THE WEST BLOCK
Episode 1, Season 7
Sunday, September 10, 2017
Host: Vassy Kapelos
Guest Interviews: Congressman Kevin Cramer, Ambassador Carla Hills, Michael Steele
Location: Washington, D.C.
Good morning. It’s Sunday, September 10th. I’m Vassy Kapelos and welcome to season seven of The West Block.
We’re here in Washington, D.C., to talk about Canada-U.S. relations. But before we begin our program, we wanted to take a minute to say that we’re thinking of everyone south of us who’s currently facing Hurricane Irma. Our thoughts are certainly with you.
As I mentioned, we’re here to talk about Canada-U.S. relations, especially significant as we head into round three of NAFTA negotiations later this month in Ottawa. In a few moments, we’ll speak with someone who knows the deal, perhaps better than anyone else. But first, here’s your West Block primer:
NAFTA, the sweeping free trade deal was struck more than two decades ago, but here we are again.
President Donald Trump: I don’t think we can make a deal.
U.S. President Donald Trump has made it his mission to get his country a better deal, and Canada is caught in the crosshairs. Three quarters of our exports go south of the border. Quite simply, the U.S. is our most important customer by miles and miles.
Renegotiations kicked off in August and the third of six rounds will happen in Ottawa later this month. The hope, that there’s an agreement by the end of the year. The Canadian government is convinced it can happen.
Andrew Leslie, Parliamentary Secretary to the Minister of Foreign Affairs:We are there to work cooperatively with our two other training partners as we’ve done throughout all prior NAFTA negotiations. We are more than willing to get it done in January. But we want a good deal for Canada and not just any deal.
The problem?
President Donald Trump: So I think we’ll end up probably terminating NAFTA at some point.
Terminating NAFTA of course would come at an enormous cost for all three countries, including our own. Now nobody knows more about NAFTA in this town than Ambassador Carla Hills, one of the deals original negotiators. So does she think a deal can get done this time around? Here’s our conversation.
Vassy Kapelos: Thank you so much for joining us Ambassador Hills. It’s a real pleasure to have you on our program. .
Ambassador Carla Hills: A great pleasure for me to join you.
Vassy Kapelos: I wanted to ask you of course about NAFTA as one of the architects of that original deal. We hear President Trump, and we’re listening very closely in Canada, talk about the deal as a terrible one. What’s your reaction when you hear him say that?
Ambassador Carla Hills: I wish those around him would explain what the NAFTA actually does and that it created a market out of 490 million consumers with $19 trillion of output, that it opened up the three markets so that they could trade together that had been closed particularly with respect to Mexico. And it was a first step in trade opening in a number of areas. It was the first trade agreement that opened up services that provided protection for intellectual property that opened up the agricultural market between the United States and Mexico that had protections for investors. The GAT didn’t have that, the multilateral General Agreement on Tariffs and Trade didn’t have that. And when the Canadians, the Americans and Mexicans finished the agreement, and it took effect in 1994, within four months the Uruguay Round which had collapsed in Brussels, the ministers came back to the table, adopted roles on intellectual property, first time, services, and a range of tariff reductions, some moderate agricultural rules and created the World Trade Organization. I believe it would not have happened without that competitive liberalization that started here in North America.
Vassy Kapelos: Do you think his rhetoric on NAFTA is dangerous or does it disappoint you?
Ambassador Carla Hills: The renegotiation is important because the NAFTA is 25 years old, and the economy is in the 21st century, not in the 20th century. So there are many things that we didn’t cover. You didn’t have a cell phone in the early 90s. You didn’t have a Twitter account or go on the internet. The computers were big, husky—slow. And that has changed, so we would need rules to govern with digital trade and flows and the new services that have developed. Mexico had a constitutional restriction on permitting private investment and energy. Well Canada is a big energy producer. That means that we need rules covering energy but we couldn’t have them in the early 1990s. Today we can. Today we should. And so we need to upgrade it. It’s kind of like upgrading an old but lovely house. You should paint it once in a while. And the NAFTA needs a good coat of paint.
Vassy Kapelos: The public is watching these negotiations go on. The third round takes place in Ottawa in a few weeks. We don’t have any insight about what it’s like behind closed doors. You obviously do. Was there this kind of scrutiny? I mean I know the public was very divided at the time. Was there this kind of scrutiny when you were in the midst of negotiations and was there ever a point where you thought it might not happen?
