Good morning, everyone, and thank you for the invitation.
I wish I were there in person, because I understand you might actually be getting some spring in Ottawa. That's great news. My son and grandchild live in Ottawa, so it's always very close to my heart.
As mentioned, I am the director of the Canada Institute at the Woodrow Wilson Center in Washington, D.C. The center is supported by a modest congressional appropriation as well as private sector contributions. Because of the bipartisan nature of the Wilson Center, and also my respect as a Canadian living and working in Washington, D.C., my remarks this morning, first of all, are my opinions and not those of my employer, and also they indicate my great respect for the U.S. democratic process.
I have spent the past 25 years working on international trade issues, primarily bilateral trade—Canada, U.S., and Mexico—so those are the two issues I want to address here today. As a former university professor, it's hard to say anything in eight minutes, so I'm going to try to be disciplined. If there's more that you want to work with in the question-and-answer session, I'd be happy to delve deeper into these issues.
On the issue of Canada-U.S. commercial relations, the campaign promises about ripping up the NAFTA have been very worrisome for Canadians. With around 7% of Canadian exports going to the United States, ripping up the NAFTA could seriously destabilize the Canadian economy and the integrated supply chains, investments, and joint ventures we've come to rely on to sustain the Canadian economy.
We are each other's largest trading partner—everybody knows that—but Canada is much more vulnerable in the relationship. The asymmetry is not just a matter of size; it's also because, even though we are the largest buyer of each other's exports, some 20% of Canadian GDP comes from exports to the United States while less than 2% of U.S. GDP comes from their sales to Canada. Frankly, Canada does not matter as much to the United States.
For this reason, Canada is often overlooked in U.S. foreign policy and commercial policy considerations. Canada is not going anywhere. Canada is not a problem. So sometimes there is some complacency. Canada gets caught in the crosshairs of punitive actions that were not intended to hit Canada in the first place. We're hearing about targeted trade actions towards Mexico and China, and those may very well have a negative effect on Canada as well.
The Government of Canada has been really successful at managing this relationship through the turbulent early days of the Donald Trump administration. A lot of credit goes to Canadian Ambassador David MacNaughton, who has been a skilful quarterback, managing the multiple dimensions of the relationship. We hear about elder statesmen Conservatives meeting with members of Trump's inner circle. We hear about young Liberals meeting with Ivanka Trump and Jared Kushner.
They are hitting all the right notes and meeting at all the right levels. In particular here in Washington, it's terrific to see Liberal, Conservative, MPs from all parties, doing joint meetings together with U.S. partners. We also see provincial premiers and federal representatives. There's very much a united front and common messaging here. I think Canada is doing the right things so far in managing this relationship.
However, Canada needs to move from rapid response mode to a more targeted strategy that focuses on sectors where Canada can benefit from upgraded provisions in the trilateral space. I think we focus too much on defensive...and on what happens if this and what happens if that. This is an opportunity to open up a 20-year-old trade agreement, and it is an opportunity for Canada to take the long view and figure out what it needs to be more competitive on a North American scale in the coming decades. I would suggest an initial focus on the auto sector, on aerospace, agrifoods, energy, and services.
A couple of weeks ago, a draft notification from the Office of the U.S. Trade Representative was available for public viewing. This is the notification that will have to precede congressional approval for the U.S. to start new NAFTA negotiations. In some ways, the draft text was very reassuring for Canada, because what we saw in that text was not ripping up the deal or ripping up the rules of the road. It conformed to some fairly traditional, fairly predictable trade rule conventions and orthodoxies and patterns. Canadian negotiators are very skilful, and they're very used to working within that WTO language and framework, so for Canada there's some comfort in that draft notification.
At the same time, it's clear that the United States wants to go after certain protected sectors. It's likely they're going to go after Canadian dairy. It also seems likely they're going to import some of the measures that they liked from the trans-Pacific partnership, like state-owned enterprise controls and increased protection for intellectual property.
I would say the NAFTA is reason to be vigilant; it is reason to be focusing on our defensive interests but also on a forward-leaning agenda.
More disruptive for Canada than a NAFTA renegotiation is the border adjustment tax. We keep hearing that Donald Trump doesn't love it, but it is such an appealing fundraising tool to enable the U.S. administration to raise funds for the initiatives that they want to undertake, that they can't seem to shake it. That border adjustment tax would have serious implications for Canada across all sectors.
