Prime Minister Justin Trudeau on Updating NAFTA & Strengthening Canada-US Mutual Prosperity

Justin Trudeau

In February, Canada Prime Minister Justin Trudeau visited Southern California to advocate for continuing to build on what his father and President Reagan crafted - mutually beneficial, bi-national economic cooperation and alignment. Canada has a long-standing and mutually beneficial economic relationship with the LA region. With high-stakes NAFTA re-negotiations in process, the Prime Minister’s visit focused on the economic benefits of the California and Canada relationship and the shared values of building a resilient economy based on trade. At the Reagan Library in Simi Valley, Trudeau outlined some of the vibrant history of Canada and California, as well as a pathway forward to continued success. VX News presents his remarks.

Justin Trudeau: It’s my sincere pleasure to be here with you all. Thank you, Fred, for that very kind introduction and for inviting me to speak here, just days after the anniversary of President Reagan’s birth.

I think there could be no finer setting than this marvelous library, such a fine testament to his legacy, for the conversation I’d like to have with you today.

Ronald Reagan came over to my house when I was a kid. It was early 1981, mere weeks after his inauguration. He radiated optimism, confidence, and charm. He spoke of America as a shining city on a hill, quoting John Winthrop.

I remember that he was genuinely interested in speaking with me, attentive and kind. He asked me if I liked Western films and I nodded enthusiastically, because my father had recently shared with me his affection for Sergio Leone and Clint Eastwood.

So he recited, from memory, a poem by Robert Service: “The Shooting of Dan McGrew.”

I was enthralled. At nine years old, I received a masters’ class in political charisma, one that, I like to think, stuck.

As we look back now at the record of his first official visit to Canada, there’s a lot we can learn. For one thing, political branding can be deceiving. He and my dad, who was Prime Minister of Canada during much of that first term, were purported to have held opposing views about everything. They were fire and ice, supposedly.

Prime Minister Brian Mulroney, who governed in Canada in the mid-1980s, is sometimes cast as having never disagreed with President Reagan about anything. After all, they negotiated free trade together. Therefore, they must always have agreed.

The truth is more nuanced. My father actually had a quite constructive relationship with President Reagan, as the archives here show. And Prime Minister Mulroney was actually tougher in his engagements with the President, than the public perception.   The fact is that, for a Canadian leader, regardless of political affiliation, tenacity and focus are vital job requirements when it comes to working with the U.S.

My father coined the expression that to be Canadian, living next to the United States, is like being a mouse, sleeping next to an elephant. Personally, I think of us as less of a mouse and more of a moose – strong, resilient, but still massively outweighed.

Consequently, we need to speak up, consistently and clearly, to make ourselves heard. Canadians are often teased for being overly polite—which may not be entirely true, I’m sorry to say. We are not, nor have we ever been, pushovers.

In fact, on many cross-border issues, certainly since the early 1990s, Canadian leaders of different political stripes have taken quite similar stances. Getting to an agreement with our American friends, though it inevitably does happen, has always required hard work, persistence, and no shortage of sunny, Reagan-esque optimism, on both sides.

Acid rain is one example. This cross-border environmental problem was top of mind for Canadians in the 1980s. Canada engaged with the Reagan administration on this in 1981, and continued doing so under the Mulroney government. The discussion went on for a decade. But our countries got the Acid Rain accord signed in 1991. 

The same pattern has often repeated itself on trade. Among the catalysts for free trade in the 1980s, from a Canadian standpoint, was a need to defend Canadian exporters from the protectionist wave that was then sweeping Congress.

This eventually led to something far more ambitious than a mere defensive strategy, of course - something creative and visionary and truly world-leading. The Canada-U.S. Free Trade Agreement of 1989 was the most comprehensive and ambitious trade pact of its day.

            It was not automatic that things would turn out as they did. This required leadership. It required persuasion. And it began with conversations between Canadians and Americans not unlike the ones I’ve been having here in LA. Canada’s message heading into the original creation of our FTA, and then of NAFTA, a quarter century ago, was the same as our message today; America has no better friend, ally or partner than Canada. We have the longest, most peaceful and mutually beneficial relationship of any two countries in the history of the world.

Simply put, if trade between Canada and the US is a bad idea, then there are no good ideas.

Today in Canada, there is wide agreement that the North American Free Trade Agreement, while certainly in need of an update, has been good for middle-class folks in both our countries. After multiple rounds of NAFTA negotiations - the sixth recently concluded in Montréal and the seventh is scheduled for the end of February in Mexico City - here’s what we know: This accord should be modernized and updated.

