Washington, DC — Canadians are getting a close-up view this week on how American state governors are working to preserve NAFTA by trying to dissuade President Donald Trump from starting the withdrawal process.
Their lobby effort has gotten scant attention in Canada.
While Canadians have tended to notice so-called charm offensive trips to the U.S. by their prime minister, premiers and cabinet members, there are several reminders this week that influential American politicians are also working the file.
The top elected officials in crucial midterm election states have added their voices to the chorus calling for a cautious approach on trade. They have lobbied the president and vice-president directly and they will likely make similar arguments as they arrive in Washington for annual governors’ meetings starting Friday.
Already this week, the governor of a state that could play a pivotal role in this fall’s Senate race devoted a speech to trade with Canada and Mexico. Arizona’s Doug Ducey said he wants more trade —not less.
“Nearly 150,000 jobs in our state result directly from trade and investment in Canada,” he said. “Or said another way, that’s nearly 1 in 20 jobs in our state.”
With the president’s party controlling the Senate by just one seat and the Senate holding not only the power to pass or block legislation, but also to confirm nominees to federal positions, including the Supreme Court, the race in Arizona to replace the departing Sen. Jeff Flake is one of several to watch this fall.
It’s not the only such state. A map from the pro-market American Enterprise Institute shows international trade counts for more than 10 per cent of the economy in numerous states with Senate races this fall including: Arizona, Texas, Nevada, Indiana, Tennessee, Michigan, Washington, Montana and North Dakota, among others.
Some of these states are staunchly pro-trade.
For example, in Texas, both Sen. Ted Cruz and his Democratic challenger support NAFTA. A poll of 1,000 Texans last year for Texas Lyceum found 43 per cent of respondents saying NAFTA has been good for the Texas economy and just 24 per cent saying it was bad.
With those midterms approaching, the Trump administration has lately been tamping down talk about ending NAFTA. It hasn’t fully shelved the idea of starting the withdrawal process, to press Canada and Mexico for a better deal.
But farming states have pleaded with the president to stop making these threats. One Kansas senator has been particularly vocal. With signs that Mexican importers are already looking to new Latin American suppliers as a backup plan, Pat Roberts has told the president face-to-face that his state could be sideswiped by any additional uncertainty.
Canada’s ambassador says the international outreach has helped.
David MacNaughton happened to be in Arizona this week for Gov. Ducey’s international-trade speech. On Friday, his embassy in Washington will host the premiers of Quebec and Ontario and a reception for state governors.
He says the conversation on trade has shifted.
“I think what’s happened in the past is that the opponents (of trade) filled a vacuum and were very loud in their opposition,” MacNaughton said in an interview. “They haven’t gone away, but what’s happened is that those who are in favour of the agreement —an updated, modernized agreement —have now begun to speak up,”
“Not just at the governor level, but even in Congress, and the business community. And I think it’s having an impact. We’re making substantial progress. Not totally, but, frankly, in large measure because of the outreach that we’ve been doing right across the country.”
MacNaughton added: “It doesn’t mean that NAFTA is perfect or it doesn’t need to be improved, but it does mean that simply throwing it out is a less politically popular stance than it may have been a year or two ago.”
Quebec Premier Philippe Couillard and Ontario’s Kathleen Wynne, who are attending the governors’ meetings in Washington, along with federal Treasury Board Scott Brison, will begin their visit with an event at the Washington International Trade Association.
The premiers will speak at a panel on trade with the governors of Colorado and the Mexican state of Queretaro.
Other U.S. governors have written to their federal government.
Rick Snyder, the outgoing Republican governor of Michigan, added his voice last month to those calling for NAFTA to be spared: “We wouldn’t want to see NAFTA collapse or go away. ‘‘I think that would be a negative for all three countries.”
But even if NAFTA survives and negotiations continue through the year, several analysts have warned that the ongoing uncertainty, coupled with a series of U.S. punitive duties in trade disputes, would still hurt Canada.
Recent analysis from Scotiabank and the Bank of Canada suggested that if doubts about free trade linger into 2019, it would cause a chill on investment which would trim one-fifth of a percentage point off of Canada’s potential GDP.