A refusal by certain provinces to implement the USMCA would initiate a substantial intergovernmental dispute that could have profound consequences.
Whether out of indifference or relief, most citizens appear to have taken the draft United States-Mexico-Canada Agreement (USMCA) in stride. Media outlets and public opinion firms have demonstrated little interest in polling Canadians on the issue. Early criticism, it seems, has been confined to lawyers, lobbyists, political scientists, union leaders and other naysayers concerned with specific provisions of the deal. Business leaders and workers in specific sectors — in particular dairy, steel and aluminum — are mobilizing to secure transitional subsidies. This is a time-honoured post-deal tradition in Canada as elsewhere, and governments have had years to prepare the compensation packages. To the rest of Canada, and to opinion leaders in traditional and social media, the USMCA appears to have less to do with milk and movies, and more to do with whether Prime Minister Trudeau bested President Donald Trump in negotiating the deal.
Enter the provincial premiers, some of whom sense an opportunity to deepen the divide between Ottawa and their conservative bases of support. Some intergovernmental rancour is expected in a federation like Canada, particularly over dollars and cents. Premiers are expected to stand up for their residents as the trade deal is negotiated and implemented. Yet the early reaction from premiers in Ontario and Quebec appears to move beyond conventional political posturing. It borders on challenging the legitimacy of the deal itself. This may hinder Canada’s ability to implement the USMCA, which would have ramifications for the country’s reputation and for its ability to negotiate future deals.
Canada has encountered similar free trade challenges in the past. The negotiation of the Canada-United States Free Trade Agreement (FTA) in the late 1980s sparked intergovernmental conflict. In the beginning, the debate pitted Brian Mulroney’s Progressive Conservative federal government and its western Canadian base against Ontario and its Liberal premier, David Peterson. However, following Mulroney’s victory in the 1988 “free trade” election, Premier Peterson withdrew his months-long opposition to the FTA and stated to the New York Times, “I guess history will say who was right and who was wrong. But at the moment, let us respect the voice of the Canadian people.” Without doubt, his acquiescence had much to do with promised subsidies to support industries adversely affected by the deal. The same arrangements have been made for Ontario farmers and manufacturers today. Nonetheless, Peterson’s move was an example of national interest and respect for intergovernmental norms prevailing over partisanship and regionalism.
Three decades later, support for free trade with the United States and Mexico has increased dramatically. Last year, 81 percent of Canadians wanted to maintain an agreement among the three countries. Canada’s negotiators delivered that deal at the 11th hour. No objective reading of the text suggests Canada emerged from the negotiations unscathed; major shortcomings in terms of placing conditions on Canada’s future negotiations with nonmarket economies and a 16-year sunset clause are only the most glaring deficiencies. The terms of the agreement are worth debating, and such debate will take place in the House of Commons in due course. Yet, ultimately, this is the deal that Canada has struck.
The power to negotiate does not imply the power to implement. The implementation of an international treaty that affects areas of provincial or concurrent jurisdiction, such as government procurement or agriculture, requires the provinces to pass their own implementing legislation.
This used to be enough. Even today, no one is questioning the federal government’s constitutional authority to negotiate international agreements like the USMCA on behalf of the federation. However, the power to negotiate does not imply the power to implement. The implementation of an international treaty that affects areas of provincial or concurrent jurisdiction, such as government procurement or agriculture, requires the provinces to pass their own implementing legislation. This is one of the reasons the federal government consults with the provincial premiers and their trade ministers during international trade negotiations. It is also why Europeans insisted provinces be intimately involved in negotiating the Comprehensive Economic and Trade Agreement: they knew the deal was only as solid as the provincial governments’ commitments to implement it.
Provincial engagement in these negotiations has never entailed a veto over the final deal. The established norm dictates that, following the signing of the agreement, provincial legislatures will implement the agreement within the areas of their jurisdiction for the benefit of the country. In return, affected industries in their provinces will receive relief packages from the federal government.
