THE WEST BLOCK
Episode 14, Season 7
Sunday, December 10, 2017
Host: Vassy Kapelos
Guest Interviews: Parliamentary Secretary David Lemetti, Jerry Dias,
David Akin, Joanna Smith
Location: Ottawa
On this Sunday, no deal: The prime minister returns from China without an agreement on future trade talks. We’ll find out why.
Then, the intersessional round of the NAFTA negotiations gets underway tomorrow in Washington, as congressional members and business leaders call on President Donald Trump not to cancel the deal. Will he listen?
Plus, we’ll unpack the politics of the prime minister’s trip to China, and news the government is preparing to buy used fighter jets from Australia that are as old as the ones they’ll be replacing here.
It’s Sunday, December 10th. I’m Vassy Kapelos, and this is The West Block.
The prime minister returned home late last week without announcing the start of formal free trades talks with China. So what happened? And why is a free trade deal with China apparently out of reach? In a moment, we’ll talk to the parliamentary secretary on this file. But first, here’s your West Block primer.
President Donald Trump: “It’s been a one-sided deal. And this includes Canada, by the way.”
As Canada gets badmouthed by our once friendly neighbours to the south, and doing business with them is more uncertain that ever, the feds are doing what anyone would, looking for new customers. China has a lot of them, nearly 1.4 billion, in fact, the second biggest economy in the world. The prospect of selling our goods barrier free to a market that big is understandably tantalizing. But China isn’t like any other country. Get yourself into a customs dispute over there, like this B.C. winery owner did, and you could end up behind bars. So how do you reach a free trade deal or even a framework for one with a country that doesn’t play by the same rules? As the prime minister found out last week, it won’t be easy.
And joining me now is Dave Lemetti who is he parliamentary secretary to the minister of innovation. Thanks for joining us.
Parliamentary Secretary David Lemetti: Hi.
Vassy Kapelos: Great to have you on the program.
Parliamentary Secretary David Lemetti: Pleased to be here.
Vassy Kapelos: Did your government set expectations for this trip too high?
Parliamentary Secretary David Lemetti: I don’t think so. I think we knew it was going to be difficult from the get-go. We have been talking about engagement with China. We promised it during the last election in contradistinction to what the previous government did and we knew that it would be a step-by-step process. We knew that it would take time. We knew that it would take a concerted effort by different people, the prime minister, others ministers. We’ve had a number of visits by ministers. Now we’ve had the prime go with a handful of ministers and other Canadians. So we knew that this would be a step along the way and we’re continuing on. We think the process is by no means done. We are working forward, still continuing on in our pre-negotiations. Hopefully we’ll be able to reach a formal negotiation stage at some point soon. But we expected this to be complex and we expected to go in with our eyes open. That’s what Canadians expect from us and that’s what we promised we’d do.
Vassy Kapelos: With all due respect though, I think the language going into this trip was a little bit different. And we interviewed Minister Navdeep Bains, the minister of innovation last week. Have a listen to how he described what to anticipate on this trip.
Is your government pursuing an actual bilateral deal? I understand there are opportunities and you and the prime minister have spoken at length about those. But will that manifest in a formal capacity?
Minister Navdeep Bains: “That’s the objective. We want to move forward in a meaningful way to advance trade discussions between Canada and China and that’ll be top priority.”
Vassy Kapelos: So if that was the objective, did your government fall short on this trip?
Parliamentary Secretary David Lemetti: Well I think we’re still in process. I never disagree with Minister Bains as you know, as his parliamentary secretary. As Minister Bains said, we want to move forward. We’re still moving forward. We made progress. There are still steps that we have to take.
Vassy Kapelos: What are those steps? Can I ask you to qualify to Canadians where are we too far apart to come to an agreement on some sort of framework to move forward?