I would be happy to discuss my opinions on that tax during the Q & A, but what I'd like to move on to now is Mexico. In Canada, it is tempting, perhaps, to just get out of the way and let Mexico and the United States fight it out. It's not a fight that Canada started. Also, Canada and the U.S. do have an existing priority commercial relationship through the Canada-U.S. Free Trade Agreement, so there are some who are saying just let Mexico go its own way.
In my opinion, that is a short-sighted view. Mexico is a young, growing consumer economy, with a population four times that of Canada. Our commercial policies are already closely linked through more than 20 years of the NAFTA, and most of the effective trade barriers have been eliminated. Companies like Scotiabank, Linamar, Bombardier, and Grupo Bimbo remind us of the important opportunities that relationship creates and will continue to create.
Also, many Canadians don't realize the important retaliatory power that Mexico has against the United States. Even though Canada is the largest buyer of U.S. products across the board, Mexico's purchases are more focused in key commodities. Mexico buys all of U.S. exported corn, so if Mexico turns around and puts a more than 100% tariff on that corn, that's going to be very punitive against the United States. Leaving trade aside, Mexico has been a very important partner on southern border control. If they stop being so co-operative and just open up the gates for Central American migrants right up to the United States, that will have a very destabilizing effect on the U.S.
Meanwhile, Mexicans feel insulted by the rhetoric that they heard during the presidential campaign. As a result, Mexico's leading candidate in the upcoming election is running on an anti-Trump campaign and a promise to restore Mexican dignity, so Mexico is going to take some very hard negotiating positions in the upcoming NAFTA. The U.S. has already carved out hard negotiating positions, so it seems to me Canada has an important role to play as a flexible negotiator, as a mediator, and as a consensus-builder, so that the NAFTA issue can be resolved in a way that's productive for everybody.
The most significant threat for Canada is not embedded in any one action. It's not the NAFTA. It's not Mexico. It's not the border adjustment tax. It is the aggregated effects of policies that disrupt efficient supply chains and generate unnecessary volatility in exchange rates and border taxes, as well as any other factors that make it difficult for businesses to engage in long-term planning and investment in North America.
While I didn't have time to address the security dimension of the trilateral relationship, I would be happy to take that up in the question and answer period.
Thank you very much for your invitation this morning and your attention.
Excellent. Thank you very much, Mr. Chairman.
Thank you, committee, for putting up with another appearance by me and also the technological glitches. I hope I don't repeat too much of what Laura said. I heard her formal testimony but not the Q and A. Let me just say that she's fantastic. We've known each other since we were in grad school, and I'm a huge fan of her work and her analysis, so you can disregard everything I have to say. As long as you have her guidance, you're going to be doing just fine. But, since you did invite me, I'll have a little guidance of my own.
What I want to begin with is a kind of commonplace observation, but one that I think is very reassuring right now with regard to the relationship between Canada and the Trump administration. That is, the two countries—Canada and the United States—are friends, fundamentally because the people of Canada and the United States are friends. That guides everything, and even in a moment when American politics are very populist, Canada shouldn't worry because most people, including Trump voters, think Canada-U.S. relations should be good, constructive, not without their disagreements, but managed in a constructive way. I think that's really important because it's going to keep a boundary on just how chaotic or difficult relations with the Trump administration might be. We have no reason to think that the president has any animus against Canada either, but there are some concerns in the relationship now, and I'll echo some of what Laura said and try to cover the remit that was given to me by the committee.
First of all, in regard to the commercial relationship, we have a great trading relationship. Thanks to trade liberalization, thanks to regulatory cooperation, and thanks to security co-operation, we have been able to knit tremendous value chains together that allow firms with specializations on both sides of the border to work together to build products that are world class. This has kept the American economy as well as the Canadian economy going. Canadians create millions of good American jobs, and the United States economy helps to fuel the Canadian economy by creating jobs there as well.
The problem, however, is that the Trump administration has created a great deal of uncertainty about those foundations of the relationship. Specifically, he's talking about renegotiating NAFTA, which Laura addressed, and however that comes out, whether it's a tweak or a twerk, or something grander, I think the uncertainty over the trade rules is going to be bad for our business community in both countries. It's going to cast a doubt about whether we can continue to invest and expand on that economic activity. The sooner we resolve that, the better. There's no resolution like a final resolution. Even though we're going to keep hearing rumours, and tweets will fly, it's very important that we resolve this as quickly as possible.