Ambassador Carla Hills: No, I can’t remember a point when it was going to break apart. I worried that it was taking too long. It took us 14 months and that seemed like a long time to me. You know, when we started, it started out to be a bilateral agreement because we had signed an agreement with Canada. And then I received a call from the Canadian trade minister say, “Carla, you’re leaving us out.” This was John Crosby. I said, “John, your government had a terrible time with the U.S.-Canada agreement. I can’t imagine you want to go through that again.” And he said, “Well I don’t want to be left out.” So what we did was convert it into a trilateral. And I think it has made North America region the most competitive in the world. And you look around at the supply chains. We don’t just sell things to one another, we make things together. Twenty-five cents of every dollar we import from Canada is U.S. content. And 40 cents of every dollar that we import from Mexico is U.S. content. And that means that we are using intermediate products that we’re making together.
Vassy Kapelos: So let me ask you then, finally. How optimistic are you? The timeline is fairly short. They want to finish talks by the end of the year. How optimistic are you, given what we’ve heard from the president and given what you’ve observed so far that a deal can be reached?
Ambassador Carla Hills: I think it’s within the art of the possible to reach a deal. And it may be that some of the more contentious issues that are not really part of the NAFTA would be left for a later time. What is the likelihood of that happening? I think that that’s below 50 per cent.
Vassy Kapelos: Really?
Ambassador Carla Hills: I think that it’s going to be very difficult to get a finished agreement. Our timelines of when we shake hands and say we’ve got a deal are quite lengthy. Under our trade promotion authority we have to give notice to the Congress before the president can sign the agreement, and that’s 90 days. And there are many things that have to happen, much notice. Before we can sign, it has to be published and so forth. And so you run into the worry of the elections that come next year, both in Mexico in July, but next November 2018 here in the United States. But I am hopeful that we will get a deal and that we can get it. I would like to see us get it sooner rather than later, but let’s not give up hope that we get it.
Vassy Kapelos: Okay, well thank you so much for your time Ambassador Hills. It’s a real pleasure to meet you.
Ambassador Carla Hills: It was a pleasure to talk with you.
Vassy Kapelos: Thanks you.
Up next, trade and pipelines with Trump confidant and border state Congressman Kevin Cramer.
Vassy Kapelos: Welcome back. Republican Congressman Kevin Cramer was one of the first members of Congress to come out in support of candidate Donald Trump. Late last week he and the president travelled on Air Force One back to his home state for a rally there. We wanted to know if he could help us decipher what exactly Donald Trump is saying. Have a listen.
Vassy Kapelos: Thank you so much congressman for joining us here. Beautiful day, beautiful backdrop, I appreciate your time. I wanted to start off by asking you about NAFTA. Obviously a lot of Canadians watching and listening to everything that’s coming out of this town where NAFTA is concerned, you’re close to the president. I know you were on his plane a few days ago.
Congressman Kevin Cramer: I was.
Vassy Kapelos: When we hear NAFTA may have to be terminated or he wants to tear up the deal. How should we as Canadians be interpreting that?
Congressman Kevin Cramer: Well I think we’re all sort of learning how President Trump communicates and how he negotiates. And the first thing I’d say is read the book. You know it’s really important.
Vassy Kapelos: Art of the Deal?
Congressman Kevin Cramer: Yeah, if you read Art of the Deal you’ll have a better sense of things. One thing that I find about President Trump is while he does negotiate from his strongest position, whatever he deems that to be, he generally comes to a position where there’s success. And if you doubt it, just look at what he did just this week in Congress with the continuing resolution hurricane relief package. When it comes time to pull the trigger and make the deal, he is not nearly as rigid or as ideological.
Vassy Kapelos: If you were Canada would you be worried? Would you be concerned?
Congressman Kevin Cramer: Well let me just say I would make sure that my negotiators were as schooled up as possible, both on his techniques and his strategy, as well as what’s important for Canada, because nobody would expect the Canadian negotiators to be any less committed to their country than ours are to our country or Mexico is to their country. All of that said, it should never be lost or forgotten that President Trump intuitively understands that we’re the big dog in this fight. That the United States economy is the $20 trillion economy and that access to our economy is more valuable probably to anybody—just about everybody else than theirs is to us. So he negotiates from that position of strength all the time, so you know, you might want to always push back, but the key is to know when to stop pushing.
Vassy Kapelos: Speaking of access to your economy. You’re of course one of the bigger supporters of the Keystone XL pipeline. Can you update us as to, you know, we know the executive order was signed, but where do things stand right now? Do you see this pipeline really getting built?
