By Carlo Dade
Published in Japan Times
April 16, 2019
As Tokyo anxiously prepared for trade talks with the United States that started this week, one of the chief concerns of the Abe government and Japan’s private sector was what to expect when negotiating with the Trump administration, and to glean insights from how Canada survived the process.
The short answer is that Canada emerged battered and bruised beyond what any country would expect in normal trade talks, even with a notoriously difficult U.S. administration. The slightly better news is that Japan should be able to do as well, if not better, if it understands upfront just how different these negotiations will be from any other in its past.
That may seem obvious, but it’s not.
Canada, as has almost every country that has had dealings with the present U.S. administration, thought it was prepared.
But the reality in dealing with the changed U.S. is that how a country, meaning the government, media, private sector and public, traditionally prepare for trade negotiations can be a hindrance, not a help, in discussions with the Trump administration.
While Japan and Canada are in different positions regarding the U.S., what follows are some reflections on what Canada endured and continues to endure that may help inform Japanese thinking.
First, the U.S. has changed dramatically over the last few years, and not just the administration itself.
The ascendency of President Donald Trump has changed the country’s political culture and institutions. Even living next door to the U.S. and consuming a regular diet of American news every evening, Canada was not able to fully appreciate how much has changed.
It would be remarkable if Japan, over 10,000 kilometers further away and separated by language, was more aware than Canada. Any failure to fully appreciate how different the U.S. is now from even a few short years ago is no failing of Japanese institutions. If there was any country that should have caught this, it is Canada — and we were not able to fully do so.
For generations, we’ve dealt with the U.S. as a close military and political ally and trade partner, and worked alongside political operatives and bureaucrats. This experience has shaped an image of the U.S., reinforced at school, at work and in American films and television.
But these expectations and frameworks, which have given generations of our leaders and professionals an edge in working with the Americans, have become a hindrance. We expect the U.S. government to pursue national objectives in a rational manner guided by research, policy formation and pursuit of self-interest. All of that is now largely out the window.
Hollowing out of institutions
Policy announcements now come by presidential tweet, only to be rescinded by another tweet five minutes later. The policymaking bureaucracy in the administration is hollowed out. Close to two years into the administration, the State Department still has 10 senior vacancies not filled, including the assistant secretary of state for East Asian and Pacific affairs.
The Washington Post, among others, have run articles describing the current Cabinet as the worst in U.S. history. Trump himself has stated that he thinks many appointments universally regarded as essential are, in fact, unnecessary. While “policy-by-tweet” has become familiar, the hollowing out of the professional policymaking apparatus remains largely unappreciated.
Beyond the administration, there has been a different hollowing out of other institutions that Canada had grown dependent on to constrain the president: the House of Representatives and the Senate.
Foreign policy stalwarts who valued allies and their contributions and who understood the need for rational, long-term thinking in U.S. foreign policy like the late Arizona Sen. John McCain are either no longer with us or are retiring.
These are individuals that we in Canada had come to expect to help defend our common interests. They are largely being replaced by backers of the president and his transactional approach to foreign policy. In this new world, our past sacrifices and contributions hold no sway in the White House; when we look to the Senate and House we find fewer allies, and those who remain are unable to push back directly against Trump for fear of being attacked during their next primary race.
For Canada, our traditional strategy of reaching out to Congress, including spending time in congressional districts, has proven less effective than in the past. Without the ability to work in all congressional districts, Japan will be even more disadvantaged.
This shortage of allies extends beyond the government.
In 2002, when President George W. Bush tried to save the U.S. steel industry by imposing tariffs, the move was met with vociferous political blowback in the U.S. from groups hurt by the tariffs. They were quickly rescinded.
Today, we see farmers and others in the U.S. caught in the middle of Trump’s damaging trade wars steady in their support of the president’s trade actions. Groups we expected to become allies in the fight against his trade policies because they are being harmed are, like our expected allies in Congress, simply not there.
Fully appreciating how much the U.S. has changed is the most important step to getting prepared. Beyond this there are a handful of other things that emerge from Canada’s experience.