Secondly, since the Trump administration has begun, and in part, since the Trudeau government has taken power, our vehicles for border security co-operation, the beyond the border working group, and regulatory co-operation, the Canada–United States Regulatory Cooperation Council, have all but disappeared from the scene. We don't hear much from them. They've been moved within the Canadian government, and they haven't been particularly highlighted in the U.S. government, not in the meetings between Trump and Trudeau, and not elsewhere. That work is extremely important because it provides a way for the economies to get closer that doesn't have to be managed by the president or the prime minister; it can be managed by officials on both sides. We need a green light for that to continue, and we can't afford to let that work split.
At the same time, I think that our approach to NAFTA renegotiation—and this something that, I think, Laura pointed to—has been remarkably defensive. Those of us who care about Canada-U.S. trade have gone into this saying we'd like to keep exactly what we have now, if possible. I think it's very short-sighted. We ought to be looking to expand labour mobility, particularly by, for example, treating business travellers as though they were tourists. Allow three months of visa-free, hassle-free visits to each other's countries in a row so that a business person can come up to a conference or a sales call in Canada, or vice versa, without being given the third degree at the border over whether they may or may not have a tax liability or who's paying them. We could open up business travel.
We could, similarly, maintain our good investment relationship. We could look at doing joint infrastructure projects as a way of heading off Buy American or Buy Canadian provisions in our government's infrastructure spending plans. There are a lot of things we might hope to achieve in NAFTA renegotiation if we have a bit of vision and ambition.
Let me add another thing I'd like to see us consider. I would like to see Canada and the United States negotiate a mutual recognition agreement of functional equivalency in regulatory standards and inspections, so that if a product has been certified as safe in Canada, it would be considered automatically safe in the United States and vice versa.
This is not to harmonize our standards to the exact same level, but to recognize that while there are some minor differences our standards are functionally equivalent. This would cut tremendous amounts of regulatory red tape on our businesses that operate on both sides of the border. I would argue that it is consistent with President Trump's commitment to cut red tape and ease the regulatory burden, especially on our small and medium-sized enterprises.
I echo what Laura said about Mexico. On a positive note, Mexico is a tremendous emerging market. It is a market with a middle class almost as big as the entire Canadian population. It is a huge business opportunity for Canada. Yet, since Canada was able to get access to the Mexican market in NAFTA some 20 years ago, I think a lot of Canadians have tended to overlook or take for granted their access to the Mexican market as they look to expand trade with China, India, and Europe. All this is good, but don't forget Mexico.
There's a huge opportunity. Laura underscored the energy component of this, and I would concur, but there are so many ways in which the Mexican market would be a good diversification of Canada's export portfolio and a great opportunity for Canadians. I think that's going to require some diplomacy, because Mexicans are feeling Trump's ire. They need a friend right now, and I think Canada can be that friend.
With regard to the security relationship, President Trump has brought burden-sharing front and centre in the NATO alliance. This is not a new concern for the United States, but it's one that he's made with a particular focus for the first time since the end of the Cold War. I think this has been translated by many people as meaning that NATO allies need to reach the 2% of GDP contribution that all of the NATO countries agreed to aim for at the Wales Summit. I think that's a reasonable benchmark. I would think, however, that Canada needs to have a wider accounting of security contributions than simply the military contributions it makes.
Our European allies have a tendency to throw in all sorts of things to try to make their figures look like they're closer to 2%—veterans benefits, contributions to diplomacy. They consider these things as contributions to security, and they count them in to make their numbers look better.
The problem is that Canada is too darn honest. Canada considers only military expenditures as contributions to collective security. In my view, given the deep integration between Canada and the United States, the RCMP together with Canada's efforts in intelligence gathering and border security contribute to the national security of the United States and should be counted in Canada's favour. When you add military expenditures to these domestic law and order expenditures, Canada is at 2%.
That doesn't mean Canada shouldn't resolve defence procurement and try to buy a new jet fighter. I think that it also would refound the relationship if the United States could acknowledge its dependence on Canadian contributions beyond the military in North America.
I would like to urge, as a concerned observer, the Trump administration and the Trudeau government to return to Ogdensburg. I think we need a new bilateral discussion, or statement, on the Canada-U.S. security partnership that incorporates domestic and traditional military contributions and that endorses these contributions within a strong partnership, just as Franklin Delano Roosevelt and William Lyon MacKenzie King did 70 years ago.
