The Morning Brief: Cabinet Shuffle-Trump and Putin

Bruce Carson - January 11, 2017


Economy—Cabinet Shuffle: Trade, Economic Growth and Relations with the United States, China and Russia

Cabinet Shuffle—The focus of yesterday afternoon’s cabinet shuffle was on trade and economic growth, shoring up cabinet expertise in relation to what may be difficult economic and trade discussions with the United States, pursuing economic interests with China, including the possibility of a free trade agreement and putting someone in foreign affairs who is intimately aware of the political structure and players in Russia. In other words the day focussed primarily on new Foreign Affairs Minister Freeland and to a lesser extent on her successor at trade Francois-Philippe Champagne and Canada’s new ambassador to China, former Immigration Minister John McCallum.

If anything, the shuffle indicated that Prime Minister Trudeau recognized weaknesses in what he likes to refer to as the “team” in the post-Obama world we are entering and went about attempting to fix them. Only time will tell whether his cabinet changes, and appointment of McCallum, will prove to be successful or whether they will look like that well-known home repair job where the problem area remains, but ends up bound with duct tape.

Fen Hampson of Carleton University and CIGI had nothing but praise yesterday for the abilities of Minister Freeland as he referred to her good communications skills, positive role in the CETA negotiations and the fact that she already knows most of the people she will be dealing with as foreign affairs minister in the U.S. as most of the U.S. issues are involved with trade. Mark Warner a trade lawyer who has often been interviewed on the trade file was less charitable last evening on Peter Armstrong’s program “On the Money” when he offered the opinion that much of the saving of CETA by Freeland came as a result of early mistakes she made and that she had shown little interest in the now defunct Trans Pacific Partnership and under her watch the ongoing softwood lumber dispute with the U.S. remains unresolved despite her early optimism that a settlement could be reached. Regardless, Trudeau has put his government’s future diplomatic approaches and trade relationship with the U.S. in Freeland’s hands.

In the media availability after the cabinet shuffle held by the prime minister, where the middle class and those aspiring to join it was mentioned at least five times, Trudeau stated “we know full well that Mr. Trump wants to talk trade and always talks about economic growth and job creation.” Trudeau went on to say that it made sense to link foreign relations with the U.S. with the ability and responsibility to engage with issues such as NAFTA. Referring to Trump, Trudeau said that Trump sees everything through a “jobs and trade lens” so giving Freeland responsibility for foreign affairs and trade in relation to the U.S. was appropriate. This leaves new Trade Minister Champagne with landing the final stages of CETA and taking on the major challenge of dealing with China, Japan and other Pacific Rim countries who may be looking for trading partners with the pending demise of the TPP.

With regard to China and the appointment of John McCallum as ambassador to China, former ambassador to China, David Mulroney pointed out that the Canadian government must not look at China only as a potential free trade partner. Mulroney offered the opinion that Canada’s relationship with China also involves Consular matters, dealing with detained or imprisoned Canadians and the matter of security. He also warned that given President elect Trump’s views on China, Canada cannot find itself cross-threaded with the U.S., should a full blown dispute erupt between the U.S. and China. This view reiterates the opinion expressed the previous evening by former ambassador to the U.S. Derek Burney in an interview with Rosie Barton, that there is no relationship more important to Canada than the one we have with the United States.

And then there is the relationship with Russia where at present Freeland is on a list of Canadians banned from travel to Russia as a result of Canada invoking sanctions against Russia after the invasion of Crimea. Freeland’s views against the Russian invasion of Ukraine and takeover of Crimea are well known. It will be interesting to see how Freeland deals with the budding bromance between Trump and Putin because Canada will not be abandoning its position on Crimea and Ukraine and will be sending troops to Latvia under NATO to shore up defences against possible Russian aggression at the same time as Canada is protecting and advancing its trade and economic interests with the new Trump administration.

At the end of the day, the major parts of yesterday’s shuffle point to triangulation of the Canada-U.S.-China relationship and the triangulation of the Canada-U.S.-Russia relationship. But it will be vitally important for Prime Minister Trudeau to remember that the most important line in both triangles for Canada is the one that links Canada and the United States.

In relation to Russia, Freeland once her status with Russia is addressed could be quite helpful in resetting the relationship around mutual interests in the Arctic. Such discussions would move areas for negotiation beyond security in Eastern Europe. As noted above Canada’s new ambassador to China will in addition to dealing with the beginnings of a free trade relationship have to be aware of human rights issues and abuses as well as those that affect Canada’s security. As Freeland herself has characterized, the relationship with the U.S. and particularly this new administration is “complex.” The burden of executing seamlessly as matters arise will fall primarily on her shoulders and to a lesser extent to Canada’s Ambassador David MacNaughton.

Potentially there could be much to discuss with the new U.S. administration and from recent media reports at least the “getting to know you” part of the relationship has begun. From Canada’s point of view there will be an education function, acquainting top political officials in the Trump administration with the intricacies of the trade relationship. But for Freeland in her new position as Minister of Foreign Affairs will be charged with the broader relationship which involves the Canada-U.S. border, the Gordie Howe Bridge between Windsor and Detroit which is still in early stages and defence and security issues such as NORAD and the future of NATO and perhaps the UN.

In all of this Canada can’t be preachy or appear sanctimonious. While Canada has taken a different approach to climate change and energy development than will be the approach of President Trump, it is worth noting that yesterday the World Bank increased its forecast for global economic growth primarily due to the economic plans Trump has set out, particularly lower taxes.

The Trudeau administration faces two major issues going forward and its relationship with the Trump administration will affect both. Canada has an economic growth and jobs problem and Canada needs to maintain its productive trading relationship with the U.S. Should the Trump policies of lower taxes and deregulation stimulate growth in the U.S. that will have a spillover effect in Canada. The Parliamentary Budget Officer in a report made public yesterday found that much of the infrastructure cash set out in the March budget was still in Ottawa. Any economic stimulus will be at least another year, if not farther into the future. So the continuation of a productive relationship with the U.S. is vital for Canada’s economy and in turn that is crucial to the long term future of the Trudeau government.

As noted at the beginning of this, only time will tell if the changes made yesterday will be effective, but the success of this government is clearly linked to the success of the changes.

To Come

--January 12, new home price index for November will be released
--January 18, Bank of Canada deals with interest rates
--January 18, EI numbers for November to be released
--January 19, manufacturing numbers for November to be released
--January 20, swearing in of the new Trump administration
--January 20, CPI numbers for December to be released
--January 20, retail trade numbers for November to be released

Tomorrow The Morning Brief will deal with the other cabinet changes and economic data--bc

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