OTTAWA – With the winds of a potential China-U.S. trade war gaining strength, Foreign Affairs Minister Chrystia Freeland says the global trading order that Canada helped create faces its greatest threat since 1945.
“I think that in some ways this is the most fraught moment since the end of the Second World War. And that’s a big thing to say,” Freeland said during a panel discussion in Winnipeg on Wednesday.
Freeland said the global trading order is now facing its most challenging moment since Canada helped establish it after the war, a development that laid the foundation for the peace and prosperity that much of the Western world currently enjoys.
She didn’t name the Trump administration, but it is at the epicentre of economic uncertainty that has thrust world markets into downward spiral in recent days.
In the face of that, the U.S. now wants an agreement in principle on the North American Free Trade Agreement in the coming weeks as it swaps escalating punitive tariff measures with China.
Canadians watched record gains in the market evaporate as President Donald Trump tweeted Wednesday that the U.S. lost its trade war with China a long time ago because of the incompetence of his political predecessors.
Freeland will be in Washington on Thursday to meet U.S. trade czar Robert Lighthizer as part of the ongoing efforts to complete a renegotiation of the NAFTA.
Freeland and Lighthizer met last month in Washington and the minister said they made good progress.
“NAFTA is my biggest, most immediate, most constant challenge. It’s part of this bigger issue because the rules-based international order is also about rules-based international trade,” Freeland explained at a meeting of the Winnipeg Chamber of Commerce.
The broad international implications of the U.S.-China dispute are deeply disturbing, said Paul Evans, a professor of international relations at the School of Public Policy and Global Affairs at the University of British Columbia.
“Global supply and value chains are going to be disrupted, the norms and rules of the global trading system eroded further and a whole new level of uncertainty built into the global economic system,” said Evans.
“Add to this the Trump administration framing of China as a strategic competitor and the powder train is being laid for a major confrontation.”
Joseph Pickerill, spokesman for International Trade Minister Francois-Philippe Champagne, said the government is closely monitoring the U.S.-China situation.
“We believe, first and foremost, in free trade, in the rules-based institutions and norms that govern it and in protecting the integrity and reputation of our market in the process.”
David MacNaughton, Canada’s ambassador to the U.S., told The Canadian Press on Wednesday that while Canada’s trade focus is on making progress with NAFTA, it is mindful of the impact of the China dispute.
“The U.S. has got issues with China. We’ve got some issues with China,” the envoy said.
MacNaughton said the fact that Trump, Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto will all be in Peru next week for the Summit of the Americas could break the NAFTA logjam.
“There is a good chance with the three leaders getting together in Peru, it provides a focus for us to work really hard to try and get as far as we can. I’m not going to predict where this is all going to end up except for the fact we’ve done our homework.”
A well-placed source with first-hand knowledge of Canada’s NAFTA stance said the Peru meeting represents the best chance for the three leaders to make progress towards an agreement in principle. The source said centrepiece of any deal will be a resolution on autos.
Kelly Craft, the U.S. ambassador to Canada, said in a speech Wednesday that she has “every confidence” that the three countries can “fix NAFTA so that it can work for the next 25 years.”
But she said obstacles remain, including resistance to the American proposal to raise the duty-free limit on Canadians visiting the U.S. for 24 hours.
“The lineup of cars driving back into Canada every weekend that has to stop and declare any purchase when travelling just for the day — think of the carbon footprint of those traffic jams spread across our border,” she told an Empire Club of Canada luncheon in Toronto.
“Now, a lot of Canadians might not agree on what the U.S. suggests — $800 a day — but come on — $200?”
— with files from Colin Perkel in Toronto and Joan Bryden in Ottawa