Parliamentary Secretary David Lemetti: Well there are a number of balls in the air in any kind of trade agreement. They are extremely complex. You’re trying to fundamentally align government priority sectors of the economy. We’re well aware that we’re dealing with an economy that’s very large. They’re huge compared to us and they’re a very different economy in the sense that they have state owned enterprises, SOEs as they’re called, and we have to take that into account moving forward. So I don’t want to identify any one sticking point. I just really want to underline the complexity of all of this and that as with any trade negotiation you move forward on a number of different tables, literally but also metaphorically, on a number of different tables and that’s what we’re doing here. So I think Minister Bains was right when he said we wanted to make meaningful progress. We did make meaningful progress. Did it result yet in formal negotiations? No. I think that’s clear. But we are moving in that direction and we continue to move in that direction.
Vassy Kapelos: When you say basically you want to align the two governments, how much more difficult is that? And in all seriousness, realistically with a country like China, with labour standards, you know, they’re so different than ours and human rights track record that is universally thought to be very, very poor?
Parliamentary Secretary David Lemetti: Well I think China, like Canada, aspires to be better at labour standards, at human rights and on the environment. I think that—
Vassy Kapelos: But really? I mean they were putting their hand in front of our journalist there.
Parliamentary Secretary David Lemetti: Well as an aspiration I think there are differences in terms of the practice. I think we have to admit that, but I do think we have to continue to push forward on that progressive agenda. I spent a year consulting Canadians from coast to coast to coast on the old TPP, and what I heard from Canadians from coast to coast to coast was that they wanted us to be thinking about labour standards. They wanted us to be thinking about the environment, about gender. We see from geopolitics over the last couple of years, there has been a large sense of disenfranchisement from the benefits of trade agreements. Trade agreements are very beneficial to our economy. There’s no question about that. We believe that and we have to push forward to open up markets for our Canadian producers. But there seems to be a large number of people who feel that we haven’t benefitted from that. And as the prime minister mentioned in one of his exit interviews from China, we have to be conscious of that context and that challenge. And so unless it’s a progressive trade agreement, we’re going to have a great deal of difficulty convincing our fellow Canadians that this is good for us. And so we really do have to push forward with those very aspirational goals for trade agreements. So it’s not just about opening up our markets. Yes it is about opening up our markets and we can’t always—there’s give and take in any trade agreement is what I’m trying to say. But we still need to keep those aspirational values in front of us as we move forward.
Vassy Kapelos: Okay. Thanks for your time, Mr. Lemetti.
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Parliamentary Secretary David Lemetti: Thank you very much.
Vassy Kapelos: Up next, NAFTA talks have stalled. What are the stumbling blocks as negotiators meet again in Washington, tomorrow.
President Donald Trump: We have trade deficits with everybody. Virtually every country in the world we have trade deficits with and that’s going to be changing, it’s already changing. And we’re going to look at NAFTA very seriously so we’ll see how that plays. But it’s going to be very successful.”
Vassy Kapelos: Welcome back. That was President Trump last week talking about NAFTA during his meeting with a group of pro-trade Republican senators. Tomorrow, NAFTA negotiators meet in Washington to try and move the talks forward, ahead of the ministerial round next month in Montreal. So how hard will that be? Joining me now from Toronto is a stakeholder in these negotiations, Unifor President Jerry Dias. Mr. Dias it’s great to have you on the program. Thanks so much for joining us.
Jerry Dias: Always my pleasure.
Vassy Kapelos: Before we get to President Trump’s recent comments on NAFTA, I wanted to touch base with you about China. Were you surprised at all to see the prime minister come home without even the prospect of working towards a free trade deal with them?
Jerry Dias: Well not really because the prime minister and the Canadian team, candidly, have been very specific that any trade deal that they’re going to sign that frankly human rights is going to be the cornerstone of their foreign policy. So if you take a look at what they’re doing with NAFTA, for example, labour is front and centre. So there’s no question unless China is going to start to make some moves on labour standards, human rights, freedom of expressions, freedom of speech, and I’m not concerned at all that he really walked away empty handed. As a matter of fact, it makes sense. If you look at where it’s at today with China, Canada has a $43 billion a year deficit with China. So the only discussion right now they should be having with China is how do we reduce that? And my guess is, if we look at our history of free trade deals that we’ve signed, the $43 billion deficit would only just get worse.
