00:01:06 Stanley U. Nweke-Eze:  
Thanks, Jim. Good afternoon, everyone. I'm Stanley Nweke-Eze, an assistant professor at Queen's Law, where I work on international economic law, including the intersection with development and dispute settlement. It's a pleasure to co-host this session with Jim, and to welcome you to our panel.

A word on how the next hour will go. We'll start with one targeted question to each panellist. They will have about 5 minutes to answer, then we'll open it up to audience, so please put your questions in the Q&A box as they occur to you, and Jim and I will do the best we can to bring it to the panel. We'll close with a short round of questions, and that will deal with what would outlast the present turmoil that we are facing. And the plan is for us to finish by 3:15 pm.

So now, let me introduce our panel very briefly. I will start with the Honourable Bob Rae. It's a pleasure to welcome Bob Rae, Professor Matthews Fellow in Global Public Policy at Queen’s School of Public Policy. Bob is a former ambassador and permanent representative of Canada to the United Nations, former Premier of Ontario, and former interim leader of the Liberal Party of Canada, whose distinguished career has spanned public service, law, diplomacy, education, and human rights. 

We also have Nicolas Lamp, who is an associate professor of Queen’s Law and the School of Public Policy at Queen’s. He's also the Director of Queen’s Institute on Trade Policy and the Academic Co-Director of Queen’s International Law Program. His research focuses on international trade law, economic globalization, and the competing perspectives on who wins and who loses from the global trading system. 
 
We have Valerie Hughes, who has held several senior legal and policy roles with the Government of Canada, represented Canada before international dispute settlement tribunals, served in leadership positions at the World Trade Organization, and now regularly serves as a dispute settlement panellist in international trade disputes.  
 
We have Jessica Horwitz, who is a leading Canadian international trade lawyer, and who advises clients on complex cross-border matters involving international trade, customs, tariffs, economic sanctions, and import and export regulation. She regularly advises clients before Canadian courts and regulatory bodies. 

 
Last but not least, we have Preston Lim, who is an assistant professor at Queen's Law, and his research spans Canadian constitutional law and legal history, public international law, and international economic law.

 
Jim, over to you for the first round.

00:04:04 Jim Farney:  
Great, thanks, and Jessica won the short straw as it speak, has the first question. You're clearly in the trenches of the trade war, advising businesses and international clients on the day-to-day. How is it affecting them, kind of very concretely, and what type of assistance are they coming to you looking for? 

00:04:26 Jessica Horwitz:  
Thanks so much, Jim, and thanks to Queen's for the invitation to come here today. I think any of us that work in the international trade space right now have probably drawn the short straw with everything that's been going on in the last year and a half or so but I would say, to summarize the impact that this, the current economic situation is having on businesses, it's manifesting in a number of different ways, and I don't think any of this is going to be a surprise to anybody on the line today, but one of the biggest challenges is that uncertainty is often a bigger problem than the tariffs themselves.  
 
So, businesses are generally resilient and resourceful, right? Businesses can adapt to almost any tariff or almost any regulatory change if it's predictable and given a long enough lead time but the problem that we've been seeing in the last 18 months or so is that the changes have been coming so fast and furious that you can hardly catch up with what happened yesterday before there's some new announcement that's happening today, and I think a lot of people that work in trade compliance and that have businesses that rely a lot on international trade, their heads are kind of spinning, right? Just to try and prioritize and triage and keep track of everything. So that has been, a very serious challenge. Obviously, long-standing supply chains are being fundamentally disrupted. Canada-U.S. supply chains that have been entrenched for 40 years or more in the case of some industries, like the auto sector, are just being abruptly cut off with, again, no warning, no lead time, and so companies are being forced to reassess the structure of supply chains that have really been built around efficiency and evolved to be just-in-time delivery and single-source supplier, often to maximize efficiency, and now businesses are being forced to reimagine those supply chains around resilience and taking into account tariff exposure and cost reduction, because a lot of the options for international trading partners that were once largely duty-free, biggest of which, obviously, is the United States, are now subject to tariffs, so it's not a zero-cost proposition. You have to make some cost-benefit analyses. 

