Our Canadian Prime Minister Goes to Washington: What’s Next?

Sunny Ways
The news in Canada is all about the state dinner tonight between Prime Minister Trudeau and President Obama.  It is the first official visit of the Canadian Prime Minister to Washington in 19 years.  We’ve been there in the intervening time, but it didn’t qualify as official.  I don’t really know why.  The last time was between Jean Chretien and Bill Clinton.  This time around the American press have noticed a little bit more because Justin Trudeau represents so much of a photogenic opportunity than pass Prime Ministers.  Put him together with President Obama and you have lots of fodder for the glamour pages of the newspaper.

Of course, in Canada we always like to see it when our American friends take time out to not ignore us.  That may happen with the Prime Minister’s visit to Washington and of course it may not.  The Republicans have a presidential debate running opposite to the state dinner and that surely will compete for the news cycle.  Needless to say, Canadians are always fixated when their man goes to Washington.

Regardless of whether you think the pomp and circumstance in Washington is all fluff, our trading relationship is still incredibly important.  Canada is not the United States leading trade partner anymore.  That was surpassed by China just a few years ago.  In fact, in 2015 trade with the US was $575.5 Billion.  Mexico on the other hand stands at $531.1 Billion.  So we have fallen into second place and we’re very close to being in third place to Mexico.

Mexican economic growth has exploded and trade with the United States has increased significantly.  The industrial part of Mexico has grown with all kinds of auto parts, computer equipment and other widgets supplied into the United States and Canada.  Interestingly enough, that is something presidential candidate Donald Trump is talking about and winning votes all across United States.  He wants to bring some of those things back.

So despite those numbers coming out of Mexico, Canada is still an incredibly significant trading partner with United States.  If the oil price goes up it might further that gap with Mexico, but I don’t think we’re ever going to overtake China again.  President Obama and Prime Minister Trudeau will surely be discussing many aspects of Canada US trade during their meeting.

Of course from a farming perspective, we want access to the American market.  The loonie has been the hottest currency in the world since January 20th popping up to $.75 US this past Thursday.  However, that still gives us a 25% advantage going into the American market and it’s something that we want to keep.  The early word out of the summit in Washington is that border pre-clearances at selected airports and land crossings will be announced in the coming weeks.  I do not know if this has anything to do with agricultural products, but I assume at this early stage that it probably will.  Everybody knows on the Canadian side of the border that it has thickened significantly post-9/11.  That was a long 15 years ago now and maybe it’s time to do something different.

Any agreements coming out of the Washington summit will surely be welcomed in Canadian agricultural circles.  However, it is quite obvious at this early stage in 2016 the November elections will probably have a significant impact not only on trade agreements but also the American economy and possibly the value of the American dollar.  It’s nice to have agreements with administrations that are in power, but what is next?  Rightfully, Prime Minister Trudeau said today in Washington that he would be more than happy to work with whomever the American people elected in November.  That was certainly the right answer.

From a Canadian agricultural perspective we’re winning with our American friends now.  Any pre clearance customs agreements coming out of this meeting to aid agricultural trade is a bonus.  With the COOL labeling requirements behind us and with that lower Canadian dollar, the road is clear to trade with our American friends.  You should never lose sight of that fact in Canada that the world’s largest, richest consumer market place is just south of us.  We as Canadians are a lot different than our Australian and New Zealand cousins who produce agricultural commodities and then ship them half was across the world to get them to market.

So as the state dinner winds down in Washington and Mr. Trudeau comes back to Canada let’s hope he made it better for Canadian agriculture.  Let’s hope he has opened those doors wider.  At the end of the day, he is only a politician so most of it is up to us.  What we can do in a economic environment where the US dollar and Canadian dollar move in inverse will always affect that US and Canadian market.  The other part of the equation is what may happen when a new American president is elected this November.  That could be a wildcard, which may affect Canadian and American trade.

At the end of the day, we’re still Canadian and our friends to the south will be American.  Over our history, it hasn’t always been peaceful but at least for the last 200 years we seem to be getting it right.  We will keep the Canadian perspective.  We all know what that is and we will continue to love our American friends.  On this continent, that’s always the best way forward.