Vassy Kapelos: Can you really, though, as the Canadian government, make human rights the cornerstone of any kind of deal with a country like China? I mean is the prime minister sort speaking out of both sides of his mouth, if that is the case?
Jerry Dias: Well look, China has $1.4 billion citizens. We have 34 million. So the tail is not going to wag the dog. That’s crystal clear. But, you have to walk into a trade deal and you have to deal with trading partners that at least share your same values. Why would we entertain and continue to encourage trading relationships with nations that frankly have no respect for labour, human rights, don’t have any social responsibility. So you really have to take a look inwards as a country to say listen, who are we? What do we want to be? Are we just selling ourselves to the highest bidder? If I take a look at China right now, I’m more concerned about what’s happening in Canada right now with China. I’m concerned about the fact that the Chinese government has a $1.5 billion bid for Aecon and Aecon is on the cusp of $125 billion worth of infrastructure construction business. I’m concerned about the fact that Canada is selling our satellite and military technology to China. So China has already infiltrated Canada as the number one investor in Canada surpassing the United States. So, I have a whole host of concerns about China, what they’re doing domestically and of course what we’re talking about, trade.
Vassy Kapelos: Do you think, very quickly then, that a free trade deal with China, given the concern around human rights is impossible?
Jerry Dias: Well I think it is impossible. The first issue for us has to be what do we get out of it? Like I said, we already have a $43 billion deficit. So what’s the plan? What’s the strategy? What are we going to export to China? Exports from Canada to China are going up, but we have such a small percentage of the overall trade between the two countries that it’s insignificant. So before you even think about it, you have to a) deal with the human rights issue, but then b) what are we going to get out of it? The interesting part of all of this is that there’s a big push for trade agreements around the world. Canada does much better when it comes to imports to nations around the world that we don’t have any formal trade agreement with. Canada’s trades to those countries with no agreements, exports are going up almost 7 per cent a year. To countries in the world that we have a formal free trade agreement with, exports from Canada to those nations are going up a little over 1 per cent a year. So if those are the raw numbers and the straight numbers, why is there a push to sign free trade deals? You don’t need a formal trading agreement to have trade and that’s clear because Canada does much better without the trade agreements.
Vassy Kapelos: So let me ask you then, that exact question on NAFTA. Obviously, you’re on the inside of that process. Do you believe the same is true of NAFTA?
Jerry Dias: Yes, I do. NAFTA has been a colossal disaster for Canada. When Donald Trump says that NAFTA is a mess—that is the only thing that I agree with him on. Pre-NAFTA, Canada had a trade surplus in manufacturing. Today, we have $120 billion deficit. We’ve closed four auto assembly plants here in Canada. They’ve closed 10 in the United States. They’ve opened eight in Mexico and they’re opening two more. Mexico has 8 per cent of the auto market and 45 per cent of the jobs. Under the Mexican industrial system, they have yellow unions which are signed protection agreements for corporations. Can you imagine BMW is going to open a plant in 2019 in Mexico and the workers are going to get paid $1.10 an hour? A Mexican worker can never afford to buy the car that they build. Almost 50 per cent of the population of Mexico lives in poverty, so why would we sign a trade deal with a country where we know it’s going to continue to get worse. So that’s why I’m proud that the Canadian team, and we are all pushing very hard to fix it, get rid of the yellow unions, have free collective bargaining and frankly, give the Mexican workers the opportunity to share the wealth, enjoy its equal standard of living that we are enjoying here in Canada and the United States. So trade, for the first time we’re actually discussing is about people. It’s not just about corporations. It’s not about free movement of capital. So I welcome the philosophical and fundamental change because if we can get NAFTA right, if we can start talking about workers instead of just profits, I would argue that the world will be a much better place.
Vassy Kapelos: So let me just make sure that I’m clear, though. Is it your preference that NAFTA not exist or that it be fixed?
