Rachel Notley Goes to Trump's Washington

Over the life of this blog, I have offered some unsolicited advice to Canada's federal (here and here) and provincial (here, here and here) leadership about their relationships in the United States. Washington is a tricky minefield for any foreign government to navigate, never mind a sub-federal government like Alberta. Last week, the Premier announced that she would soon be headed to Washington for the first time since Mr. Trump took office.

Not in Alberta Anymore

I have been thinking about what I might tell Ms. Notley if she happened to call seeking my advice (I'm not waiting by the phone). So, I returned to those same blog posts and tried to read them in light of Trump. I'm pleased to say that I think much of what I had to say still holds. Indeed, one of the great things about Canada-U.S. relations is that it's generally pretty boring. The finer points of administrative cooperation over border security or supply-chain management in the private sector might be a bag of snores for many, but the fact that the relationship is boring has always been an asset for Canada. It's a relationship that is so deep that it will always take a lot of work for the occupants at 24 Sussex or 1600 Pennsylvania to unravel it.

Yet, Trump is,.... well,... Trump. President Trump's demonstrable willingness to throw established convention under the bus has left just about everyone scrambling to make sense of the road we are on.

I wish Ms. Notley well in the Imperial Capital, but my guess is she'll leave Trump's Washington with the same lack of clarity on issues of importance to Alberta as when she arrived.

Trump and Trudeau

Much Ado About a Handshake

The skids for Premier Notley's visit were greased by Mr. Trudeau's visit to the White House last week. The best I can say about this meeting is that Trudeau got out of town before getting his nose bloodied in any way. In many ways, Ottawa can rightly consider this an unmitigated "win" for Canada, particularly when compared with the lousy start Trump and Mexico's Pena Nieto have gotten off to. Yet, for all the hype on this side of the border, no one in the U.S., including Trump himself was focused on Canada. There were bigger fish to fry in the White House that day, not the least of which was the firing of Trump's National Security Advisor, Michael Flynn. Indeed, one important indicator of the pressure being brought to bear on the White House that day was that the Trump-Trudeau press conference was limited questions from four carefully chosen reporters.

The most important thing about the Trump-Trudeau meeting may have been the advance work done by several of Trudeau's cabinet ministers in Washington the week prior. Foreign Affairs Minister Christia Freeland and Finance Minister Bill Morneau were both in D.C. making the rounds with counterparts trying to tease out the Trump Administration's intentions on a range of topics, most importantly, trade. As I noted in my post about NAFTA last week, Ottawa's efforts didn't yield much in terms of what Trump has in mind.

The Dirty Dozen Points

But what about my bits of advice? How do they stack up in Trump's Washington?  In May of 2015, I listed a dozen points for Ms. Notley to consider in managing its U.S. relations (full piece linked here). A year later, as Notley was about to venture out on her first trip to D.C., I offered a letter grade of "B+/A-" for her government's efforts.

The dozen points were (fleshed out list linked here):

1) Canada is "special" but not especially important.
2) Most Canadian issues are buried in the U.S. bureaucracy.
3) Recognize you are swimming in deep, deep waters.
4) It's a political system you don't really understand.
5) Don't "piss on my rug."
6) Think twice about linkage politics.
7) Climate change black-eye.
8) Put "stable, secure supply" argument to bed.
9) The United States is also a federal system.
10) Don't just preach to the choir.
11) Alberta is important to its neighbours
12) Keep the Washington Envoy, but....

Most of these have stood the test of time and will withstand the "Test of Trump." In many ways, Mr. Trudeau's "success" with Trump last week was a kind of byproduct of Points 1 thru 6. Trudeau deftly side-stepped weighing into the U.S. immigration debate, didn't engage in destructive linkage politics (Trump, in particular, seems inclined to react badly to such tactics), and extracted the small concession that Canada wasn't as problematic for U.S. trade as Mexico. Being modest about what can be achieved in Washington is almost always a good strategy. Canadians frequently lament the fact that Americans don't pay much attention to them. The long-running softwood lumber dispute is a great example; for Canadians, the dispute has at times been a litmus test of the health of the relationship. Except for specific stakeholders and the U.S. bureaucrats assigned to work softwood lumber, Americans couldn't care less.

The fact is, to get noticed in Washington too often means you're being noticed for negative reasons. The last time Canada was singled out across the United States for bad behavior may have been the War of 1812; and that war was really against Britain. Being under the radar has a lot of perks.