It's particularly important now because this year is the 60th anniversary of our NORAD agreement. It's also the 15th anniversary of the reorganization of American defence in North America, which created the U.S. Northern Command. In these anniversary years, it is particularly important for us to renew our commitments to the past in a forward-looking way.
On the rest of the world, you have given me a wide remit. I can say that I'm only an expert on Canada-U.S. relations, so my observations are going to be bit cursory, but I'm happy to discuss them at greater length.
The world today, partly because this has been Donald Trump's emphasis, has returned to great-power politics, something we saw last saw at the beginning in the last century. It is an uncertain time. Donald Trump has taken on as a global strategy the banner that Ronald Reagan brought forward of peace through strength.
He wants increased defence spending but he wants to maintain an international order by being a very international strong player. This has shown up since he's become President in renewed commitment to NATO. I think you'll see that underscored at the NATO summit coming up in May, which the President will attend, and you've seen it also in his direct challenge to Russia. Despite all of the media speculation about his relationship with Russia, he's been remarkably tough with the Putin government.
We saw it just this week with the invitation to Montenegro to join as the 29th member of NATO, with his willingness to challenge Russia over its claim that chemical weapons weren't used in Syria and to push back on that disinformation that Russia has put out. I think you will see it in the months ahead in a stronger commitment by the United States to Ukraine. I know that's very important to Canada, but I think it's also important to the United States. It wasn't where Trump wanted to lead, but it fits with the way in which he tends to remind countries how important the United States is to their plans.
We saw this particularly with China, where the President reached out to Taiwan, took a phone call from the Taiwanese President and rattled Beijing. The President has also said, with regard to China, that he wants China to step up on the North Korean peninsula issue and help discipline North Korea. I think that's tremendously important. We've seen China at least moving somewhat in that direction, because it challenges China as a rising power to act like a rising power and to take some responsibility for security in its own neighbourhood.
I think this is an important pivot for the U.S. and not unrelated to the U.S. action in Syria, showing that the U.S. is willing to act in a proportionate way, but in a decisive way in defence of international security and norms. At the same time, China knows that the United States is very committed to resetting the trade relationship between the United States and China. There's some peril for Canada in this, which is simultaneously reaching out to China and trying to establish a bilateral investment treaty, and also a trade treaty.
If there's daylight between Canada and the U.S. on China, it will be potentially an issue between the United States and Canada. I think it's important for our two governments to come together on a common approach and in a way be a Team Canada-U.S. with regard to China, rather than having the Chinese try to play on our differences and perhaps use Canada as its access point to the North American economy, raising issues for our trade officials as well as for the President.
The Middle East is an area in which we're both involved in fighting the Islamic State. The President has a strong commitment to Israel but a desire to play a more secondary role in the Middle East, not get drawn into its conflicts and its chaos. I think it's a very difficult thing for the United States to do. We can't just withdraw and expect peace and security. The President is also very skeptical of the Iran deal that was put together by the Obama administration.
I do not think that the Trump administration is going to break the Iran agreement, but I do think that the Iranians will break it for him. I think they've already pushed the limits of what the agreement has required of Iran. I suspect that we'll see, in the next month or so, the administration publish and fully disclose the details of the Iran deal so that the media and others can scrutinize compliance. I think the administration will impose consequences on Iran for its violation of the deal.
As with Syria, we hope those consequences are proportionate and fall well short of war. But interestingly, this week the former president of Iran, Ahmadinejad, has stepped back into politics suggesting that Iranian politics themselves may be an issue. I think that's a vulnerability for Iran that the U.S. will put pressure on to try to change Iranian behaviour. This could be a moment for an opening, but I think the administration takes Iran very seriously. In this regard, the Iranian situation is going to be tied to the situation in North Korea.
The U.S. attitude on non-proliferation has become much more assertive with regard to North Korea. I believe it will be equally assertive with regard to Iran, and it's important, I think, for the United States to have Canada in its corner on that.
Lastly, there was a question that the committee raised regarding multilateral institutions, and in this area I only want to say the funding cuts that the President's budget proposed need to be taken in the context of funding cuts in the U.S. domestic economy.
