By Carlo Dade and Naomi Christensen
In the Regina Leader-Post
April 5, 2017
From “America First” to border taxes to reopening the North American Free Trade Agreement (NAFTA), U.S. President Donald Trump has thrown out the rule book on trade, and with it everything that Canada thought it knew about how to deal with Washington.
As Ottawa scrambles to come up with ways to respond, one answer — and perhaps Canada’s best hope for dealing with changes in the United States — is quietly emerging outside of Ottawa: on the ground, province-to-state engagement.
Provincial premiers, MLAs and bureaucrats have exclusive, peer-to-peer access with their American counterparts — a unique channel to exercise influence in the U.S. not enjoyed by China, Europe or any of our other competitors. That’s why recent trips to the U.S. — such as to Iowa, Washington, D.C. and points in between — by Saskatchewan Premier Brad Wall and Alberta Premier Rachel Notley have been and will continue to be so important.
This engagement outside of the beltway partially explains why Canada is so well-liked in the U.S. and has so far largely avoided the backlash on trade down south.
This is not an insignificant accomplishment, given that the United States is still Canada’s largest market.
But this willingness of local U.S. government officials to listen to Canadian counterparts, welcome them into their offices and legislative conventions and give them a seat at the table in meetings of governors does not automatically happen. It requires real effort — investment of time, money and political capital.
The 4.5-per-cent cut in the new Saskatchewan budget to the department responsible for this outreach work is understandable, given the current economic climate. But if the province wants to keep revenue flowing from trade with the U.S., investing in our relationships there is critical, given what we have seen so far with the Trump presidency.
And it’s not just the Washington administration.
Advocates at the state level for policies such as country of origin labelling (COOL) are seizing the anti-trade mood in Washington and state capitals to try and resurrect this and other agricultural trade barriers. Congress members from northern border states have been leading the charge for a reopening of NAFTA.
More than ever we need friends on the ground outside of Washington.
Making connections and building relations with state legislators mitigates, or sometimes even prevents, trade irritants. This is especially important for small and medium businesses that dominate the Saskatchewan economy. Only the largest companies trade throughout the entire U.S. Most companies trade only with specific cities or regions such as Boise and Chicago, or southern California and South Carolina. Last year, nearly half (48.6 per cent) of Saskatchewan’s exports were sent to the U.S. Yet, 70 per cent of those exports went to just 10 states, of which Iowa is one.
To resolve issues that smaller companies face, the ability of a premier, a minister or an MLA to get a governor, mayor or state house speaker on the phone is far more important than calling Washington, D.C. — that is, if anyone in Ottawa could be convinced to prioritize a Saskatchewan ask ahead of one from Ontario in the first place.
We have seen how good a tool this is in the past on issues such as COOL and Buy America, where strong provincial relationships with colleagues in U.S. states helped resolve conflicts that were hurting Saskatchewan exporters. These successes usually fly under the radar, often by necessity so as not to damage friends in the states, where compromise and concession is a fast path to electoral defeat.
The choice for Saskatchewan and the other western provinces is clear: Support the investments of time and resources by provincial officials to take control of the province’s economic destiny in the U.S., or sit back and hope for the best from Ottawa and Washington.
It really isn’t much of a choice.
Carlo Dade is Director of the Trade & Investment Centre at the Canada West Foundation. Naomi Christensen is senior policy analyst at the Canada West Foundation.