In previous times, these norms carried weight — not in today’s hyperpartisan intergovernmental environment. It bears mentioning that Ontario Progressive Conservative Premier Doug Ford did not usher in this new dynamic. Open conflict between the previous Liberal premier, Kathleen Wynne, and Conservative Prime Minister Stephen Harper brought partisanship to the fore of federal-provincial relations. Ford and his counterparts in Quebec politics are threatening to extend it to an entirely new domain, however, as they shift from the campaign trail into the international arena.
On Quebec’s election day, October 1, the outgoing Liberal premier, Philippe Couillard, called the USMCA “very bad for Quebec” and promised that the Quebec government would “take all steps to prevent the implementation of this agreement that is damaging to the agricultural sector.” Quebec’s incoming premier, François Legault of the Coalition Avenir Québec, appears ready to live up to that pledge. He has committed to considering “all options” and has not ruled out blocking the agreement. Quebec’s refusal to implement the USMCA is a very real possibility, as is a similar move in Ontario.
Ford called on “the Trudeau Liberals to compensate our farmers” and stated, with regard to steel and aluminum tariffs, “We weren’t at the table or maybe the deal would have been a little different.” (That Ford met with Foreign Affairs Minister Chrystia Freeland in Washington last month, where he offered federal negotiators his full support, is of little consequence now that the deal is done.) Additionally, Ontario Minister of Trade Jim Wilson vowed to “hold the federal government’s feet to the fire” during the implementation stage.
One must not underestimate the resolve of two premiers who — in their first weeks on the job — pledged to use the notwithstanding clause to shield controversial legislation from court challenges.
Refusing to pass implementing legislation would seem like a “nuclear option” to resolving disputes over the level of subsidies to farmers. Yet one must not underestimate the resolve of two premiers who — in their first weeks on the job — pledged to use the notwithstanding clause to shield controversial legislation from court challenges. This demonstrates their willingness to eschew norms of acceptable political behaviour. A refusal to implement the USMCA would initiate a substantial intergovernmental dispute that could have profound consequences for not only the USMCA but other present and future trade agreements.
In taking this approach, premiers in Ontario and Quebec have differentiated themselves from their conservative counterparts in the rest of the country. Premier Scott Moe of Saskatchewan and Premier Brian Pallister of Manitoba have prioritized the national interest by praising the federal government for reaching a deal, while calling on the federal government to address the US tariffs on steel and aluminum. It is also interesting to note that, while Moe, Pallister and Fords are in lockstep in their opposition to the federal carbon pricing plan, neither Moe nor Pallister is on record as supporting Ford’s intransigence on the USMCA.
In keeping with its populist tone, Ontario’s criticism of the USMCA is also offside with prominent members of the federal Conservative Party establishment. Former ministers in the governments of Brian Mulroney and Stephen Harper have toed the economic nationalist line. Even Mulroney himself called the deal “a highly significant achievement for Canada.”
This reaction from Ontario and Quebec takes the decline of intergovernmental norms to a new nadir, and it is part of a broader trend of populist premiers disregarding timeworn institutions designed to promote national unity at home and on the international stage. This is where the real danger lies.
The federal-provincial spat over the USMCA comes at a time when Canada’s reputation as a safe place to do business is under scrutiny. The Trans Mountain pipeline project remains in limbo amid obstruction from the provincial government in BC and a negative ruling from the Federal Court of Appeal. The announcement of a new $40-billion liquefied natural gas facility in the province was taken as a hopeful sign that international partners and investors had begun to regain confidence in the federal government’s ability to follow through on major economic commitments.
Conservatives across Canada have criticized the Trudeau government for its inability to exert its jurisdiction in the Trans Mountain dispute. Will they rally to the federal government’s defence against provincial obstructionism of the new North American free trade deal? What happens if hyperpartisanship impedes Canada’s ability to negotiate and live up to its commitments in international agreements? The USMCA is hardly a done deal, and opponents in the United States, in particular, may seize on provincial dissent as an excuse not to ratify the agreement.
Do you have something to say about the article you just read? Be part of the Policy Options discussion, and send in your own submission. Here is a link on how to do it. | Souhaitez-vous réagir à cet article ? Joignez-vous aux débats d’Options politiques et soumettez-nous votre texte en suivant ces directives.