We've seen that Laura's organization, the Woodrow Wilson Center, was zeroed out in the President's budget. It's not the President who decides where funding goes; it's Congress. The President's budget is a suggestion like the budget of the Prime Minister. This is illustrative and sends a signal, but is not the final word. I don't think Laura is going to lose her money, but more importantly I don't think multilateral institutions will be zeroed out or cut as drastically as the President has suggested. But it's a shot across the bow; it's a challenge to those organizations to reform; and it's difficult to reform an organization like the United Nations or its parties. It's going to be difficult to reform the World Trade Organization, the IMF, and the World Bank. By signalling a willingness to step back from those organizations, the U.S. is finally active on its concerns of the past and said they expect change or they will change their posture. This will put pressure on every one of those organizations to reconsider the trajectory they've been on.
Resolutions condemning Israel at the UN are really not constructive for either the UN's reputation or the UN's relationship with the United States. As those organizations try to recalibrate their position, re-establish the trust and conscience of the United States, and address problems in their organizations, they can have no better friend than Canada, which is a committed multilateralist with a professional diplomatic corps that has helped it make those organizations as successful as they have been. Canada's commitment on multilateralism is not at odds with what the U.S. is doing, but may enable the U.S. to get what it ultimately wants, which is functioning international institutions. The U.S. role as such a big country is to threaten funding perhaps, but Canada's role could be to take that, translate it into reform that can make, if you like, the United Nations great again, and all these other organizations more functional and more supportive of the international order.
With that let me stop. I'll be happy to take any questions, and maybe now I can hear Laura if she jumps in too.
Thanks for the opportunity.
I received a list of nine questions, which could take hours to answer, but I'll try to do it in eight minutes. Hopefully we'll get somewhere on this.
The essence of a few things that I see here is that—as many of you who watch the news as much as I do know—there is a lot of unpredictability going on. We don't know what's happening out of the White House, so it's really difficult to determine exactly what U.S. foreign policy is from one week to the next. It's just so in flux that way.
The challenges I see here are that, as we all know, there is a bit of a personalization of foreign policy. I think the U.S. President has often acted on a knee-jerk reaction, and is very much swayed by unpredictable factors. We're in new territory.
I've been working in Washington quite a bit recently, both with the IMF and Brookings, with which I'm affiliated. Much of my conversation with bureaucrats inside the U.S. administration, whether it's treasury, state, or parts of defence, suggests that there isn't a lot of bureaucratic buy-in. There's a lot of frustration within Washington proper.
Added to that is the fact that they're really short-staffed. There is a great deal of unease in D.C. generally about the lack of capability and the lack of expertise. It doesn't help that the White House itself seems to be lacking on that front. There is a great deal of uncertainty as to whether or not people like Jared Kushner and Ivanka Trump have a lot of weigh-in and sway with U.S. foreign policy, which again is highly unpredictable. Frankly, there is no expertise in either of their repertoires, so it becomes far more difficult.
That sort of personalization of foreign policy means that there need to be contingencies. There needs to be a number of best-case and worst-case scenarios on all foreign policy issues related to the U.S., because things are very much in flux. One can't help but see that this week alone, five major foreign policy positions were completely reversed by Trump himself, from China's currency manipulation, to questions about Russia, to questions about NATO: suddenly it's no longer obsolete. There is so much flip-flopping here that it makes many of us dizzy trying to analyze this.
In terms of issues that need to be watched for, I think the deregulation of the financial industry is something that Canada needs to be careful about. There are a lot of potential spillovers for Canada, maybe positive and negative, depending on how things go. There is going to be a lot of money pouring in as some of the Dodd-Frank regulations become deregulated and we start to see smaller banks in the U.S. become empowered. This is something the Trump administration is very keen on. One thing he does have is a high number of Goldman Sachs advisers, who are also very much in favour of dismantling this once-hated regulation in the financial industry. I think that's something to be watched.
On the trade front, I noticed the committee had quite a few questions on trade. This is something to be watched, of course. The expected or potential trade war that many had been talking about between China and the U.S. may now be averted. It seems as though the Trump administration is backing down on its idea that China is a manipulator of currency. The truth of the matter on that question is that China is a manipulator of currency, but that's not the point. China's currency has actually risen in recent years as a way to thwart money leaving China, but that was for its own domestic political reasons, not for a trade advantage. In terms of the time to ask China to overvalue its currency, he's probably about three or four years too late.
Federal interest rates are something to be watched. There are planned interest rate increases. Janet Yellen has already noted that. We're at least expecting another two increases between now and the end of the year. Keep in mind that Trump wants them to be lowered; he does not want to see rates increased, so there may be a clash forthcoming. Again, this is a president who doesn't realize there is such a thing as central bank independence, so that's something to be watched. Of course, for Canada, any sort of interest rate movement on the U.S. side is something of interest to us.