On that point, costs, obviously, are skyrocketing for a lot of businesses that are sourcing materials internationally. Also, the cost of Canadian manufacturers' products is going up, and so they're having a harder time passing those costs along to customers in some cases, and in that sense, unfortunately, small and medium businesses sometimes have a harder time adapting to these types of disruptions, because small and medium businesses have less of a leverage and an ability to pass on costs to their counterparties, their suppliers or their customers, whereas, you know, larger companies might have a better ability to leverage and put those cost increases on others.

I think a major change that we've seen is that trade compliance and supply chains generally are now a boardroom issue. Whereas for a very long time, trade logistics and customs compliance were something that was handled by the logistics personnel, or even the warehouse at the company, and probably nobody in the C-suite knew what the term tariff classification meant, or knew what customs value was, or could name most free trade agreements, with the exception of possibly the NAFTA. That is not the case anymore. It is very much a C-suite issue. Trade resilience, trade compliance, and companies' management at the very highest levels are paying very close attention to these changes.

And then, I will also mention that the change, the impacts, because the question your question was about what are the impacts. The impacts are not being felt evenly throughout the Canadian economy. There are some sectors that are significantly more impacted than others, and part of that's a function of the integrated international supply chains of those particular sectors. I mentioned auto. Steel is also very important. Canada is a relatively small market. We're a relatively small economy, and so if you are a manufacturing business and you want to invest in capital and have the economies of scale necessary to be able to be competitive in manufacturing a particular product you have to have access to other markets, because in a lot of cases, the Canadian domestic market is simply not sufficient to be able to sustain the production capacity of an operation.

So, businesses that are heavily dependent on trade in that way are being more heavily impacted, unfortunately, or if it's a sector that just happens to be political for whatever reason, a great example of that is alcohol, and how Canadian winemakers and Canadian distillers of whiskey are being disproportionately impacted by the U.S. tariff measures when really, they represent a very small proportion of Canada's exports. It's a luxury product and you know, you wouldn't think that it's necessarily something fundamental to the economy, and yet it's been in the headlines quite a bit.  
 
So how are we helping companies understand their exposure? It's interesting. I was looking through my notes to prepare for this, and I came across a little brochure that we put together in, I think it was January 2025, right before this most recent trade war came into effect and, we called it a Tariff Preparedness Diagnostic Toolkit and it was asking questions that, really are still very relevant, even though we've been in the trenches of this trade disruption for some time. But it's questions like, first of all understanding what you know and what you don't know. So gathering the information, gathering the facts, mapping your supply chain, understanding where the company's exposure is. A lot of companies were not even aware at management levels what country they were sourcing their input materials from, because no one was paying attention to it. Now everyone's paying attention to it, so making sure you understand your exposure is step one. And then once you understand your exposure, that gives you the resources that you need to come up with mitigation methods, whether that's diversifying your customer base or your supply base, whether that's pursuing government relations or policy-related solutions, like remission applications in special circumstances to relieve the impact of duties. There are certainly strategies that are available to companies. Sometimes companies simply were misclassifying goods in the first place, and they didn't even realize it because they'd never looked at it.

Then when they take a closer look, because suddenly that tariff code is subject to a very high duty, they realize, oh, actually, I've been misclassifying this for years, completely unrelated to the trade war. But fortunately, this actually gives us a bit of an out right now. So, knowledge is power, and step one always is having the facts straight and having full visibility on where you stand so that you can decide how to move forward.

00:12:18 Jim Farney:  
Wonderful. Thank you. Thank you, Jessica. There's definitely threads there that we could keep pulling on all panel, but I'll do a bit of a pivot on the uncertainty question and ask Bob about politics, and to try and put some bounds around what could also be a very, very long question, thinking just about the last 6 weeks, where we thought we had a tariff deal, and then we didn't. We're now facing tomorrow, outright import bans on some Canadian goods, like alcohol. 
 

There's been a lot of economic talks, but how do we think through the political dimensions here in Canada, there in the U.S, both international and domestic, of this particular moment? We're in an early fall before the midterms in the U.S, and lots of domestic stuff going on in Canada as well. So, how do we think through this particular political moment? Political uncertainty is the question I would throw to Mr. Rae. 
 
Sorry, Bob, you're breaking up quite badly. Could you maybe try moving your microphone a bit?