With effort, hard work, and willingness to compromise on all sides, this is very achievable. Our negotiators have already closed three chapters: on competition, small and medium-sized enterprises, and anti-corruption. They’re within range of closing several more bread-and-butter chapters at their next meeting. They’ve begun talking, thanks to some creative ideas advanced by Canada’s negotiators about some of the toughest issues that have faced us in these talks: with respect to rules of origin for the auto sector, investor-state dispute settlement, and a regular five-year review of the agreement.

My friends, we’ve made progress. And it is vitally important we build on this progress. I fundamentally believe it is in America’s interest, not just Canada’s, that we do so.

Now, I see the response this can draw: “Of course, NAFTA has been good for Canada. Canada is winning in NAFTA and America is losing, and that’s why you Canadians like it.”

But trade is not a hockey game. The truth is that both Canada and the United States are winning. And so is Mexico. And that’s how we should keep it. When trade is working as it should, all partners win.

The data bears this out: Nine million jobs in America are tied to trade and investment with Canada – including more than a million right here in California. Two thirds of American states have Canada as their largest export market. We’re in the top three markets for 48 states.

We buy more American goods than China, Japan, and the UK combined. We buy more California fruit, nuts, vegetables, and more of your wines, than any other export market. You’ve got leading California companies like Mattel, Warner Brothers, and AECOM, with deep connections to Canada, both as a market and through their supply chains. You have innovators like Thalmic Labs, based in Waterloo, Ontario, with a growing office in San Francisco – a recent start-up that is on the cutting edge of wearable technology, now serving clients worldwide. 

These are all examples of Canadians and Americans, innovating, creating, and building, together. Moreover, the sum of our trade, including both goods and services, is essentially balanced. In fact, in 2016, the U.S. enjoyed a trade surplus with Canada of close to US$8 billion. In manufactured goods, your surplus was nearly US$36 billion.

Those are American numbers, by the way, from the U.S. Bureau of Economic Analysis, in the Department of Commerce. Where we do have a significant surplus with you is in energy trade – about $37 billion in 2016. Canada provides more than 40 percent of America’s imported crude. We supply you with more electricity and uranium than any other country.

But those energy imports, from a trusted partner and ally, support U.S. energy security. They’re also, to be clear, in Canada’s interest, because our exporters gain from access to the American market, just as U.S. manufacturers and farmers gain from access to ours. When you’re more secure, we are too.

Once again: This is a win-win. In fact, since NAFTA went into effect in 1994, the U.S. economy has added 33 million net new jobs. That’s also not a Canadian number. It’s according to the U.S. Bureau of Labor Statistics. To put this in perspective, the entire population of Canada is 36 million.

NAFTA, while not perfect, has been a good agreement for the United States, broadly speaking, just as it has been good for Canada and Mexico, broadly speaking. That is not in doubt.

What is also undeniable, however, is that global trade isn’t working for everyone. Income inequality is growing, worldwide. This is an urgent problem. There’s been much parsing of the origins of the reaction against globalization, essentially against global free trade, that's swept around the world these past few years. ‎

But to me, the most compelling testimony is the stories I hear from ordinary Canadians, who tell me they’ve yet to see the benefits of the modern economy we politicians are always talking about. I spend a few weeks doing town halls. These are unfiltered conversations with anyone who shows up. There are no pre-arranged questions. Lots of people are doing well. But far too many are not. If I hear a single mom who isn’t getting the services she needs, I can’t tell her not to worry because someone else is better off. She’s the one with the problem. She’s the one we need to help.

It’s fine in the abstract to say free trade brings greater prosperity. That is true. But each individual circumstance is different. And trade data, however positive, will not put your kids through college.

Two things follow from this.  The first is that the status quo, and I’m speaking here of NAFTA specifically but also trade more broadly, is not good enough. We need to collectively do a much better job of ensuring the benefits of trade are shared more broadly, to more people. The second is that we must provide more help to folks whose livelihoods are disrupted by global economic shifts, including automation and technological change, so they can re-establish themselves in new jobs, with brighter futures. President Trump and I have often spoken about this.

Now our journalist friends, I know, have sometimes cast our administrations as unlikely to see eye to eye about anything. The GOP is conservative. My government is liberal. How could we ever find common ground? But the truth is that President Trump and I agree about this: Too many people have been left behind, even as our economies surged.

I was heartened to hear the President talk about the importance of skills training in his State of the Union address. We in Canada are seized with the same problem, and have reached a similar conclusion. The wave of technological innovation that’s being led by bright minds – in this very state, in many cases – can be hugely positive and transformative for North Americans. But we cannot allow it to become a wave that sweeps working people and their families aside.

This is something we can, and must, address as we modernize and improve NAFTA.