Your fourth question asked what this would mean for border issues. I think we have to keep in mind that many of those who surround Trump continue to propagate the myth that a 9/11 bomber came through the Canadian border. That's something that unfortunately still resonates in the fake news and Breitbart type of folks who really surround Trump, so it needs to be heightened, I think, in terms of our awareness on that issue. I don't think we're necessarily expecting to see real changes in terms of border security, but I think the messaging and the leeway that many U.S. border guards have been given, thanks to some of these executive orders, does in fact mean that if this myth propagates itself and is indeed internalized by these agents, it may mean more difficulty for Canadians crossing. I think that's a real issue.
Of course, these executive orders need to be continued to be watched, because they disproportionately affect Canadians from different backgrounds. I can speak from personal experience that if you have several Middle East stamps on your passport, you may be interrogated far differently than if you don't. There is an issue that Canadians need to be concerned about. The government needs to think about how it will deal with discrimination, potentially, at the border on these issues.
There's another thing that I think is important to point out on the Russia front, and it's really quite an exciting one. To go back to an earlier point, there has been a lot of change in the past week alone on a number of issues. While we expected a sort of increased détente between Trump and Putin, it seems as though that may be more rocky. As to how this will affect the NATO alliance, I think it's comforting to hear people like Trump and Tillerson now re-engage in NATO and the alliance. Of course, if it rears its ugly head again in terms of calling NATO obsolete or again putting down the alliance, that's problematic.
In terms of allies in eastern Europe, there is still obviously a rush, a clamouring, to try to get into NATO as fast as possible. Russian troops are approaching Belarus, for example. One can't ignore, of course, the continued occupation of Crimea, eastern Ukraine, and Georgia. I think, from my attendance at a number of security conferences in eastern Europe, eastern European leaders are very, very afraid. They are constantly bombarded by a great deal of fake news in their own language. They don't have the same state news or, I should say, even private news supports or a plethora of views that often can counter some of this fake news. You do have a preponderance of Russian or Russian-backed media in many parts of eastern Europe that are really putting a lot of fear in allies. It's quite powerful messaging, so I think we can't discount that.
Of course, as we head into very important elections in Germany and France, Russia's penetration there is well documented. Whether it's support for Le Pen and other ultra-nationalists in Germany or just the preponderance of fake news, it's something to be watched. As far as the Trump administration is concerned, last week I would have said it was completely trying to sideline this argument, and now, just this week, we've heard Tillerson talk about Russian fake news in eastern Europe. It's really hard to break that down.
I'll spend the few minutes I have remaining to talk about U.S. policy toward the Middle East and the JCPOA. As far as U.S. foreign policy toward the Middle East is concerned, of course everything we've seen this past week has shaken a lot of our long-standing assumptions. However, I do think that the engagement or the strike against Syria by the U.S. administration is a limited, one-time thing. I don't expect to see more escalation of that. I don't think the Americans are interested in putting more boots on the ground. They already have about 5,000, maybe a bit more, between Iraq and Syria in the fight against ISIS. I don't see much appetite there.
One has to read the very sensible analysis of people like Mattis and others in the U.S. Pentagon who I think are also very cautious about getting involved or further entangled in the Middle East. The strike itself, 59 Tomahawk missiles on the Syrian air base, probably didn't do a lot of damage in terms of really thwarting Syria's capability, but it did produce a positive signal, at least to the Assad regime, that one type of arsenal is not acceptable—i.e., chemical weapons.
That, of course, does not stop the Syrian regime from continuing the very cruel assault with conventional weapons on its people. That will continue.
If I may, I will just very quickly talk about the Syrian situation and where I think that's going. I think we're seeing that the Syrian government and the Russian government have a plan to basically continue to depopulate and strike at places like Ghouta, Daraya and other parts of Madaya, basically trying to reclaim the very few pockets left in the southern part of the country and around the capital. They are trying to get continued swaths of population such that the rebels in those areas put down their arms and basically agree to be resettled in Deir ez-Zor in the north.
As long as the Syrian regime can regain the Aleppo-Damascus highway to the coast, I think they're quite happy. That's what many internal Syrian regime operatives keep calling the useful part of Syria. I think there is an effort to do that. I think there's a three- to four-year time horizon in that effort.