 
I miss the old CBC waiting for connection to come back thing that might need, but this won't take but a moment. So while, while Mr. Rae is coming back in, I had one last question kind of lined up for Nicolas Lamp, which is kind of in the fine details of CUSMA, right? 

We've got this situation where the agreement's still in force until 2036, really. Canada says that the tariffs, especially the auto ones, are outside the terms of the agreement. The U.S. is saying they're justifiable responses to Canadian actions. How do we understand the agreement continuing to be binding while we've got such fundamental disagreement? Does this represent kind of an end of free trade between the two nations, given that level of disagreement over the state of CUSMA?

00:14:18 Nicolas Lamp:  
I think we have to go back to the bottom of what's currently happening. If I've counted correctly what the retaliation of the U.S. that we're going to see tomorrow — the bans on Canadian alcohol and motorcycles that have been mentioned — that's the U.S. retaliation for the Canadian retaliation against the U.S. retaliation for the Canadian retaliation against the original tariffs and so what are the original tariffs that are at the bottom of this. These are tariffs that the U.S. is levying under Section 301 of the Trade Expansion Act of 1962 against core Canadian exports, steel, aluminum, cars, and lumber.

 
And so these are tariffs that the U.S. wants to maintain. These are not strategic tariffs that it has imposed in order to get Canada to change something, like the fentanyl tariffs, or these are tariffs that the U.S. wants to maintain, because Donald Trump wants to make cars in America, and he doesn't want any cars from Canada. He also doesn't want anything else from Canada, as he's repeatedly said and so, that is the core of the issue, that Canada wants to be able to maintain a free trade system where we are able to use the U.S. market as an outlet for our products. We're also, of course, taking in a lot of U.S. products. The car market, for example, is roughly balanced. We're buying about as many cars from the U.S. as we're exporting to them, but Donald Trump doesn't want it anymore, right? And so, that core issue is very hard to crack because we have this conflict of interest the U.S. wants to end the free trade order embodied in CUSMA that existed before. Canada wants to return to it.

 
And so that then raises the question, well, how did we end up here? CUSMA is an agreement that was negotiated by the first Trump administration and many people thought, when it was clear that Trump was coming back to power, and including myself, thought, well, I think we are safe, because the agreement we have with the U.S. was negotiated by the Trump administration, and so he must be kind of proud of that agreement and wouldn't try to touch it.

 
Boy, were we wrong. We were really, really wrong but the truth is that even if you go back to the CUSMA negotiations, it was already clear at the time that Trump really didn't want cars made in North America, he wanted cars made in the United States. The U.S. administration, under the first Trump administration, entered the negotiations with the demand that cars that entered the U.S. had at least 50% U.S. content, right? They gave up that demand later in the negotiation, so we ended up with a kind of Fortress North America approach to car production, where the CUSMA raised barriers to the outside world but allowed free trade in North America. But what we're now seeing in hindsight is that this impulse of bringing car manufacturing back to the U.S. — and the same applies to steel and other key products — was very much there, even during the first Trump administration and what we're now seeing is a more, more extreme version of that attempt. 

So how can Canada respond to that? I think Canada has two bad options. One is to kind of keep the trade relationship unsettled, which is what we're doing through the retaliation. In the hope that somehow the car industry will survive until January 2029, and that we might hopefully have a Democratic president at that time who might be willing to embrace, again, a Fortress North America approach because the other option would be to settle for an approach where there are tariffs in place on Canadian cars, and where the danger is that these tariffs are at a level that will not allow the industry to survive, right? And that was exactly the crux of the negotiations in August.

It was clear Canada had accepted there were going to be some tariffs, but for the survival of the Canadian car industry, the level of the tariffs mattered a lot and when it became clear at the last minute that, for example, trucks were not going to be included in the reduced tariffs, at that point, it was clear that under that deal, the Canadian car industry was not going to survive. And so, that is the terrible choice that Canada faces: accept continued disruption in the hope that we are not settling for anything that would mean the death of the Canadian car industry because once we've settled for something, and that brings me back to CUZMA, right, once we agree to a certain level of tariffs, as the new status quo, it will be much harder for future U.S. administrations to actually depart from that again.

