U.S. treasury secretary welcomes Canada's Morneau as first foreign visitor
Import, export policies, changes to tax regime likely to push NAFTA onto back burner, for now
The flurry of Canadian cabinet members visiting Washington continued apace Wednesday as Finance Minister Bill Morneau dropped in on a U.S. capital awash in policy debates with big implications for America's northern neighbour.
Morneau called it a getting-to-know-you session so the Canadian government can have the lines of communication ready as the Trump administration settles on wide-reaching policies involving tax reform and trade.
He arrived at the U.S. Treasury right beside the White House and was greeted by his counterpart, Steve Mnuchin, who welcomed Morneau as his first visiting finance minister since taking office.
"I'm honoured that I'm doing this with you," the new U.S. treasury secretary said. "There's a long history between our countries. I look forward to working very closely with you."
The two countries have much to discuss.
- Liberals wrestled with Trump tax plan shortly after election
- Expect to pay more to fund infrastructure, warns David Dodge
- Canada isn't about to 'throw Mexico under the bus,'
The U.S. is beginning discussions on a once-in-a-generation tax reform that could affect Canada in significant ways — with lower corporate rates in the U.S. and a border tax both under consideration.
But the reforms are being hotly debated.
Questions about tax and health changes seized the attention of American lawmakers before they could even begin the discussion about another idea important to Canada: the future of the North American Free Trade Agreement.
The files may all be connected. Some analysts believe NAFTA talks can't get serious until there's clarity on the import-tax idea, and the White House says it doesn't even want to settle on a tax plan before it knows what health policy might replace Obamacare.
With all that uncertainty, Morneau described his meeting more as personal bridge-building than policy-making. He said he didn't delve into Canadian objections to the border-tax idea, which has strong pockets of opposition within Congress and the administration itself.
"We spoke broadly about our objectives," Morneau said.
"When he spoke about tax reform, he did not go into specifics.... At this stage, without details, it's not a time for us to express support, or opposition, or even insights into the impact on the Canadian economy.
"Our goal right now is to develop a strong relationship, so that as Secretary Mnuchin and his colleagues are considering actions, we'll have the ability to talk about those actions."
Skills based immigration
As part of that relationship-building, Morneau said he offered to share details of Canada's experience with one of President Donald Trump's stated priorities: using private funding to build public infrastructure. He said his U.S. counterpart expressed an interest in learning more.
Trump mentioned several Canadian policies during his speech to Congress this week. One involved copying aspects of Canada's skills-based immigration system. He also spoke about private financing for his massive, $1 trillion infrastructure idea.
It's part of a policy agenda that's big on promises, small on details.
On Capitol Hill, there's confusion and some frustration that the White House keeps declaring ambitious goals, insists that they be met in a popular way, and doesn't articulate specifics regarding the hard decisions.\
Delay to NAFTA talks
That's caused some uncertainty about whether NAFTA negotiations can even get started while the country is still sorting out its import-export policies in the nascent debate over tax reform.
Mark Warner, a Canada-U.S. trade lawyer based in Toronto, said he can't see how NAFTA talks get started now: "In my opinion they can't get started on NAFTA until they have sorted out the border adjustment tax."
Some American lawmakers also expect a slow start on NAFTA, for other reasons.
Chris Collins, a New York Republican who was the congressional liaison for the Trump transition team, said he believes the United States trade representative needs to be confirmed before Trump sends his 90-day notice to Congress that trade talks are starting.
"I think you need your trade rep (first)," he said.
But that same trade representative is embroiled in complications regarding his nomination. When asked whether that means the NAFTA process might not begin for months, Collins replied: "Yup."
Meanwhile, the Canadians keep coming.
As Morneau completed his second Washington visit since mid-February, one of his cabinet colleagues was arriving. Marc Garneau arrived in Washington for meetings related to his transportation portfolio, and as head of Ottawa's Canada-U.S. cabinet committee.