Remember too who the main audience for a trip to Washington really is; the voters at home. What such a trip nets in terms of tangible benefits is tough to discern. However, to make the front page of the Calgary Herald or Edmonton Sun and look as though you are trying to advance the province's business in Washington is important.

Climate Change/Stable Secure Supply

The Truck Seen Around the World, 2005

In Trump's America, points 7 and 8 are a little more complicated. Alberta's oil and gas sector has been under a near-permanent state of siege for about a decade as successive provincial governments tried to raise awareness of the province's vast energy resources, particularly in the northeast. Moreover, the province sold those resources as a long-term, secure, and stable supply of energy to interests in the United States. It worked, but it also brought unwanted attention (attention Alberta was unprepared for) from climate change activists regarding the environmental impact of expanded development of those resources.

The Notley Government has sought to change Alberta's image as a source of "dirty energy" by trying to get more serious about climate change, and in the process purchasing some "social license" to continue developing parts of the province's oil and gas resources. At the heart of that effort is Alberta's carbon levy, introduced just this past January.

The "stable and secure supply" argument has rightly been shelved, and no longer makes sense in the context of the rapid expansion of America's own domestic production. But what about all the social license the province has recently been working to build? In Trump's Washington, I'm not sure what political capital having a climate change strategy buys you? Everything about the new Trump Administration, including the appointment of Scott Pruitt as EPA Administrator, the rapid reversal of Obama administration decisions on the Dakota Access and Keystone XL pipelines, as well as the roll-back of executive orders of coal fired electricity generation, all suggest combating climate change has fallen down the list of Administration priorities.

Trump has signaled that his administration has no intention of implementing U.S. commitments to the 2015 Paris Climate Change agreement. It strikes me we are back where we were under the George W. Bush Administration after it announced it would not implement U.S. commitments under the Kyoto Accords. In the aftermath, the Chretien Government used the Bush Administration's decision as a rationale for doing nothing to implement Canada's own commitments, ostensibly out of concern for putting Canadian firms at a competitive disadvantage.

Will Prime Minister Trudeau's own commitment to a national climate change strategy similarly be scuttled while Trump is in office? What about the political viability of Alberta's brand new climate change initiatives, particularly in an economy that remains dependent on oil and gas production?

As mechanism to begin cleaning up Alberta's image as a climate change laggard at home and internationally, it's a strategy that ought to remain in place. But, my conclusion is that, for now, Alberta's climate change strategy isn't worth crowing about in Washington.

Canada Can Be Important to Trump

Points 9 thru 12 remain as valid as ever in Trump's Washington, and I would re-emphasize the importance of Rachel Notley's appointment of a career civil servant/foreign service officer to be Alberta's own eyes and ears on ground in D.C. (link to my post on this).

I'd also note Ottawa's efforts to repeatedly emphasize the importance of Canada as market for U.S. exports. Global Affairs has regularly produced effective maps of the United States with all kinds of factoids about goods and services Americans export to Canada from different states. Sharing such messages with anyone around D.C. who will listen is never a bad idea, although raising one's profile does invite scrutiny; in advance of his meeting with Christia Freeland, Wisconsin diary farmers were keen to remind House Speaker Paul Ryan (R-WI) that Canadian supply management schemes are an ongoing market access concern.

There is a tendency on the part of Canadian officials at all levels of government to visit Washington, visit the same venues, and give speeches to the same people. Doing so certainly has its place. However, I am impressed when Canadian officials meet with folks other than the usual suspects. I'd like to see more of this. That said, visits inside the Beltway may not be where the scarce resources of Canadian provinces are best spent. Going forward, U.S. states will be among the provinces' strongest allies. Finding common cause with the states in Ottawa and Washington will be worth the effort.

Underestimating Trump

As readers of this blog know, I am deeply worried about Trump. But, one of the strongest pieces of advice I might offer Ms. Notley about Mr. Trump is probably something she already knows; don't underestimate him or his willingness to implement many of his campaign promises.

