What the U.S. election could mean for Canada

David Frum in conversation with Gary Doer

“Many writers, even superlative wordsmiths, must be having difficulty capturing exactly the phenomenon that we’ve been witnessing these past days, weeks and months in the United States presidential campaign.” With this observation, host of CBC News Now Heather Hiscox set the stage for an engrossing and wide-ranging discussion of what the outcome of the U.S. election means for Canada. The conversation, between David Frum and Gary Doer, and moderated by Hiscox, took place on the occasion of the LRC’s 25th anniversary gala in Toronto.

David Frum has been among North America’s leading conservative political thinkers for more than a decade. A speechwriter for President George W. Bush, he is a senior editor at The Atlantic, chair of the British think tank Policy Exchange and the author of eight books.

After a ten-year stint as NDP premier of Manitoba, Gary Doer served as Canada’s ambassador to the United States from 2009 until January 2016. He recently joined the global law firm Dentons as a senior business advisor, building on a distinguished public service career marked by pragmatism and bipartisanship.

Frum and Doer spoke before an audience of more than 200 LRC supporters, including a number of Canada’s policy and business leaders. This is an edited transcript of their conversation.

Heather Hiscox: Mr. Doer, what are your impressions as you’ve watched the presidential campaign over these past weeks and months?

Gary Doer: Well, it’s interesting to look at the Canadian election a year ago when it was really a battle between a message of “steady hands on the wheel” versus “time for a change.” In the United States, normally after a two-term government it is a time for change. I would say the fundamental macro message for Donald Trump has been “throw all the bums out of Washington”—if I can use that language—and with Hillary Clinton “steady hands on the nuclear button.” Now it gets complicated everyday with the coverage of “character”—he says diplomatically—but I think that is basically what’s happening, besides demographics, maps and the electoral college.

HH: David Frum, [you were] one of the first Republicans to disavow Trump and Trumpism—as of July 2015, if I’m not mistaken—so from that perspective, what do you think as you watch this unfold?

David Frum: One of the questions I get asked a lot in my pundit life is “Are you surprised?” And, of course, the answer is always no, because a pundit is never surprised no matter how wrong the pundit was or how violently the pundit has changed their views since 24 hours ago. But yes I am.

To use terminology that would be recognizable to Donald Trump, what you’ve had here is a kind of leveraged buyout of a troubled corporation by an asset stripper who’s admitted a lot of junk bonds and with that has been able to take a minority position and seize control of a majority institution, and has then attempted to plunder it. He is, I think, the only candidate in American history—certainly recent history—to have enriched himself during the course of the campaign because he’s been directing a lot of the campaign contributions into his own pocket.

But I want to take a step back, because Canada is an important vantage point for what’s going on in the United States, which is that a normal centre-right party has become a nationalist-populist party. That is a global phenomenon. The 2017 French election will almost certainly see the National Front facing off against the very unpopular social democratic government of François Hollande. In Germany you have a new nationalist-populist party, the Alternative for Germany, which has been winning second place in a series of state elections as the grand coalition of Christian Democrats and Social Democrats collapses under the unpopularity of Merkel’s refugee decisions. In Britain you saw a nationalist-populist vote in the Brexit vote. It is a very interesting question whether to think of Brexit as a right-wing or left-wing phenomenon: it was Labour votes—Conservative voices, but Labour votes—that made Brexit a reality.

Canada is the only major democratic advanced country not to have a nationalist-populist movement. I urge my friends in the United States and Europe to study the Canadian example. There’s a flu going around and ten houses on the block have got it but one doesn’t. There’s something to study in that one house.

HH: But the other point is leaders and elites [in this country] ignore what’s happening in the world at their peril. Now, Mr. Doer, [you were] telling me as we began the evening that as ambassador, and particularly since 9/11, everything is seen through the prism of security, so it’s security abroad and security at home.

Let’s begin with the area of military spending, particularly NATO [the North Atlantic Treaty Organization]. The commitment is supposed to be two percent of GDP [gross domestic product] on defence spending. And Canada seems very comfortable: 0.98 percent, not even one percent—no indication of wanting to boost that, and happy with the role Canada’s playing in NATO. Do you think there will be increased pressure on Canada for military spending?

GD: Yes, there will be. And that’s been building in Washington for a number of years. You could get some of the investments in keeping the world safer included in that definition of two percent, but there’s no question that being as low as we are, it’s going to be a big Canada-U.S. issue.

HH: Will Canada push back, do you anticipate?

GD: Well, the argument in Canada has always been, and I had to carry this argument, that we’re always there when you need us. But I think that this is not going to carry the day with the next president. If I was the Canadian government, I would look at options about how they’re going to get there—it’s always better to announce it yourself, rather than being forced by another country to do it. I would take some of the investments that Canada makes around the world to make the world safer—to paraphrase Tony Blair, I’m going to deal with the causes of crime. If we can deal with the causes of insecurity in our investments, that may be available. But it’s better for us to anticipate and propose rather than oppose and be forced to do it.

