Northern Insights

An Interview with John Baird

Obviously, for the United States, given its size, leadership, and economic power, it will always be better to go bilaterally than to go multilaterally. For Canada, we don't have a huge debate. The United States has a $42 billion trade deficit on goods. And we have a $44 billion trade deficit on services. With Mexico, it's $56 billion and with China it's over $300 billion, and his sole goal is to reduce those deficits.

When it comes to Mexico, obviously there are lower regulatory barriers there, lower wages there, and if people want to buy a good or product it can be made cheaper in Mexico than it can in the United States where labor laws are stricter and wage rates and regulatory standards are higher.

I think in the current discussions, of the five big issues that the United States is pushing three are complete non-starters for Canada or Mexico. The difference is, in Canada there's growing support for NAFTA. The official opposition has, by and large, been backing the government and the re-negotiations. I think the Canadian government has handled it about as effectively as they could.

I think the real challenge is in Mexico. Trump is toxic in Mexico, whether it's because of the wall, immigration, or trade. I don't think Peña Nieto is capable of giving any ground in these negotiations, particularly so close to the presidential election, where his party remains quite competitive. Lopez Obrador nipping on the heels of the PRI makes it a lot tougher.

OR: What’s your take on TPP and the U.S. withdrawal?

Baird: What we shouldn't forget is both the Republican and Democratic candidates were not supportive of TTP. I know Hilary Clinton, I like her, I admire her. She made a pretty clear commitment. I think she would've honored it, so I think the TPP was going be walked out of regardless.

I think it's a bit ridiculous. The U.S. led the development of the TPP. We joined because of that leadership in order to pursue it. They're a sovereign country, it's their sovereign right. Obviously there was a real concern about it with a large part of the American electorate, but they could hardly have some sort of a veto from Canada wanting to participate. For us, it's free trade with Japan, the world's third-largest economy. Free trade with a growing powerhouse, Vietnam. But also it would be to begin a free trade deal with Mexico if article 2205 of NAFTA were to be invoked with a six-month notice. It would at least give us a back door into the Mexican market.

OR: In general, is there a stronger consensus about free trade in Canada than in the U.S.?

Baird: Absolutely. In 1988, we had a general election, and the entire election was a referendum on the Canada-U.S. trade agreement. So we had a big national debate about this in the late 1980’s under Brian Mulroney. Canadians see globalization positively; they see trade as crucial to our future economic prosperity.

The United States never really had any debate about the Canada-U.S. free trade deal. They had a little bit of one on NAFTA, but I think the United States has two problems. One, no one's out defending free trade. Two, they haven't had some labor transitional measures. A lot of this is automation and technological innovation. I understand Nike is building a shoe plant in the United States right now, one of their largest shoe plants in the world — and it's only going to hire around 120 people because you just don't take many people with automation.

I'm on the board of the second-largest lumber company in the world, Canfor. We have mills all over the United States and Canada. These mills, 50 or 60 years ago, would've employed 700 to 1000 people. Today they employ 150. And it's because everything's automated.

OR: Canada and a number of our other close allies joined the Asian Infrastructure Investment bank over U.S. objections. Do you see Canada and Australia, and some of our other core allies, moving more towards China in the face of U.S. pullback in the Pacific?

Baird: Well, President Obama led the effort in the West to stop countries from joining the Development Bank. The United Kingdom, one of America's two closest friends, under David Cameron joined anyway. Australia joined anyway. President Obama, I'm told, personally reached out to try to stop them. I think, increasingly, people are going their own way.

OR: Do you think that's part and parcel of a more general American retreat?

Baird: It was President Obama, like a loyal friend and ally. In Canada, we had the Keystone XL Pipeline. We couldn't get an answer on it for seven years of Obama’s presidency. You don't treat friends like that. We understood that he had to get over his 2012 re-election bid, and they had to use him to raise money for the 2014 midterm, and then for his presidential library. In Canada, we knew that. Still, what do you expect?

OR: What is your take on the question of Israel and its friends and enemies in the West?

Baird:  Well, that's one issue where I give the President huge kudos, not just for his support for Israel but for his returning to the traditional American policy of being close to the Sunni Arab world, in and outside of the Gulf. So I think, if anything, American leadership in the Middle East is demonstrably stronger than it was one year ago — and demonstrably more positive.

People are astounded when I tell them that whether it's Israel or Egypt or Saudi Arabia or the United Arab Emirates — indeed, throughout the entire Middle East — there's just a much greater appreciation of the direction of the American administration.

OR: How big of a threat do you see the de-legitimization campaign and BDS?

Baird:  It's a huge problem with the Left in western countries. It's a huge problem in large swathes of Europe where you see the re-emergence of anti-Semitism. Instead of demonizing the individual Jew, they're demonizing the collective Jew. Popular opinion, whether it's in France or the Netherlands — two close allies of Canada — is deeply disturbing. I think we've got to take BDS incredibly seriously. In the 1950’s and 60’s, the problem might've been on the Right, but I think the problem now is on the Left: the politically correct crowd, university campuses, even (briefly) in some trade unions. Bernie Sanders got 40 percent of those votes, and he was somewhat hostile to Israel.