Why Canada has two trade ministers: trade in the age of Trump

by Samantha Wright Allen (feat. Eric Miller, Sarah Goldfeder, & John Weekes)

The Hill Times
September 20, 2017

It’s “highly unusual” to have a trade minister tasked to manage all files except the relationship with Canada’s largest trading partner, but observers say the tactic is fitting given the major NAFTA talks, general trade shakeup under U.S. President Donald Trump, and an outgoing star minister best suited for the job.

The North American Free Trade Agreement is at a scale that demands singular attention, and keeping Chrystia Freeland (University-Rosedale, Ont.) on the file makes sense as she transitioned from trade to foreign affairs, say observers.

Splitting the portfolio had less to do with rookie MP and incoming Trade Minister François-Philippe Champagne (Saint-Maurice-Champlain, Que.) and everything to do with Ms. Freeland’s personality, deep connections, and proven success, insiders suggest.

Prime Minister Justin Trudeau’s (Papineau, Que.) decision to separate the file in January, when the two were appointed to their current cabinet spots, “sends a message” to the United States that Canada is serious about the NAFTA deal, said Sarah Goldfeder, a former U.S. diplomat. 

The need to have Ms. Freeland take on the U.S. file stems from the renegotiation of an agreement that governs Canada’s largest trading relationship, and Mr. Trump’s generally pessimistic outlook toward trade that doesn’t benefit the U.S. in the ways he wants—a break from previous presidents, both Republican and Democrat. Both are sticky issues Ms. Freeland must stickhandle.

There were other factors for splitting the trade file: Ms. Freeland already had the subject-matter expertise, her reputation for helping rescue the Canada-European Union Comprehensive Economic and Trade Agreement proved she could close a difficult deal, and the government has multiple exploratory talks underway in other parts of the world that require more hands on deck.

“It makes sense to divide the responsibility, given just the workload,” said Paul Moen, an international trade lawyer who advised former Liberal trade minister Jim Peterson. “It’s a massive undertaking, you don’t want to overburden the trade minister.”

It might have raised questions if an existing cabinet minister had been shuffled into the shrunken trade job, but Mr. Champagne was new to the inner circle. He impressed as parliamentary secretary to Finance Minister Bill Morneau (Toronto Centre, Ont.) and his French fluency is an asset, but without big negotiations under his belt he wasn’t the best fit for the United States. 

“It’s not that this was taken from him,” said Eric Miller, president of Rideau Potomac Strategy Group and a former Business Council of Canada executive. “He knew going in that his remit was in essence: rest of world.”

It’s still “highly unusual” to see a foreign minister assigned an economic function but it’s a matter of matching skillsets with government priorities, said John Curtis, the founding chief economist at the former Department of Foreign Affairs and International Trade.

No government has addressed the implicit hierarchy between Foreign Affairs and Trade since trade Industry, Trade, and Commerce shifted to Foreign Affairs in 1982, said Mr. Curtis.

“It’s always been a bit awkward as to what the minister of international trade is supposed to do,” said Mr. Curtis, noting Chrétien-era trade minister Roy MacLaren “would argue vehemently that he was not a junior minister.” 

In this case, Mr. Champagne’s mandate letter makes that hierarchy explicit. It says the department’s ministerial team of three (also including International Development Minister Marie-Claude Bibeau) is “led” by the foreign minister.

While Ms. Freeland was willing to take on foreign affairs—a step up—she may not have been willing to give up NAFTA.

“I think it was clear to everybody, especially to her, that she wanted to stay on that file,” said Ms. Goldfeder, adding she likely has the most U.S. connections of those in the Liberal cabinet. 

That’s evidenced in relationships with Defense Secretary James Mattis, Secretary of State Rex Tillerson, U.S. Trade Representative Robert Lighthizer, and Commerce Secretary Wilbur Ross. 

She worked extensively in the United States as a journalist, including as U.S. managing editor of the Financial Times.

