RealAg: Michael Harvey of CAFTA about U.S.-Canada trade tensions

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Shaun Haney interviewed Michael Harvey with the Canadian Agri-Food Trade Alliance and Harvey talked about a recent trip to Washington, DC, on the trade issues between the U.S. and Canada. The trip happened the week of April 8.

Listen to Michael Harvey on RealAg:

https://iono.fm/e/1548037

SHAUN HANEY: Who was all on the trip the Washington, D.C.?

MICHAEL HARVEY: Basically, all of our membership. I mean, we had the Cattle Association, the Port Council, the canola growers, the canola Council, Crop Life, Grain Growers of Canada, Food Health and Consumer Products of Canada, Sugar Institute, Pulse Canada, yeah, basically all of our members came down with us.

What was the purpose of the trip?

HARVEY: We talked about the importance of trade, and also heard things ourselves on the ground. It’s a couple of the members of the group who go to DC frequently. I don’t so often myself. Others don’t. We see a lot and hear a lot in the media, but to go down and hear people talking in closed rooms is a better way to get a feel for the situation on the ground.

What’s the feel for the situation on the ground? What did you discover doing your ground truthing?

HARVEY: I spoke to different people. I’m not going to name anybody by name. As a better way to tell you how the meetings went, I’d say most of our meetings were on Capitol Hill. So they were with congressmen or women or staffers, a pretty, I mean, a mix of Republicans and Democrats. Democrats may be a little bit less useful and they’re very critical of what the President is doing, and that’s obvious and has zero influence.

Sorry, yeah, so you get less sort of insight there, though, one should still do it. Republicans are more interesting, I’d say in general, Republicans, both congressman and staffers indicated to us that they were strongly supportive of the President, but on a specific question of terrorists, they kept using the phrase that they were giving the President some runway, which I took as a not very committal type of support of the President.

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I think it’s a reasonable metaphor. How long is the runway? Is this a runway for a 172 Cessna, or is this a runway for a Dreamliner?

HARVEY: These people are politicians and people who answer to politicians. So I think the runway for them is largely political and that runway can change a lot based on what they’re hearing from their constituents, constituents, how nervous they’re getting about things like midterms, things like elections in four years.

I mean, these people live in permanent campaigns to a certain extent, and they’re constantly recalculating these things, but I think they’re also calculating the i. Uh, the influence the President has over their careers. Of course, it’s a pretty disciplined group, and people who disagree with the President publicly have been known to pay a price for that, and that’s part of the calculation, right?

How is Canada viewed versus the rest of the global population? On April 2, when we saw the president roll out his poster boards, the reciprocal tariffs he has since given a 90-day reprieve on Canada, Mexico were sort of pushed to the side. It was, we’re going to deal with these other countries maybe first or differently. What’s your read on those events?

HARVEY: The first read and this can be a little bit humbling, although I knew this was going to happen. You go into meetings in D.C., and it quickly becomes clear to you that these are not people who are spending a lot of time thinking about Canada and thinking about Canadian agri-food trade, right?

You’re in an extremely competitive environment for any slice of these people’s attention span a lot. A lot of the people we’re speaking to, if you look at the staffers, were like the trade policy advisors to congresspeople. So people think about trade all the time, and they’re not thinking about Canada all day long either, right?

For in Canada, we are looking every day at what the president’s doing to us and what he’s doing to the rest of the world is sort of part of the fact matrix. But if you’re one of these staffers in Washington, it’s the whole world at the same time. So when they come down to some Canadians sit down to talk to them about Canadian agri-food trade, well, they focus on it for half an hour, but, you know, they haven’t been for half an hour, otherwise.

Is that an advantage or disadvantage?

HARVEY: That’s a fact where you can discuss whether or not it’s an advantage or a disadvantage. It’s just the situation, right? You did get a I did get a lot of goodwill. I mean, people are very polite. People are very pleasant. Happy to have you here. Some people made specific comments about how they thought it was very fortunate. Some of the rhetoric that’s come out of the White House about Canada, I even got that from a couple of Republicans. Got that from almost every Democrat, right? So people overwhelmingly good will to Canada. Some people are aware of some of the irritants with Canada and brought them up, maybe as a way of supporting the president. But nobody had deep knowledge of anything related to Canada.

Knowing all of that, you kind of set the stage successful trip, or what? What’s the outcome of it? Did, mission accomplished, or?

HARVEY: Expectation setting. We didn’t think that a group of Canadian agri-food Alliance members was going to flip President Trump’s position on tariffs on the world trading system, right? Yeah. But the goal of the trip, being to increase awareness, I think, was positive. The goal of the trip is to increase our own knowledge of the situation on the ground, so we can bring that back to Canada.

I think positively. Got a lot of media pickup in the ag sector, in particular, people like you reaching out to me for interviews, for quotes. So in terms of raising the awareness and importance of Canadian agri-food trade in the US, I think was very positive, but let’s keep that expectation level reasonable. The United States is going to make its decisions based on its own domestic calculations, and those calculations are playing out.