I’ve spoken a lot about trade and economics today. But my purpose here is not to speak about prosperity for its own sake. That’s not how Ronald Reagan thought about these questions. A human being is not a unit of economic production. Nor can an international friendship and alliance, the greatest the world has ever seen, be reduced to a balance of trade statistic or a tariff rate.

President Reagan was to his core, an optimist. He was unfailingly ambitious and courageous in his optimism. As something of an optimist myself, I’ve always admired that. I think it is especially germane to the dialogue we’re having now. Because optimism, ambition, and courage are not separate qualities. Where one is, you’re likely to find the other two.

The FTA and NAFTA were products of all three, of course. But it’s not as though trade is the only great thing Canadians and Americans have accomplished together. Our countries fought and won in the First World War, side by side. We defeated the fascists in the Second World War, side by side.

From the Halifax Explosion of 1917, when Americans rushed to our aid in the initial emergency response, through two world wars, to the Afghan war, and most recently in retaking Mosul in northern Iraq, we have stood shoulder to shoulder.

Canadian firefighters helped fight wildfires in California, just as American firefighters were there for us in Fort McMurray and British Columbia. The drive towards North American free trade, historically, has always been as much about cementing that historic bond as it has been about the mechanics of tariffs or trade.

It first gathered momentum under President Truman, just after the Second World War – as we led the way in building the rules-based international order that set the stage for 70 years of global stability. In speaking to a joint session of our Parliament in 1947, Truman argued that trade would be a critical tool in helping the nations of the world rebuild.  

But he went further than that. He drew a direct line between free and fair trade, prosperity, and peace. And he held up Canada and the United States as a model to the world in this regard.

“We seek a peaceful world,” Truman said, “a prosperous world, a free world, a world of good neighbors, living on terms of equality and mutual respect, as Canada and the United States have lived for generations.”

I think every American President since then has echoed this idea. It was President Reagan, forty years later, who picked up the torch and carried it further than any President had before him.

It was also in Ottawa, in a speech to a joint session of Canada’s Parliament, that Reagan most resoundingly explained on April 6, 1987. The occasion was to launch the final big push towards the first Canada-U.S. Free Trade Agreement.

I think many in this room may recall what he said: “We can look forward to the day when the free flow of trade, from the southern reaches of Tierra del Fuego to the northern outposts of the Arctic circle, unites the people of the Western hemisphere in a bond of mutually beneficial exchange, when all borders become what the U.S.-Canadian border so long has been: A meeting place, rather than a dividing line.”

A meeting place, rather than a dividing line. Such optimism! Such ambition! Such courage! Truman and Reagan each presided over a historic American victory over tyranny—one in the Second World War, the other the Cold War. And both understood implicitly that free and fair trade is a pathway, not just to prosperity, but to stability, liberty, and peace. We must remember this lesson. It is imperative that we remember.

In closing, we can and should do more to help the people who’ve been left behind by global trade. We can and must build bridges to new opportunities for the middle class, and those working hard to join the middle class. We can and must work tirelessly to find a pathway to prosperity for all. This is among the greatest challenges of our time.

In furthering these aims, let us not step back from the progress our countries have made, with extraordinary effort, since the post-war years. Let us not raise fresh barriers between our peoples. That would harm the very folks who most need our help. The nexus point for all this is NAFTA.

The generation of Canadian, American, and Mexican leaders who bequeathed to us the original treaty, in a very real sense, invented the idea of North America. Un-inventing it would come at a cost beyond the economic—one I don’t think anyone can now entirely predict or understand.

Our task, surely, is to take what our parents’ generation built and transform it into a trade agreement fit for the 21st century; and to approach this, as President Reagan would have done—with optimism, ambition and courage.

And I would add with tenacity and focus. We need those, too. We in Canada, for our part, will devote every necessary effort, for as long as it takes, in a spirit of fairness and mutual compromise, to achieve this goal.

Plato held that the greatest form of love is friendship. Because friendship is born of affection and respect, without obligation. The remarkable thing about a national friendship is that it can outlast the span of a single human life. Our national friendship now extends back 200 years. It will extend into the future for another 200 years and the same again after that, I am certain. 

But we must do our part to make it so. President Reagan famously declared, it’s morning in America. A generation later, it can be morning in North America. That is up to us.

My friends, let us keep to the task. Let us apply ourselves with unswerving dedication, with fierce ambition, relentless optimism, and unfailing courage. Let us get this good work done, and hold aloft our partnership, like President Reagan did, as a beacon of liberty—and an example to the world.

"Trade is not a hockey game. The truth is that both Canada and the United States are winning. And so is Mexico. And that’s how we should keep it. When trade is working as it should, all partners win." - Justin Trudeau