HH: We certainly saw a shift in defence strategy away from, for example, flying combat missions, toward humanitarian aid, toward training in the case of the war in Iraq and Syria. There’s light between the two countries in that area—do you think that’s going to widen further, David?

DF: I think it will. The essential Canadian ­strategic fact is that Canada faces two kinds of security challenges: security challenges from the United States—and there’s nothing that can be done about those—and security challenges from anywhere else, and Canadians have always said, “And that’s for the Americans to worry about.” The defence of Canada is profoundly non-optional, certainly for Britain and of course for the United States. It’s not a surprise that Canada’s at 0.98 percent. It puts in the minimum necessary to get its phone calls returned, and beyond that it rides for free.

But we have entered a much more dangerous period than even the post-9/11 period. I want to point to three areas of security threat that really do touch Canada. The first is, and probably in the long run the most important, the deteriorating situation in the Pacific. The Philippines is dropping out of the western-led alliance, and historic partners of the United States and Canada, such as Korea and Japan, are deciding that they hate each other more than they like us or fear China.

Russia, meanwhile, is, for reasons that don’t make a lot of logical sense, behaving in an increasingly aggressive way. Canadian troops are taking up positions in Latvia early in 2017—not that many, but as Henry V said, “enough to do our country loss.”

The area of security that is hardest for all of us to wrap our minds around is terrorism. Since 2005, we’ve moved into a security situation where, in the words of the old horror movie, the telephone call is coming from inside the house. And in Europe, with Angela Merkel’s decision to admit a million Syrian refugees, that internal threat is going to accelerate. North America has experienced less of this for a lot of reasons, including luck, but this is going to be a growing problem. We have this great pressure of migration from the Middle East. The first generation settles uneasily but more or less quietly in their host countries, and in the second generation you get this wave of security threats.

HH: So we heard from Donald Trump about what he’d do in the face of that pressure of migrants arriving—keep all Muslims out of the country, although he backed away from that somewhat. Hillary Clinton would increase the number of refugees coming in as a result of the war in Syria, but she too is talking about careful screening. And here you have the country to the north—31,000 refugees and counting—and I’m wondering if the ­immigration/refugee policy divide could be widening further.

GD: First of all, on the Syrian refugee decisions, we consulted with the Americans on everyone to make sure there was not somebody identified as a security risk—

HH: I think that’s a very interesting point. It’s to the U.S. standard, is it not?

GD: That’s right. We had an agreement with Homeland Security and the United States, and a protocol of what we were going through. They would alert us too if there were any security problems that they became aware of—somebody we didn’t know as part of that refugee group that was embedded as a potential terrorist in either one of our countries. There was a procedure in place before the election in Canada and after the election took place in Canada, and it remains between our two countries.

We have worked very hard to get a beyond-the-border plan in place that requires legislation on Capitol Hill in the United States. It has support from people like Chuck Schumer; it has support in the House of Representatives. We have an agreement now on air, land, sea and rail, and I would recommend strongly that we continue to articulate the need to get that agreement passed in the House in the United States. And in Canada, of course, it requires legislation in Parliament.

HH: There is still a belief among U.S. lawmakers that Canada’s is a porous border. We saw that after Ahmed Ressam. We even heard that from Hillary Clinton—

GD: We did hear that. The debate in Canada is kind of interesting. I was involved in the debate about handing over the passenger lists for airplanes flying over the United States maybe to Mexico or Cuba. A lot of policy people were arguing why should we do this. And my argument was it’s not a human right to go into another country. Some of this stuff is common sense, but there is resistance in Canada.

But I think [the U.S. president’s] focus will be on Turkey—those direct flights from Turkey to Canada and the United States—the perceived and real problems of the Turkish and Syrian border. In Washington that is the big, big issue—the so-called elephant in the room.

HH: Trade is another huge area in the relationship between Canada and the United States. It’s the largest trading relationship in the world, with more than $2 billion a day in goods and services going across that border. And for the United States it represents 20 percent of its exports, but for Canada it’s a much more important 70 to 80 percent. We have heard tough anti-trade stances, and the protectionist rhetoric has been high. How concerned are you?

GD: One of the areas that I hear about all the time from both Democrats and Republicans is something the Americans are very concerned about, though it isn’t an issue in the media a lot. They perceive that countries manipulate their currencies for trade advantages. You can’t just say we may have negative interest rates as an option in Canada so that we can sell more goods to the United States and not think that the senator from Ohio can read, and listen, and follow what you’re saying.

That was one of the big criticisms of the Trans­pacific Partnership, which has improved wording from the left on labour and the environment, but nothing on foreign investment protection, as they would see it, and nothing on currency manipulation, which was a huge issue to get the authorization from the president during the votes on the Hill.

