouldn't have supported it, not because they were morally concerned but because they thought it would have been bad policy. It happened, and then they ended up defending the Syrians. That made virtually everybody in Washington angry. That was a mistake. Nonetheless, the Trump administration is determined to continue to acknowledge Russia as an important member of the great power system.
NATO is now viewed by the Trump administration as a critical defence alliance, as opposed to what was said during the campaign, but the Trump administration would like the Europeans to do more to help defend themselves. Surprise? Hardly. Evidence exists that these preferences are beginning to be taken seriously.
Seven, the Trump administration is on record as getting even tougher with ISIS, whatever that will mean. The problem is that Russia and Iran are supposed to be partners in this fight. Regime change in Syria is not feasible as long as Russia unconditionally backs Assad. Iranian influence is growing in Iraq, but both Canada and the United States must continue to support the Iraq government even under these very trying circumstances.
Eight, I don't know know what the status of the joint comprehensive plan of action is. When government change occurs—this is my speculative judgment—some change, perhaps passive change, in such policy arrangements is to be expected.
Finally, funding cuts are taking place in the U.S. State Department and elsewhere in the U.S. government. It is only to be expected that mainline defence expenditures are likely to increase. Such cuts, the cuts I've talked about, are to be expected in the U.S. funding of some multilateral institutions. The question is about multilateral institutions. All I would say is that perhaps other democracies, especially those not meeting the 2% NATO defence spending threshold, will increase their level of funding of multilateral institutions—for those of us who know that they're important—in offsetting terms.
Thank you, Mr. Chairman.