 
So, that's the situation we always have to keep in mind. Underneath all this retaliation is this core disagreement about whether cars will be made in North America or just in the United States.

00:19:18 Jim Farney:  
Great, thank you. Bob, you're back with us so we'll return to the kind of political lens and the tech does look like it's working more happily now.  
 
00:19:47 Bob Rae:  
I benefited enormously from Nicolas's talk, I think he's spot on. I think the underlying political challenge for Canada is that the president doesn’t think we should have a real economy and it's not just cars, that's one thing, but it's the rest of our manufacturing sector.

Jessica talked about steel. Well, I used to be the assistant to the legal counsel of the United Steelworkers, and it's fascinating when you go to the to the conferences with American steelworkers how they have difficulty accepting the full role that Canada should be allowed to play in North America. Bombardier is in the president's, sights. That's no accident that the motorcycle that Bombardier makes is now banned from the United States, which is ridiculous, but anyway this is what we're up against, and I think the part of the Canadian strategy is not just to hold out until a Democratic president is elected but I think it's more to put sufficient pressure on the American economy in particular ways that there will be pressure on the on the president to reach a deal that we could conceivably live with.

But…Now, the bigger problem is that the president's behavior is such that even if he were to sign a deal, we have no assurances that he wouldn't wake up one morning and read something that somebody has either said or done, didn't like it, and said, oh, we're back to it, this is what we're going to do again and this erratic behavior is not an accident. It's quite a deliberate strategy. It's intended to keep everybody off their game. It's intended to reduce the level of investment in Canada. It's an effort to make us the classic drawers of water and hewers of wood, that the Americans are okay, up to a point. Even when it comes to lumber, they don't like us to over-roll their market, but they would like to have some product, but now we're even having difficulty with that. But practical American consumers know that something like Canadian lumber is needed in the United States, because actually it's a better product for some of the purposes that the Americans need it for. I honestly don't know people say, well, what do you think is going to happen? I don't think there's any way of knowing, except that it does have an existential quality about it, which is extremely difficult. 
 
It's not the end of free trade for Canada, given the level of integration that has existed between our economies over a very long period of time, is extremely difficult and really is having a major impact, which we've only just started to see, by the way. I mean, we're not in the full force of what is coming and the impact that it will have. The people in Ottawa know this very well. That's why they're preparing for this difficult circumstance. And I think there will be one more try to get to a deal if there's a moment of rationality that occurs either after the midterms or at some point before or in that neighborhood. I think there will be pressure on the president to do some kind of trade deal that important sectors in the American economy can live with but we're still in a situation where we're dealing with a powerfully negative force. Somebody said, is it an irrational force? I said, well, yes, it's irrational in any kind of normal economic calculation. 

When you listen to the president talk about trade, he talked about all kinds of things that have nothing to do with trade and it's really difficult to reach an agreement, but nevertheless if there are enough people in the United States who can convince the president that this is not having a positive impact on the American economy and in the end won't do him any good, and it's something he can change his mind on, maybe something could happen, but it is extremely difficult and there are forces in the cabinet and around the president's table who want to do us in and who are quite happy to reduce us to a totally dependent status. And that's really why I think many of us feel that this is a major fight that we can't walk away from and I think that's one of the calculations that Mr. Carney has made. I think in those last 24, 48 hours, I think he came to understand that they really did want to de-industrialize Canada in a dramatic way and no prime minister could accept that as a deal.

00:25:38 Jim Farney:  
Thank you, and I will now hand it over to Stanley and his learned colleagues for a couple of last, last opening.

00:25:46 Stanley U. Nweke-Eze: 

Thank you very much, Jim. Thank you very much, Bob. That leads us naturally to the question of what the rules can actually deliver. And I come to you, Valerie. We know you've served in WTO dispute settlement as counsel for Canada, as an adjudicator, and as Director of both the WTO’s Legal Affairs Division and its Appellate Body Secretariat. What can dispute settlement, whether at the WTO level or under CUSMA, what can they do for a country in Canada's position and what should it not be expected to do? 

00:26:26 Valerie Hughes: 

Thank you, Stanley, and thank you, Queen’s, for the invitation. It's a real pleasure to participate, especially with this group of speakers that have so many interesting perspectives. 