“These are people she knows, she’s comfortable with,” said Ms. Goldfeder. “[Canada’s] just playing the best asset—putting the best starter out there.” 

A full plate as Champagne’s office focuses on Asia-Pacific

From ongoing Trans-Pacific Partnership trade talks (though they’ve lost steam since the U.S. exited the deal) to potential deals with China, India, and the 10-member Association of Southeast Asian Nations, Mr. Champagne has a full plate.

“There’s more for the trade minister to be engaged with and doing, I think, than has been the case for most Canadian trade ministers over the last 35 years,” said John Weekes, a former NAFTA chief negotiator.

Both Mr. Champagne’s office and observers view the split as a positive, some pointing to Mr. Trump as proof Canada should ramp up its interests elsewhere.

“We see that as valuable, that the minister of foreign affairs is able to work on the Canada-U.S. relationship as a whole, while we really are focused on diversification,” said Pierre-Olivier Herbert, press secretary to Mr. Champagne, who was unavailable for an interview.

All ministers, including Mr. Champagne, Mr. Herbert said, are involved “at some level” with NAFTA negotiations. For example, the trade minister has travelled to Ohio and Washington to meet with officials. Mr. Champagne is focused on bringing CETA into effect and the Asia-Pacific as “a very dynamic region economically,” he said.

Japan is also in the mix, though it will depend on the TPP. With 11 member nations interested, Mr. Weekes said “the odds are strengthening that [a TPP] might actually happen.” It could be a leg-up for Canadian suppliers who would get preferential access to those markets over the United States.

Those files should top trade talks with China, which are in the exploratory stage but would take many years to materialize, as will anything with ASEAN, which launched exploratory talks with Canada in early September.

Earlier this year Mr. Champagne visited India and is likely to again this fall, when some suggest the file should see some movement. He’ll also attend a World Trade Organization ministerial conference later this year.

“We could well start to see some development of new ideas about what we really need to do in [the] WTO in response to this sort of crisis in trade policy that’s been provoked by Trump’s approach to trade—if he has one,” said Mr. Weekes.

With its provisional launch this week, CETA will be about 90 per cent in effect, but Mr. Champagne will have to put out some fires before the file is closed. He also manages export development, trade promotion, and the trade commissioner services. That also ties in with NAFTA, given the huge advocacy campaign at the state level in the U.S. based in the Canada’s consulates general to promote Canadian trade.

People describe Mr. Champagne as dynamic, intelligent, a quick study, and well respected among colleagues and industry as someone who speaks the language.

When Mr. Miller met Mr. Champagne four years ago he sensed “some idealism” in the former international business and trade lawyer—and a commitment to Canada and trying to make the country a better place.

“Nobody who works on corporate governance internationally is especially idealistic, but he does strike me as someone who’s in politics for the right reasons,” Mr. Miller said.

Trade approached as ‘tripartite co-operation’ between two ministers, PMO

Observers say a smart team supports both ministers, with a lot of crossover between the two and the Prime Minister’s Office, which can create an atmosphere of “tripartite co-operation,” said Mr. Moen.

“There is a lot of connective tissue between senior political staff in the PMO, Minister Freeland’s office, and Minister Champagne’s office,” he said.

rian Clow, Ms. Freeland’s former chief of staff, is running the PMO Canada-U.S. relations so-called war room. The prime minister’s former deputy chief of staff Jeremy Broadhurst took on Mr. Clow’s role in January.

There’s also cross-pollination from foreign affairs.

Several of former foreign affairs minister Stéphane Dion’s senior staff are now on the trade minister’s team, including longtime Liberal Jamie Innes, Mr. Champagne’s director of parliamentary affairs, and director of policy Christopher Berzins. Chief of Staff Julian Ovens held that same role with Mr. Dion.

Both Mr. Champagne and Ms. Freeland rely on the counsel of deputy minister for international trade Timothy Sargent, said Mr. Miller. And though NAFTA chief negotiator Steve Verheul works closest with Ms. Freeland, he and other senior experts would also advise Mr. Champagne.