Jerry Dias: Well, fixing it is the priority because regardless there’s going to be trade between Canada and the United States and Mexico. So if we can fix it, perfect. If we can’t fix it, if the trade agreement will continue the exploitation of Mexican workers to the loss of jobs in Canada and the United States, then we’re better off walking away from it. We’re $120 billion deficit today in manufacturing. That has to change. And the only way that changes is if you start to put into place trade deals where you talk about I give you something, I get something back. So trade is a two-way street, and as of now, NAFTA hasn’t been. So if we can’t fix it, walk away. We’re much better off.
Vassy Kapelos: Okay, Mr. Dis we’ll leave it there. Thanks for your time.
Jerry Dias: Thank you.
Vassy Kapelos: Up next, we’ll unpack the politics of the prime minister’s trip to China and what has one cabinet minister, apologizing.
Vassy Kapelos: Welcome back. The prime minister returned late last week from China with little progress on future trade talks. What happened? Our chief political correspondent David Akin was on that trip and he joins us now, along with Canadian Press reporter Joanna Smith. Thanks very much for being with us, guys.
So David, you’re fresh off the plane. What happened on that trip?
David Akin: It seemed that the Canadians were expecting to sign a framework to begin formal negotiations on a trade deal, and they arrived in China with the expectation that that was an achievable goal. As it turned out, the Chinese, the senior leadership of China, mainly Premier Li Keqiang, reviewed the deal and decided it was not at that point in China’s best interest, so a bit of a disconnect. Normally when leaders show up together, senior leaders, a prime minister, a premier, a president, the hard work at the bureaucratic level is done and clearly it wasn’t at that stage to be done. And so, we remain in “exploratory talks”. So there will be people in this country who are very happy that the prime minister did not sign a deal. They object to the idea of a China free trade deal. Many others, exporters, will say missed opportunity, prime minister, what happened? But I think the expectations were there that something more was going to come out of last week.
Vassy Kapelos: We just spoke with one of the people who is happy about that, Jerry Dias, the President of Unifor. He says a deal is impossible. Do you think given things like human rights, labour standards and what you witnessed I guess this week on the Hill that a deal is impossible?
Joanna Smith: Well I think what it really does is sort of underscore and perhaps shed a bit more light on why the Liberals are pushing so hard for what they’re calling a progressive trade agenda. They got that into CETA, the deal with Europe. They’re trying to push for that, things on gender environment, labour, NAFTA, and there’s the sort of a lot of thinking around the NAFTA talks that the gender, environment, labour stuff isn’t really so much about NAFTA. It’s about sort of setting a stage and a precedent for future trade deals, one of them being China. So they sort of clearly recognize the sensitivity around the issue and the fact a lot of people are really uncomfortable with free trade with China. And that’s sort of one of the reasons they want to be trying to build these things into those talks, but of course it didn’t go over so well.
David Akin: And we should point out, we started talking to the prime minister last week about his trade agenda. China free trade talks: stalled. TPP: stalled. NAFTA, which is in peril at worse. And so prime minister you’ve been talking about a trade diversification strategy and it’s all key to a progressive trade agenda, the prime minister’s very—he very much defends the idea saying if we don’t have all these things on labour, environment, gender equality, that’s how everyday working people feel left out and that’s how you end up with a Donald Trump. So he thinks it’s vital that these trade deals show everyday people, and people like Jerry Dias, that they’re going to move forward and improve lives for working people.
Vassy Kapelos: Quickly before we move onto the next topic, though. Is that even possible with China when you’re talking about progressive chapters on gender, on labour standards? I mean they are as far apart as they can get. This isn’t Japan. This isn’t Australia. This isn’t the United States even. Is it even possible?
David Akin: Well just quickly, China’s very much ready to move forward on environment. They want to take the vacuum of U.S. leadership. U.S. has withdrawn from Paris. China wants to step up gender equality. They’re ready to move there. Labour standards is the big sticking point. It’s just a completely different labour market than anywhere else in the world.