I think we should always say that we’re the United States’ biggest customer. We shouldn’t use “eight million jobs, $2 billion a day” and all these numbers that mean nothing. Our line should consistently be “Canada buys more goods and services from the United States than the European Union [countries] put together.”

Third, the biggest problem we had on trade was with the House controlled by Nancy Pelosi, who brought in the U.S. Recovery Act that had “Buy America” right throughout it. We actually had to get waivers in nine of the key areas in Canada-U.S. trade so that we wouldn’t be subject to Buy America. It took us a year to do it. In my view, Paul Ryan on trade is easier for Canada to deal with than Nancy Pelosi—that may be heresy for a former New Democrat to say. When I was premier, I thought the Democrats were better on multilateralism, on international affairs, and the Republicans were better for Manitoba and Canada on trade and energy. And nothing that I did in Washington in six years has changed my mind on that.

DF: Here’s where you’re right on the trade front: something is happening. When we talk about the American trade deficit with China, we tell a morality tale: that Americans consume too much and sell too little, and therefore the Chinese accumulate American assets, and this accumulation of American assets (stocks and bonds) in Chinese hands is the penalty Americans pay for not working hard enough and consuming too much. And I think what we’ve figured out over the past decade is that that’s an exact inverse of what is happening. What is really happening is China is making a deliberate policy of accumulating American assets and not spending them in order to hold its currency down, in order to create employment in China, in order to avert a revolution.

HH: That’s certainly been much of the fodder of what we’ve heard from the Republicans—

DF: —and Democrats too, by the way—

GD: Democrats are the same. Actually, in the Senate and the House, you hear it more from the Democrats than the Republicans.

HH: So in concrete terms, then, [is] the TPP done?

GD: Not necessarily. Again, I know that Hillary Clinton said it would be the gold standard, and then when Bernie Sanders came out, it wasn’t the gold standard anymore. I do think President Obama will try to get a vote, because he’s already got the trade promotion authority. He will try to get a vote in the lame duck session [between the election and the inauguration of the new president].

HH: If that doesn’t happen, though, that’s 40 percent of the world’s economies in the world’s largest trade pact—what would Canada lose out on?

DF: Well, on trade and on defence, Canada has a very particular competing set of incentives. Canada always has to think about two things: one is what system does Canada want for the world, multilaterally, but if you can’t get that, how does Canada protect its own interests.

The U.S.-Canada trade agreement in 1988 originated in this way. Canadians had originally always opposed the idea of continental free trade because they always wanted to be in a multilateral framework. The Mulroney government had said that’s becoming obsolete—you have to protect yourself in the face of an environment that is generally becoming more adverse.

I think your story about Buy America—I mean obviously it would have been better if the Recovery Act had had no such provisions at all. But the Canadian view is, “well, gee, we’re not going to invest Ambassador Doer’s time exempting Germany—he’s paid by the Canadian taxpayer, he’s there to make sure that Canada is exempted, and congratulations, good job.” But it is going to be a different world.

HH: They’ve also begun to raise—and again we heard this back in 2008 and it never happened, so perhaps again it’s just rhetoric for the campaign—NAFTA [the North American Free Trade Agreement].

GD: Yeah, I don’t think there’s been a candidate that hasn’t said they’re going to reassess NAFTA.

HH: Well, are they not now so baked in, integrated—would it even be possible?

GD: We’ve had the same situation in Canada where candidates say they’re going to renegotiate NAFTA, and then they write a letter on environment and labour policy, and then exchange letters and say that’s a renegotiation—not to be cynical about it! [Laughter]

There are two agreements: the Canada-U.S. agreement and the NAFTA agreement. And, for example, Mexico didn’t want energy in the NAFTA agreement—it’s in the Canada-U.S. agreement. Of course, you look at Pennsylvania, which is selling gas to Canada, and that’s protected in the Canada-U.S. trade agreement. I did not hear Donald Trump talk about the Canada-U.S. agreement, but there’s also no question that the NAFTA trade agreement in northern, Democratic states, is not popular.

HH: We’ll get to clean energy in a second, and that leads into climate change, but energy itself, the pipeline issues … will Keystone ever take place?

DF: Keystone is a very interesting prism through which to predict what a Clinton presidency is going to be like. She is very likely going to win a very big victory, and she’s going to look for 16 or 17 hours like a very powerful president, but she’s not going to be.

Unlike Barack Obama, who was the clear leader of the largest faction of his party, who never faced any significant internal challenge and, of course, who faced no primary challenge when he ran for re-election in 2012—he commands a Reagan-like authority within the Democratic party—Hillary Clinton is not that person. Whereas Obama fought and won a hard-fought primary against the most famous brand name among living democrats, Hillary Clinton fought and barely won a primary contest against Larry David without the jokes. It’s absurd that you would almost lose to Bernie Sanders.