To hear some tell it, Mr. Trump's first weeks in office have been among the most chaotic, disorganized, and divisive in modern history. Botched travel bans, multiple problems with his cabinet nominees, and the firing of his first national security advisor are just some of the evidence that Trump is off to a terrible start. Indeed, there are many reasons to conclude that President Trump will soon fade into legislative and policy irrelevance within weeks of assuming office. Republicans on Capitol Hill, many of whom were never enamored with Trump as their standard bearer, are cheering the Commander in Chief's missteps. With each blunder, the locus of power will shift toward the legislative end of Pennsylvania Ave.

I Won.... Bigly

We've heard this line of reasoning about Trump before. Candidate Trump, we should recall, was pilloried during his bid for the White House for, among other things, running an unorthodox campaign that could never be successful. He had no money. There was no organization. How could he possibly stand a chance against such a well-financed and disciplined Clinton machine? Good grief, Trump had three different campaign managers through August of last year.

We know how that turned out.

Expect Contradictions to Pile Up

Populist politics are not necessarily known for their coherence, and Trumpism is living up to that label. On the campaign trail, and now as President, Donald Trump has proposed a range of policies that lack the ideological coherence allowing others to anticipate what might be next. That includes members of his own party. For example, the House GOP caucus led by Speaker Ryan would like to tackle America's large budget deficits through tax reform and measures that would at least slow the growth of entitlement programs (Medicare, Medicaid, Social Security) as a share of the U.S. budget. While most budget analysts agree that entitlements represent a long-term fiscal time-bomb, Donald Trump has promised not to touch these programs. Moreover, Donald Trump has promised to build a wall along the Mexican border, embark on a major infrastructure re-building program, expand defense spending, and fix the Veterans Administration; in effect, a lot of guns and butter. It's unclear how both ends of Pennsylvania Ave aim to work this out?

For Alberta (and Canada more broadly), it could all mean a big case of whiplash. Trump aims to "fix" America's poorly negotiated trade agreements. What that means isn't clear. However, his focus on agreements in which the U.S. runs a trade deficit isn't necessarily where fixes ought to be made. Indeed, Trump's plans for a significant fiscal expansion (infrastructure, defense, walls, VA, etc), are likely to result in an appreciation of the U.S. dollar relative to many other currencies, including the Canadian dollar. That's bad news for the politics of U.S. trade deficits since a strong dollar incentivizes Americans to purchase more imports. Hence, there is a proposal for a border adjustment tax to be applied on all imports to the U.S. The idea here is to tax everything that enters the United States will giving some kind of tax relief to those firms who then export. Economists don't like any of this, but the mix of re-negotiating trade agreements and the imposition of border taxes is going to create a lot of dust that will take some time to settle.

In the domain of infrastructure spending (including energy), my bet is that while Trump will get significant funding to throw at roads and bridges, there will be significant limitations on how contracts for all of that work (materials and labor) are written; specifically, so-called Buy American Rules wherein materials and labor purchased with taxpayer funds must be sourced entirely in the United States. On energy infrastructure, in particular, Trump has already signaled that his support of Keystone XL will include a re-examination of the terms of that project to see whether a "better deal" can be had for the United States.

I think all Canadians should expect to be side-swiped in some way flowing from the Trump Administration's tightening of immigration enforcement. Canada may not be the specific target of any Trump initiative, but given the way a number of Trump's early moves have been rolled out (not well), and the fact that DHS will be responsible for implementing them (I don't have great faith in their ability to make lots of distinctions), Canadians would do well to expect the unexpected.

Who Has The President's Ear?

Jockeying for Position

The entire planet is currently trying to sort out who has the most influence on Trump. Premier Notley would be wise to pay attention to how internal White House politics begins to shake out. In one of my less gloomy posts about Trump, I offered a few thoughts about some of his early cabinet selections as we knew them (link here). The most important questions Canadian officials need to sort out swirl around which of Trump's advisors will hold sway over things of importance to Canada. Will it be Rex Tillerson at State? John Kelly at DHS? Wilbur Ross at Commerce? Perhaps Steve Mnuchin at Treasury? What about Steve Bannon or Jared Kushner inside the White House? If the NAFTA is going to be renegotiated, which of these people will have the greatest role in shaping those talks? Will all matters of border enforcement be left to John Kelly at DHS, or will there be a stronger role for the National Security Advisor-- now Lt. Gen H.R. McMaster? Will the President himself get involved in "negotiating great deals?"

So, good luck to Rachel Notley in Trump's Washington. At this stage of things, I expect it to be an inconclusive ride.