The limits of personal ties
The transactional nature of the new administration extends to personal relations.
A year ago, it appeared that Canadian Prime Minister Justin Trudeau had figured out how to manage relations with Trump. Australia’s prime minster and others were calling for advice.
All of that vanished seemingly in an instant. Canada and our prime minister went from being favored friend to public enemy No. 1. A few rounds of golf or months of biting one’s tongue in public to curry favor will not help Japan on this front, either.
Our allies in Mexico tried to warn us. But we thought we were different, that we had figured out the new administration, that someone else — in this case, Mexico — was the problem, not Canada.
In hindsight, that was a major miscalculation.
When the relationship between the prime minister and the president turned, Canada experienced political infighting at home and recriminations in the media.
This kind of political wrangling isn’t unusual, but when it came to trade negotiations with the U.S. under the volatile Trump administration, it weakened Canada’s hand.
Part of the Americans’ calculated path to success under Trump is simply to divide and conquer. This was the motivation behind withdrawing from the Trans-Pacific Partnership agreement. It was, from the U.S. administration’s point of view, better to divide the TPP countries and negotiate one by one.
This works equally well at the country level. If you can divide your negotiating partner’s domestic factions, you can weaken their hand at the negotiating table. In negotiations concerning the North American Free Trade Agreement (NAFTA), the Americans eventually drove a wedge between Canada and Mexico and also drove a wedge internally in Canada. Canada and Mexico and Canada’s domestic parties resisted, and there were long periods of political solidarity domestically and with Mexico, but eventually the Americans simply wore us down on both fronts.
Japan resisted the Americans in their attempt to destroy the TPP. If it can summon similar fortitude when dealing one on one with the Americans, it will do better in these negotiations.
Finally, these negotiations will be unlike any other — they will turn the process of traditional negotiations on its head. They will not be about gaining new advantages or benefits for shared prosperity; they will instead be about limiting concessions to simply try to hold on to what Japan already has.
Japan is not looking for new benefits; it is simply trying to limit loss.
For the Trump administration and Congress, and the public that supports them, these negotiations are meant to correct a historic injustice.
In this view, for decades the Americans have given access to their markets and gotten too little in return. Any existing trade deal or trade relationship is a bad deal that needs to be renegotiated. Those who have benefited now must step up to make amends to the Americans. This means making concessions to the Americans in exchange for the same, or potentially even less, access to the U.S. market than is already enjoyed. If a country chooses to not negotiate, then terms will be dictated.
It is a no-win situation.
But it is not fatal.
To survive what the U.S. will do, the Japanese public and media must understand the Americans’ approach. This will help redefine expectations in line with this new reality. It will also help to maintain unity in the country, mitigate domestic political fighting and dampen the natural political inclination to seek short-term gain.
So, the typical questions asked about trade negotiations — What gains have been made? How will this improve trade? What new opportunities are being created? — all need to be replaced with a single question: How little damage has been done?
This may seem too large an ask, but what the Americans are doing is a shock. It is better to give the public a shock up front both to prepare them and to weaken the effectiveness of the American approach. Think of it like a flu shot.
At the end of Canada’s negotiations with the U.S., Canada and Mexico did not fare too badly.
The countries made some minor concessions. In the Canadian case, this involved dairy and largely toothless promises to share information about future trade agreements with nonmarket economies. But compared with the bombast with which the Americans started the negotiations, what was surrendered was not fatal.
Japan can expect similar bombast up front, especially with regards to agricultural access and dealing with China. If Japan ignores the bluster and tweets, remains calm, patient and united, it should be able to do well.
For Canada, what was really lost was an opportunity to strengthen the trade and political relationship, to prosper together. And with that the loss of innocence in the idea that past sacrifice, shared values in a hostile world and decades of friendship mean something.
In the end, that may be the biggest shock for Japan.
Carlo Dade is director of the Trade & Investment Centre at the Canada West Foundation. He is also a senior associate at the Center for Strategic and International Studies in Washington.