Tuesday, June 28, 2016

North American Leaders Meet, With Brexit and Trump Clouding Ties

Josh Wingrove

Mike Dorning

June 28, 2016 — 5:00 AM EDT Updated on June 28, 2016 — 3:43 PM EDT

Obama, Trudeau and Pena Nieto hold summit Wednesday in Ottawa
U.K. vote, U.S. presidential race weigh on pro-trade agenda

The shadow of Brexit and rising protectionist sentiment loom large as U.S. President Barack Obama meets his North American counterparts to bolster the world’s largest trading bloc.

Obama, Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto hold the so-called Three Amigos summit Wednesday in Ottawa, with fallout from the U.K.’s vote last week to leave the European Union raising pressure to show confidence in their own alliance. The countries will vow to produce more clean power and cut methane emissions while strengthening economic ties.

Britain and the EU

Risks to North America are palpable, as Brexit roils global financial markets and anti-trade rhetoric ramps up in the U.S. presidential campaign. The meeting -- Obama’s last, and Trudeau’s first -- comes amid opposition to the Trans Pacific Partnership and disputes over visas, lumber, and beef. Yet all three countries see the summit as an opportunity to double down on easing trade barriers.

“This is a moment for North America to say we stand united, we stand together,” Chrystia Freeland, Trudeau’s trade minister, told Bloomberg TV Canada’s Pamela Ritchie on Monday. “And as a continent, we have a partnership that believes in the importance of building bridges rather than building walls.”

Given the impact it’s had on world financial markets, Brexit will be discussed at the summit but won’t be the focus, White House Press Secretary Josh Earnest said Tuesday.

All three countries have signed but not yet ratified the 12-nation TPP. The deal faces hurdles in Congress and is opposed by presumptive U.S. presidential nominees Hillary Clinton and Donald Trump, with the latter vowing to “rip up” the North America Free-Trade Agreement and other pacts.

“I’m going to tell our Nafta partners that I intend to immediately renegotiate the terms of that agreement to get a better deal by a lot -- not just a little, a lot -- for our workers,” Trump said in a speech Tuesday in Monessen, Pennsylvania. “If they don’t agree to a renegotiation, which they might not because they’re so used to having their own way,” he said, “then I will submit under Article 2205 of the Nafta agreement that America intends to withdraw from the deal.”

Increased ‘Uneasiness’

Republicans, whose support is critical, are wary of getting out of step with the rank and file, having lost high-profile party figures in populist revolts. Brexit will only increase “uneasiness” toward trade, according to former Republican Congressman Vin Weber, now a partner at lobbying firm Mercury LLC. “What happened in Britain and what’s going on in American presidential politics absolutely has an effect: It makes everybody more nervous,” he said.

Wednesday’s summit is the first since 2014. Last year’s was postponed by Trudeau’s predecessor Stephen Harper in part because of tensions over the Keystone XL pipeline, which Obama rejected after the new Canadian prime minister took office. This year’s meeting will “focus on creating jobs, strengthening North American communities, and building a clean growth economy,” Trudeau said in a statement.

“Certainly Brexit will be on the agenda,” said Mark Feierstein, the U.S. National Security Council’s senior director for western-hemisphere affairs. “It’ll be evident to Americans and people beyond that when North America speaks and acts as a single unit, it’s really for the good of our citizens and people around the world.”

Environment, Immigration

The countries will pledge to produce half their electricity through non-carbon-emitting sources by 2025. That “aggressive goal” will require “ambitious” measures, according to senior Obama adviser Brian Deese. Mexico is also joining a pledge made in March to cut methane emissions.

This week’s talks take place amid a dispute over a visa restrictions Canada placed on Mexicans to stem asylum claims, a thorn in the ties between the countries.

“There’s a lot of confusion in Mexico, hurt feelings and disenchantment with Canada over this issue,” said Laura Macdonald, a professor of political science at Ottawa’s Carleton University.

Trudeau and Pena Nieto announced Tuesday during a bilateral meeting that the visa restriction would be lifted effective Dec. 1, and that Mexico would fully open its borders to Canadian beef as of Oct. 1.

U.S. Protectionism

The Brexit vote was “a very big shock” for the three leaders, whose economies under Nafta collectively exceed that of the EU, according to John Kirton, director of the University of Toronto’s G-7 Research Group. As a result, the trio is under more pressure to display unity and declare “globalization is good for us and we still deeply believe it and are reaping the rewards as we speak,” Kirton said.

Polls show a wave of opposition to trade agreements. Americans, by a margin of 65 percent to 22 percent, say they want more restrictions on international trade, according to a Bloomberg poll in March. The same poll found Americans believe Nafta is a trade deal gone awry that has done more harm than good.

Deals in Limbo

The 12 TPP nations have until February 2018 to ratify the pact. Chances of the U.S. doing so this year were slipping even before the Brexit vote, according to Alec Phillips, a Washington-based economist with Goldman Sachs Group Inc. “Our expectation was already reasonably low that it would happen,” he said.

Trudeau, who describes himself as “extremely pro-trade,” has the parliamentary majority to approve the deal though he hasn’t yet taken a clear position. Mexico has already submitted TPP to its Senate for review and expects a vote later this year.

Canada has instead focused on its trade pact with the EU, which it still hopes to ratify under the Brexit cloud. Canada made changes to the pact this year and Freeland said Brexit will hasten the push -- a view not shared by Harper’s former foreign minister.

“The EU trade deal is not helped by what happened,” John Baird said in a Bloomberg TV interview last week. “There’s growing anti-globalization sentiment, there’s anger at elites. This is the big unknown the British people have thrown at all of Europe.”



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