Dispute settlement. Canada has excellent dispute settlement credentials, right? So, that puts us in good stead. We were one of the main architects of the WTO dispute settlement mechanism and before you say, yeah, yeah, but it doesn't work, it worked beautifully for 20 years and it resolved problems for both the developed and the developing countries that used it and had faith in it and brought many, almost 600 cases to that mechanism to resolve. So, it was a system that was highly successful, and Canada's role in making it that way should be lauded. Canada, a middle power, Canada, not one of the largest economies, yet Canada was number three in using the WTO dispute settlement mechanism to bring challenges. The U.S. first, the EU second, Canada number three. The size of our economy is much smaller than those two mega economies but we use the system to help our trade relationships and so our DS credentials, our dispute settlement credentials, are excellent, and what it means is that our strong support for the DS system means that we are regarded highly as a supporter for the rules-based multilateral trading system. And what does that get you? We've heard Prime Minister Carney talk about that we're not fair-weather allies, that we are reliable trading partners, and our actions at the WTO dispute settlement mechanism and creating it and using that system and in fact, being one of the highest number of Canadians have served on, on almost as many panels as anyone. Canada is right up there, so that respect that Canada has in that system is something that is going to be useful for us going forward in other multilateral trading systems. So, we still to this day are bringing cases. The, the system is a little bit wobbly at the moment. We're still bringing cases, and so are others. The system is still being used; people think it's not, but it is. What we can talk about, though, is that the system needs adjustments and Canada is the one to be sitting at the front table for the adjustment because we have the experience, we have the know how, and we have the respect.

So, you say, well, and before I move on to the next part is what can dispute settlement do for you or not, we all, I should also mention that the CUSMA also has proved quite beneficial for Canada. We've brought two cases against the United States. One was on safeguards for solar cells, and we were successful in that case, and the measure, the improper measure was removed. We were also successful in the case we went with Mexico and challenged the United States on how they, on rules of origin for automobiles, how they calculated whether or not the automobile was North American origin. We also won that case against the United States. The problem was, and like many problems now in dispute settlement, is that the United States didn't do anything to come into compliance with that ruling.

So, are there problems? Yes. Especially now at the WTO, since the United States regularly uses what they call a security defense. They say, when we challenge those tariffs that Jessica was talking about, the United States says, well, it's a security measure, it's national security, and so it's not a measure that can be dealt with through WTO dispute settlement or any other dispute settlement.

So, when you come to this and say, well, what can disputes get you? What it gets you at the store, it is a level playing field. Middle economies, small economies, have a chance to go and bring their challenges forward. The WTO system is the only dispute settlement mechanism where you can challenge China. Nowhere else can you challenge a China trade measure. Is it easy? No, but it's there. There's a mechanism it will get you, we were very successful in eliminating many trade irritants through the system, a lot of softwood lumber cases, but a lot of others, too. You might remember we went against the European Union imposition of import ban on our sealed products, about hormone-treated beef, about GMOs, all these cases that we were able to have some success. Country of origin labeling that the U.S. imposed on our agricultural products, lots of success there, so we had, success, for eliminating trade, irritants. So, it's a I think it's a fair system. It will assess measures. We had confidence in it and we can build it up again.

What won't it get you? What won't you be able to do? What will that system not help you with? Well, I talked about the United States, and its regular use of the security defense, so that if you try to go against the United States on these tariffs, they simply say, sorry, but dispute settlement is not the right place to deal with these things. This is national security, and WTO dispute settlement doesn't belong there.

So, you have little power against some of this weaponization, little power against some of these threats that the president is using. These are the things that dispute settlement won't get you. It also won't get you a quick solution. So, if you're exporting and you have a trade barrier in China or in some European country, or in Chile or something, it won't get you a very quick solution. And so the person who's exporting will say, what does that do? Why do I need to bother? That's a problem, and as architects, as designers, we have to address that somehow. The CUSMA worked faster. So, it can be done? The WTO is slower, so we have to fix these things, and we have to address the very practical problems of what dispute settlement is meant to do. 