As far as the fight against ISIS goes, just more generally, it's gone very well in parts of Iraq obviously. Although I think what may not have reached the radar of many is that parts of Iraq like Ramadi have seen a re-entrance of ISIS because of no governance or no central government capacity to actually go in and stabilize the situation. There is a risk, just as in Palmyra, that governments, both Syrian and Iraqi, are not well equipped to actually hold the cities that they liberate. That's a real concern.
As far as Mosul is going, of course eastern Mosul has been liberated. Western Mosul is slow, which is a good thing because it's very, very dense. There will be a rush to try to finish this before the heat comes on, because Mosul's heat or Iraq's heat generally is quite intolerable. This is a street-by-street battle. Of course, the Americans have changed their rules of engagement. I think anybody who denies that is foolish. There's been a change in the rules of engagement, which means that sort of command to the Americans to step up aerial assault on western Mosul has gone up. That has led to the increase in civilian deaths. I would caution against that.
Do we still have time to speak about the JCPOA or do I need to wrap it up?
: Merci, mesdames et messieurs.
I looked at that list also, and I came to the conclusion that I would try to answer one or two of the questions. I very much agree with what Bessma has been saying. She and I have worked together on many things for a long time. Maybe we've come to see the world too much the same, but anyway, we do.
I'll speak a little bit about Trump's foreign policy. As Bessma was saying, the “u” words—unpredictable, uncertain—seem to be operative. The best description of Trump's foreign policy I've seen was a cartoon in the Washington Post yesterday. It shows Trump with a civil war kind of cannon, and he's blowing a big hole in the Oval Office wall. He says to his assistant, Reince Priebus, “Okay now draw a target around that.” Then the second line is, “And ask Spicey to distribute it to the newspapers.”
This is a government that doesn't have a foreign policy. It has erratic impulses, and that's making people nervous literally around the world.
I want to talk I guess more specifically about the U.S. proposed budget, the cuts, and what that might entail. There is to be a cut of about $10 billion from the State Department—about 28% of its budget—that will fall particularly heavily on the United Nations and other organizations. There is always a lot of loose talk about what the size of the U.S. budget is and how much is being spent. The budget of the UN is about $13 billion to $14 billion, give or take, and the U.S. share of that is about a quarter. If you take out a quarter of the spending of the U.S., you're looking at about a $4-billion hole that others will have to find some way either of filling or of cutting programs that are not going to be necessary. The Canadian share of the UN budget is about 3%.
There's always a lot of misunderstanding in people's minds about the size of the aid program. There was a poll recently I saw that suggested that Americans thought about a third of their budget was going to foreign aid, when it's about 1%. Indeed, the Canadian share is heading in that direction also. There's going to need to be some catching up.
I looked through this in the late 1990s when the Americans also decided to stop paying their full dues. They ran up a rather significant bill, but at the end of the day, they decided they would pay the bill, and the UN was financially mostly restored.
There was talk at the time of reducing the U.S. share of the UN budget to about 15%. That wasn't talk that was originating in Washington. That was talk that was originating around the table in the UN because people wanted to reduce the influence of the Americans in the UN. It's one of the great ironies that no one benefits more from the UN than the United States does, and no one seems to disregard it more.
I'll say a word or two about why the UN matters and why we should not be giving up on it. First of all, the UN Charter provides the international rules of the road, and most countries accept most of it most of the time. It's in their interest. It's the only rule book there is for the international strategic political situation.
Secondly, there is a kind of non-stop diplomacy that takes place here 24-7. This is something that's not well understood. There hasn't been a war between the major powers since Korea, and even that could be considered an exception because China was not in the UN or not on the Security Council.
There hasn't been a war between powers on the Security Council since 1945. Part of the reason is that they are there day in and day out at the UN Security Council. The five permanent members run the place—no one should have any doubt about that—and they're meeting constantly, day in, day out, often weekends. I'm the last Canadian to have sat on the UN Security Council, and the stories you hear about nobody being home on the weekend and nobody being there after 5:00 are urban legend. I can remember meeting all night plenty of times and getting phone calls in the middle of the night to come for a meeting plenty of times.
There is a non-stop diplomacy, and that means that the Russians and the Americans and the Chinese know each others' red lines, know what the limits are, and are not going to go to war by miscalculation or misunderstanding.