If American farmers were listening right now to the show, what would you tell them about the benefits of trade with Canada?

HARVEY: I’d say to American farmers, the discussion around tariffs is bad for you. Undermining Canada-U.S. trade is bad for you. Undermining USMCA is bad for you. Canadian agri-food products reduce your input costs. They make you more competitive globally. They allow you to be part of a more efficient trading system and a more efficient supply chain that allows you to get a higher value out of your products that you sell abroad. So when anything is being done by the US administration, the US government to weakening all that’s bad for you as U.S. farmers.

But bad from the perspective of financially, or bad in what context?

HARVEY: Financially, it costs you money if you’re a US farmer, because you’re going to pay more for inputs. It costs you opportunities to trade abroad because you’re pushing other countries to put up trade a bear trade barriers against you as a reaction to the tariffs that you’re putting on them. It makes you less efficient by not being part of a broader supply chain that gives you better inputs at a better cost. So it’s bad for you financially. It makes you weaker. It makes you poor.

Are there, from your perspective, are there items or components of Kuzma, USMCA, to lack a better term, clean up or fix and improve in a renegotiation?

HARVEY: Say there’s always room for improvement. But overwhelmingly, the room for improvement comes in working together better, not in working less together. So if you look at the Regulatory Cooperation Council, which is about the two the three countries, aligning the regulatory systems to reduce costs for businesses, that Council could meet more often with a more solid agenda to get more things done.

We want to converge around regulation. That would be a positive. So there’s always room for improvement. But overwhelmingly, I’d say, not harm. Right now we’ve got a very good agreement, that represents a lot of years of confidence between the three countries and eating away in that confident at that confidence is not in anybody’s interest.

The closer you get to the Canadian-U.S. border, the more awareness there is, versus, say, if you’re, I’m picking on states here. I’m not, not anyone in particular, but Louisiana or Florida is going to be different from, say, North Dakota or Montana. Is that fair?

HARVEY: That’s generally true. That’s generally true. But then other people’ve developed a specific interest in the bilateral relationship for their own reasons. I mean, Canada is a big trading partner for all the states, not just the ones on the border, but obviously, people on the border, they’ll tell you often, Oh, you’re Canadian, and they’ll start with a personal story. There were a couple of, a couple of meetings we had where they started talking about Winnipeg Jets games, because they were from North Dakota, that sort of thing. So obviously, that kind of personal connection puts things in the right place. What can I say, just in the right sort of emotional state, right?

Is this something that CAFTA in the membership intend to do on a more regular basis, or is this kind of a one-and-done sort of kind of trip?

HARVEY: I think all of us are going to go to Washington more often than we have. We all have bandwidth issues, where organizations that generally focus on our work in Canada, but it’s quite clear right now that the risks involved in our relationship with the United States are such that we’re all pivoting, to use one of the words that everyone knows nowadays. We’re pivoting to do more work on Washington right now, as this political risk plays out.

Have we seen a restriction of trade flows at all, even with that situation being true?

HARVEY: Early days. I mean, trade flows aren’t normally measured on a daily sort of basis. There are all kinds of analysts out there who are studying how ships are getting loaded up and where they’re offloading and this and that, but I haven’t seen much in the way of solid data. If you look at things like Canadians’ trips to the United States. Seeing big movement in the numbers really quickly, things like goods, it’ll play out over a longer period of time.

What I would say is, if you’re the type of person who manages political risks, that’s gone way up, right? And I think when you look at how the stock market has gyrated with a general down, downward slope, that’s an expression of overall confidence in the economy. And it’s quite obvious that the investors in the stock market think that the future returns of big American companies are lower now than they were a couple of months ago, right? So I think that sort of thing doesn’t play out over 24 hours.

We’ll see you over the coming months, but things will play out. What also remember, you know what? He’s only been empowered for a little while, and the terrors are on pause. It’s a little bit hard to follow. So like, the facts haven’t played out that much yet. There’s a lot more noise than fact in most sectors, especially in agri-food, where USMCA-compliant goods have not been affected by the tariffs. So this is going to be a medium and long-term play on a large scale to a large extent.

You got some insight because you heard Bob Lighthizer, former U.S. Trade Representative, speak in Toronto as well.

HARVEY: His book, which is very cheap on Amazon for somebody who wants to read it, gives you a pretty good insight into sort of the intellectual underpinnings of a strategy to relocate manufacturing to the United States from the perspective of somebody who thinks that the global trading system has been very harmful to us manufacturing, I don’t agree with much of the man’s thesis, but you have to give him credit for pushing His thesis when probably 98 99% of economists would disagree with what he’s pushing.

I’d also think you can overestimate sometimes how important the intellectual underpinnings of the strategy are in the President’s decision making on a daily basis, which doesn’t always look super strategic from the outside, generally doesn’t look super strategic, and doesn’t look like he really sticks to his decisions a lot of the time. So it’s hard to say, but Bob Lighthizer does make a theory for the case, which doesn’t, though I don’t agree with it. I think it’s insightful to listen to it.