Vassy Kapelos: Okay. Let me ask you, Joanna, about fighter jets. We found out this week that next week we anticipate the government will announce not only an open competition to permanently replace them, but they’re going to buy used Australian fighter jets which are the same age as the ones they’re replacing as an interim measure. What do you make of the government’s lines on this? And is there any way to defend their position?
Joanna Smith: Well the whole idea behind the sort of interim purchase, the stopgap of course was to sort of buy them more time to sort of figure out how to do the major competition. They had huge stumbling blocks along the way promising on the campaign trail they rule out the F-35. I’m not sure how that solves the problem of it not being an open competition if you sort of completely rule out one of the ones that caused the problem of the competition in the first place. But they chose this interim measure of the Super Hornets by Boeing. And then of course that was scuttled by this huge trade dispute with Boeing and the U.S. And if you remember when British Prime Minister Theresa May was here, Trudeau really surprised us all by coming right out and saying we’re not going to do business with a company trying to sue us. But that didn’t really work because just a few days later, we got this huge tariff on the C-series for Bombardier, sort of the very important company in Canadian politics, it’s really impossible to overstate the role that plays. So he was sort of stuck, right? You can’t play a really hard game and then sort of go ahead with the purchase anyways. So I think they sort of felt boxed in a little bit. And now they need that stopgap and now they’re turning to Australia.
Vassy Kapelos: The criticism of course is that by making this interim purchase, you’re just putting off actually making the permanent one, which is a huge purchase. And they wouldn’t be the first government to do that. The last one did that as well. There are so many blunders over procurement, especially these jets. Why hasn’t it really translated into votes?
David Akin: Well again, it hasn’t translated into votes because a lot of Canadians just think this is the way it is because that’s the way it’s been for 30 years. I’m very much one of those who thinks we should be spending more on defence. Not because we’re a war fighting nation, but we need search and rescue planes. We need to be able to defend our arctic shores which are now—there’s a lot of open water up there and we don’t have a navy really that can go up there. But every time you go to the electorate, that’s a low priority for Canadians at the polls. It is in ridings where there are bases. And so again, fumbling away on fighter jets, we saw Michael Ignatieff run an entire campaign on the F-35s and that didn’t seem to go so well. So if it doesn’t resonate with voters, that doesn’t mean to say that, a government needs to get a hold of this. It’s an important thing.
Vassy Kapelos: Yeah, definitely. Speaking of fumbling, this week on the Hill, Minister of Disabilities and Sports Minister Kent Hehr, you know, thalidomide survivors coming forward and saying that he was dismissive of them and basically made a comment alleging that they might only have 10 years to live and that’s a good thing for the Government of Canada. Then someone else coming forward and saying he was condescending to her. An apology, but no resignation, do you think a resignation is coming or can he survive this?
Joanna Smith: Well the first apology was really weak. He sort of said, you know, he got really defensive, said what I said was misattributed to me. The second one, I think might buy him some time or some good grace was in Question Period last week he sort of really acknowledged that he can be insensitive and brash and inappropriate, and he’s going to be taking steps to better himself in that way. I think it will really depend on what exactly he does and whether he actually has learned his lesson. What we have seen in the past with cabinet ministers who have been sort of inappropriate or that they may not be forced out immediately because that creates a whole other scandal on its own, but in the next cabinet shuffle we may see him once again demoted.
Vassy Kapelos: I’ve only got about 25 seconds, Joanna, but I wanted to ask you. Were you surprised at sort of the lack of outrage until the end of the week from the Opposition? They still had their guns focused on Morneau, even though this seemed to be a very blatant egregious example.
Joanna Smith: Well I think the key is that we saw their own sort of issues with personal conflicts this week with James Bezan and his remarks from earlier this year to Sherry Romanado So they probably felt a little bit if they make too big a deal out of that, then they’d be caught sort of defending themselves again.
Vassy Kapelos: Okay. Unfortunately I have to leave it there. But thank you both for your time, I appreciate it.
Joanna Smith: Thank you.
David Akin: Thanks, Vassy.
Vassy Kapelos: And that is our show for today. Thanks for joining us. I’m Vassy Kapelos. See you back here, next week.
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