Congressman Kevin Cramer: You know, really, I think the answer to that has to come from the company itself because the company, TransCanada, has to make the determination based on commitments to putting oil into the pipeline and the access to the market or whether the market wants it. I do see it getting done for a couple of reasons. One, with the president clearing the first major hurdle or maybe it should have been the last major hurdle with his executive order. Right now the biggest issue of course is the state of Nebraska and making sure that they’re comfortable with the route through their state. But there’s, I think, a strong will to get it done. And the reason I say that is if you look at what’s going on in Venezuela as an example. You know, when I think of where I’d rather get 800,000 barrels of heavy sour crude per day, you know, Alberta or Venezuela, you know I’ll take Alberta every time. I think the case for national and energy security, global security, and frankly North American security. I think the Keystone XL pipeline becomes more valuable, not less.
Vassy Kapelos: With respect to Keystone, we have heard from the president about American workers being involved, American steel being involved and the possibility of a greater share of the profits going to the U.S. government. Can you clarify exactly what this administration would be looking for from Keystone that differs from the project in the past?
Congressman Kevin Cramer: When I have talked to him, I’ve often pointed out to him, and I think he understands, is first of all, a lot of the pipe for the Keystone XL has been laying on the ground in staging areas for many, many years, some of it in North Dakota. The other thing that I think he finds encouraging is that about half of that pipe was made in the United States. A good chunk of the other half was made in Canada. In other words, this is a North American product that will be going into a North American product to move North American product. And I think while he would like to see more of it made in the U.S.A., and I think any new pipe, that there’s going to be more of a U.S. origin to it. My hope is that he understands and sees the value in the pipe that’s already been invested.
Vassy Kapelos: And when you talk about energy security or energy independence, or he does, I think it goes back and forth questioning in Canada. Is that in reference obviously in your state, the Bakken oil field, that explosion there that could incredibly ramp up a production—
Congressman Kevin Cramer: Yes.
Vassy Kapelos: Does that mean just American independence or is it a continental idea?
Congressman Kevin Cramer: Okay, so I’m going to speak for me now.
Vassy Kapelos: Sure, please do.
Congressman Kevin Cramer: I think it’s really important that we take a continental energy security view. Mexico, for example, is an energy producing state as well. But more importantly than that, it’s becoming a merging and fast-growing market for U.S. products and especially natural gas. So getting back to the NAFTA discussion, the origin of product is one of the major stinking points right now. But it’s really important that our companies have access to Mexico and that’s better for the continental security. Now, that means Mexico has to probably lighten up on some of their issues down there as it relates to who owns what, attracting private investment. That’s a little bit of a barrier for them.
Vassy Kapelos: Do you understand I guess the nervousness on the part though of just regular Canadians based on this sort of unfamiliarity we have with the kind of rhetoric this president uses?
Congressman Kevin Cramer: Well let me just say this. You’re not unique in that. In our own country we have the same challenges and in other parts of the world. I think we all have to understand that this isn’t just a flash in the pan. This is the new normal for a while with this president. All of that said he didn’t become a successful businessman by being a poor negotiator or by hurting people along the way. I would say that in Canada, you’re young new leader, is a bit unconventional as well. And while not ideologically the same, they are similar in the sense that they’re both a bit out of the box. They’re not traditional. And we all have to sort of get used to this new way of business, but the relationship remains the same.
Vassy Kapelos: Well we’ll leave it there. Thanks so much for your time Congressman, really appreciate it.
Congressman Kevin Cramer: Thanks for the interest, and welcome to Washington.
Vassy Kapelos: Glad to be here.
Still to come: What advice would a Republican insider give to Canada when dealing with the Trump administration? That’s after the break.
President Donald Trump: He didn’t say it fast enough. He didn’t do it on time.
What about the alt-left? They came charging at the—as you say the alt-right. Do they have any semblance of guilt?
We have to close down our government. We’re building that wall.
He hugged me. He wanted to kiss me so badly.
Vassy Kapelos: Welcome back. That was just a sampling of what Donald Trump has said since becoming president. As you can imagine, a lot has changed here in Washington since then. And as a consequence doing business in this town is a lot different as well. So, how do you navigate the new reality here? Former Republican Party Chairman Michael Steele has some ideas.
Vassy Kapelos: Thank you so much Mr. Steele for joining us today—a bit of a windy day but a beautiful one here in D.C.
Michael Steele: Yeah, it’s great.
Vassy Kapelos: When I was researching for this interview I heard you say that the fall won’t be a pretty one for Republicans. What do you mean by that?