A third value of the UN Security Council is that it has basically stigmatized aggression. Why was it that the Russians were pretending they were little green men in Crimea? They didn't want to admit that they were actually breaking international law. It's one of the great, delicious ironies in the Syrian situation that the Russians have run to the Security Council to complain that the Americans are breaking international law, and isn't that a terrible thing to be doing?
Well, it is in some ways a very regrettable thing to be doing, but it's also a very understandable one. If the law prevents you from saving people who are being gassed and bombarded by their own government, then the law is an ass and something has to be done about it, and that's what we've been seeing. That was the hope, at least, with Trump.
Always with Trump, however, there's more to it than that—or less to it than that—and in this particular case it is possible that if the Americans don't follow up, they will actually have made the situation worse in Syria rather than better, because people now have expectations. For ordinary Syrians who thought perhaps relief was coming, it probably isn't.
There are things that could be done. Bessma and I have talked about them at various times. At every stage of this crisis it has been easier to do something about it the day before than it is the day afterwards. That goes also for no-fly zones and for safe havens. The Turkish government, for example, has been advocating from the very beginning for a place inside Syria—and it has more than one motivation for this—where Syrians could go and be safe and not have to test their luck in the Mediterranean.
That's my time, Mr. Chairman.
What can Canada do about the uncertainty that Trump creates, and what impact does that have on Canadian foreign policy with the emphasis it puts on multilateralism—the World Bank, the IMF, the UN, and NATO? NATO is now not obsolete, but it could be obsolete again soon if the Russians have their...and the Americans get along, as President Trump is predicting.
I think there are two or three things.
One, it's not in every case, but it seems to be the case that whoever got to Trump earliest got him to change his mind. Trudeau got there very early, I think, with a very sound strategy, with some things that were interesting to him and to his family. I think it has set relations on a course that is much less fraught than it might have been otherwise. I don't think that's all the story. There are people.... I'm thinking particularly of future secretary Ross and negotiations of NAFTA, where the list seems to be getting well beyond a tweak and a tweet.
I used to be at the embassy in Washington, and before that, I was director of U.S. relations in the foreign affairs department. I think the government has handled it about as well as it could be handled. I'm not saying that for partisan reasons.
The was there early. It was constructive. Ministers were spending a lot of time in Washington cultivating people, going up on the Hill, seeing all the people they could see. Provincial premiers have been enlisted. Everybody is on the job in order to make sure the American relationship doesn't go off the rails. Job one for any Canadian government, job one in foreign policy, is relations with the United States. I think that's going pretty well. I think it's important that people go to see him.
I don't think you can say that in every case it has gone well. I don't think it went especially well with Mrs. Merkel, for example. Frankly, I do not believe that you can put the Chinese President at your dinner table, have the cameras turned on, and let him know that rockets or missiles are flying at Syria. It would make him look complicit. I think there's going to be trouble from.... That's not going to be readily forgotten. I don't think that was considered to be hospitable.
Generally speaking, the President's sophistication is that which you would find among New York business people, but his learning curve is pretty much straight up. The people around him in the State Department and the people around him in the White House are being sorted out. I think he's finding out, as many governments have found out, that the people who get you elected are not the people who keep you in office or get you re-elected. We're seeing a shakeout there that's very important.
As one of your preceding witnesses—Mr. Sands, I think—said, very few people have been appointed. Everything depends on the sophistication, the stamina, and the capacity of the people who are directly in the White House to just keep on working. Fortunately, there are obviously some warhorses—maybe that's the right word—who are working there.
What we can do is continue with that kind of policy, make sure there's nobody significant on the Hill who doesn't understand what we're talking about.
By the way, as a comment on the importance of the States, we have a good story to tell about 35 states whose major international economic relationship is with Canada, and about how many jobs depend on that. But bear in mind, that's a tiny percentage of their GDP. If that were to disappear, it would be very regrettable, but it wouldn't be crippling. We're in a position where, as always, we're much more concerned about our relationship with them than they're going to be about their relationship with us, no matter what we do.
I guess a last point, and one could talk all morning about this, is that I think we need to be careful not to throw the Mexicans under the bus. I don't think it's in our interests to do that. Trump may be here until the end of the world, but most likely he has eight years, or four. He'll be gone, and the Mexican and the Latin component of American politics is going to be even bigger at that time.
We need to take a look at the long game here as well. It's in our interests to make sure that whatever we do, the relationship with Mexico is not sacrificed for an interest that may disappear four years from now.