So she will be governing, always, with one eye over her left shoulder, and she’ll be worried about a primary challenge in 2020, and with good reason. And on foreign policy, she is far to the right of where her party is. So on domestic issues, and on things like the pipeline, she will try to appease an unappeasable democratic left, and whatever she does it will never be good enough. And one of the places she will pay her party’s left is on energy issues, pipeline issues, fossil fuels. And that’s especially easy to do because we are in a global energy glut, especially in fossil fuels.

GD: On energy, it’s an interesting debate. When George W. Bush started, he had 1.2 million barrels of oil a day from Canada, and 1.9 million when he left office—and Barack Obama is at 3.4 million. So he’s actually doubled the amount of oil from Canada in less time. But he’s not perceived to have done that because the Keystone pipeline became such a big symbolic issue and was opposed by a lot of his people. And when Nebraska said no to it after Hillary Clinton said yes to it, that’s when it became just an absolute mess, and it still is. I don’t see Hillary Clinton having the ability to change course, going from yes to no to yes. But I think there’s a populism to getting your oil from Canada, a reliable neighbour, rather than getting from a country in the Middle East, if you want to get out and sell it that way.

HH: On the clean energy point, do you see that sort of continental negotiation, with Canada as part of it, being foreseeable, David?

DF: Look, the climate issue is really about China and India, right? What are they going to do? All of the developed countries have been on the path for a long time to reducing energy intensity. Canada has a lot of hydroelectric resources that have never been worth anybody’s while to develop, but there are a lot of them, as you know well, and Manitoba’s the sort of Saudi Arabia of this potentiality. But it just hasn’t been cost effective—small market changes and technological improvements can make it happen. Meanwhile, the idea that you’re going to sit down with a Mexican government that is an especially dysfunctional one, wracked by terrible scandals, run by an unusually—even for Mexico—corrupt president … Has anyone ever seen pictures of his plane? Just go look at the pictures of the new 787 Dreamliner delivered to the president of Mexico, and then look at the plane of Angela Merkel…

GD: I have seen her plane!

DF: Oh, you’ve seen her plane. Right? It’s, it’s…

HH: Modest?

GD: It’s your basic…

DF: Yeah, it’s your basic head-of-state, we-need-a-lot-of-security-equipment-to-get-you-from-place-to-place plane and you have to share it with the president of the state. The president of Mexico has a plane upholstered in white leather, with a working fireplace. It’s as big as Air Force One. I mean, it’s wacky! And then you look at his house. Okay, and GDP per worker in Mexico is still lower today than it was in 1980. It is a highly dysfunctional country. And the idea that anybody there is going to be interested in these things, and negotiating them in a functional way—I just don’t think it’s real.

GD: [Laughter] I do believe there’s a lot of room for agreements on clean energy, energy efficiency, between Canada and the United States. It takes five years to get a transmission line approved from one state to another state in the U.S., and I used to joke (and I got in trouble in the media) that it was one lawyer per megawatt to get a transmission line approved from Canada to the United States. And that actually hasn’t changed. We need a big vision, or a big plan to approve all these projects, because right now it’s a battle of one-trick ponies.

HH: You talked at the beginning about Canada so far [avoiding] that populist tide that has been so detrimental in so much of the world. The extent to which politics has been debased in this U.S. election campaign, the level of political discourse—do you ever see that happening in a Canadian ­campaign?

DF: I don’t think Canada is inherently immune to what has happened in other countries. Canada has had populist movements in the past. It just doesn’t have them right now. I think the reason Canada is different [today] from the United States and France and Germany and Great Britain and all the countries of central Europe comes down to three things. First, Canada has had the strongest employment recovery from the great recession of any developed country. Second, Canada has had an unusually strong growth in middle class incomes. That is a tremendous inoculator. What drives populism is a sense of unfairness, the world not being ordered. But the last thing I would stress is that the Canadian experience with ­immigration has been different from others. Canada has an immigration policy that is not overly reliant on any one source. And immigrants to Canada are better educated than native-born Canadians, so they tend to enter at the top of the labour market and they therefore exert a pro-equality influence. They are driving wages at the top down, and ­purchasing power at the bottom up. In almost every other country, the opposite is the case.

But none of these things are guaranteed and a lot of them owe themselves to luck as much to sound policy.

GD: Yeah, I think on immigration it’s good policy. One of the things that I really found in the United States from my time as ambassador was a fourth factor: we did not go through the housing crisis like the United States did. A lot of Americans had a 40 percent decrease in the value of their home at the same time they had rising unemployment. And then all their taxes, they perceived, were going to Wall Street to bail them out. So when you have your own home going down in value, and your own taxes perceived to be going to Wall Street—that’s why you get a lot more anger in the United States, some of it very legitimate.