Michael Steele: Well I think as we’ve already begun to see as Congress has come back town the turbulence around the DACA issue on immigration, certainly the president’s push to do something still on health care. Then you’ve got infrastructure and you’ve got tax reform. Oh and then there’s that debt ceiling question. As you can see, there are a lot of things that are stacking up for both the House Senate as well as the president. And nobody’s on the same page. So a lot of the tension that we saw in the earlier months of this administration around some of these issues will continue to play out this fall. As the stakes get a lot higher, you have to take an action on the debt ceiling. We’ve seen that now pushed back to December. Much to the consternation of Republicans, the president sided with the Democrats. So this president is already beginning to show his independence. If you hadn’t figured it out by now, you do at this moment understand his independence is break away from the party in some respects in order to get his agenda done.
Vassy Kapelos: Should that come as a surprise to anyone?
Michael Steele: I don’t think so. I was talking about this during the transition back in November that this president has run a campaign and has always been about his own self-styled form of politics. You can call this the Trump wing of the Republican Party, which I think in light of what’s been happening, recently, is emerging as the Trump Party. And so you have this sort of creation of a new space in politics that neither Democrats nor Republicans have any real control over. Steve Bannon put it best when he talked about the deconstruction of the administrative state, that that was part in parcel of where this administration wanted to go, how it wanted to push out its agenda. Not within the typical confines of either political party and certainly not based on some ideological principle established by Republicans or by Democrats.
Vassy Kapelos: So if you’re trying to do business in this town, how do you make sense of that?
Michael Steele: Well it’s hard because you can’t rely on the old structures, or the old systems that would enable you to engage in the political conversation, to conduct your lobbying because you don’t know at any given moment what the president’s agenda is really around an issue. The president instructs his attorney general, Jeff Sessions, to go out and say we’re ending the DACA program. It is unconstitutional. It is illegal, right, the executive order that President Obama put in place. And literally within hours of the attorney general saying that, the president tweets out well if they don’t get it done in six months, don’t worry about it. I’ll take care of it. Implying that I’ll just issue an executive order doing exactly what Barack Obama did. So how do you conduct business if that’s the yin and the yang of the relationship where they don’t connect in a real sense? You know, the president is over here, everyone else is over there and you’re playing catch up to where he is and yet he contains to move this to a different space.
Vassy Kapelos: So what’s your advice to a government like our countries, who is right now embroiled in some very high stakes negotiations, no relationship is more important to Canada than the one we share with the U.S. What would your advice be to our government to try and navigate this new path?
Michael Steele: Set your point. Know exactly where you want to be, where you want to go. Establish the boundaries and the parameters upfront. Say this is our goal. This is what is important to Canada. This is what is important we think in the Canadian-U.S. relationship. And Mr. President, you tell us why this is important. You tell us why we’re off or wrong. Force the conversation in your direction. Don’t allow for the free range president to just sort of go out and create a new space and then you have to come in and fill it. The opportunity to sort of hold onto some of those traditional relationships like Canada-U.S. over issues like NAFTA and things like that is significant, it’s important. And so at least one of the partners has to be grounded somewhere because the president is not grounded. He’s not grounded in the history of NAFTA. He’s not grounded in the relationship with Canada. He just isn’t. That’s not a criticism, it’s just the reality. So if that’s the case, Canada has to be the anchor in that partnership in many respects and say, come on now, we want to play over here because over here we have a better understanding of what it is we’re trying to achieve for both the U.S. and for Canada. And I think that that’s going to be an important first step.
Vassy Kapelos: Before we go, I just quickly want to you. As someone who joined the party in 1976, whose spent years and years in this town, who helmed the party later on. Have you ever seen this town like this?
Michael Steele: No, I have not, which is actually troubling yet exciting. I mean it’s troubling in that uncertainty is not something Washington does well. And there are two things that it really counts on: relationships and a certain degree of certainty or a high degree of certainty. This president doesn’t have either of those. He has very few relationships, certainly on the Hill, to speak of. And he’s all about the uncertainty. He’s comfortable in that zone. But at the same time it’s exciting because the system to be honest, did need to have a little bit of disruption brought to it, to refocus both parties on what the ultimate goals and agenda are, to move off of what has become this sort of entrenched sort of monotheistic political approach to policy. We’ve always done it that way. This is what we firmly believe in all instances at all times. And the world is changing.
Vassy Kapelos: We’ll be watching. Thanks so much for your time.
Michael Steele: My pleasure.
Vassy Kapelos: Great to have you perspective on our program.
Michael Steele: Great to be here.
Vassy Kapelos: And that is our show for today. I’m Vassy Kapelos in Washington D.C. We’re back in Ottawa next Sunday. Hope you can join us then. Have a great day.
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