So, is dispute settlement dead? Well, in a lot of the agreements right now that the U.S. is negotiating, some people call them the napkin deals because they're written on the back of a napkin, there are no dispute settlement mechanisms in them. What happens is that there's a unilateral decision on the part of the United States that the other side has violated one of the objectives, or one of their commitments. Well, that is not something that Canada should be looking to do, that is not something that Canada will, be happy to do and when you see that, Canada is going to be, we see the Prime Minister is very much a part of pushing a trade diversification, so if we are signing all these new deals and updating the deals and doing what the Prime Minister seems to believe is the answer to the problems south of the border, then we have to be really rigid and I suppose very, I guess, vigilant, is what I want to say, in terms of making sure that the dispute settlement mechanisms are there, that they work properly, that they answer some of the weaknesses that we've seen in the other systems. But these systems can help, and they have helped, and Canada has, by continuing to use and believe in these systems I think will enhance our reputation and keep our reputation as a fair trading partner that you can rely on, a trading partner that respects the rule of law, and a trading partner that is going to be worth signing a deal with, and the one that you want to be associated with.  
 
So we have lots of trading agreements already, but it seems that the Prime Minister has got quite an agenda. We have India coming, it seems, very soon, which would be a very significant trade agreement, so this is important, and the multilateral trading system, I think, is very much dependent on how the dispute settlement mechanisms work, so I think there's a lot that you can you can take away from the DS mechanisms.

00:35:16 Stanley U. Nweke-Eze:  
Thank you very much.

00:35:18 Valerie Hughes: 

Keeps me working.

00:35:20 Stanley U. Nweke-Eze:  
Thank you very much for sharing these interesting perspectives. Before I go to Preston, I just want to remind our audience that we have the Q&A function on your screen, so please feel free to type in your questions there, and we'll come to them after Preston's response, but Preston, let's now look beyond the United States. Canada's ability to sign trade deals beyond the United States is now part of the disputes. 

 
Prime Minister Carney has called it a red line, and Article 32.10 of CUSMA already provides that if one party enters a free trade agreement with a non-market economy, the other two may terminate the agreement on six months' notice and replace it with a bilateral agreement between themselves. So, the question is, how does the conflict with Washington affect Canada's room to engage with China? And also, what opportunities or constraints does it create?

00:36:19 Preston Lim:  
Right, so it's a big question, and I'm going to get at least a couple points on the table. I think it's a really well-timed question in light of President Xi Jinping's visit out to DC last week, and I'm sure all the panellists and many in the Q&A room saw, kind of, some of the results to come out of that bilateral meeting. Happy to talk about that more later. In short not too many big developments, but I think to answer your question, Stanley, I'd point to a couple of ideas. The first is that while there's, I think, a lot of noise out there on the effects of Article 32.10, that view, right, a lot of views that emphasize Article 32.10 as an infringement, a dramatic infringement on Canadian sovereignty. There is the need, I think, to read the agreement a little bit more contextually. So the article, what it says is that if a party to the USMCA enters into a free trade agreement with a non-market economy, then the other parties have the ability, as you rightfully pointed out, Stanley, to certain procedural realities. They also have the right to convert the USMCA into a bilateral agreement, and so a lot of people who look at Article 32.10, they, I think they react in the way that you've mentioned, right? This is a very sharp curtailment of Canada's ability to conduct her own international economic policy. I understand that. I think what I'd point to is that there are other provisions in the agreement that provide other parties to the USMCA with a great deal of room for maneuver. The withdrawal provisions, for the agreement are very liberal, so a party to the USMCA can already withdraw with written notice, with 6 months' notice. So, this idea that Article 32.10 is the only provision in the USMCA that is preventing Canada from entering into a deepened economic framework of relations with China it's incorrect. Even if Article 32.10 weren't there, there would be mechanisms under the USMCA for, say, Washington to signal its displeasure.

The second point is really just to empathize with the Prime Minister and with the Canadian government right now, because it's immensely difficult to craft Canada's China policy when the United States' China policy is so in flux and so mercurial. What do I mean by that? Yes, there remains, I think, a solid group of Democratic and Republican lawmakers who are China hawks, and there remain many within the U.S. federal government, a lot of China policy experts who see the need for the United States to compete vigorously with China, if it is to maintain its position within the international order.

President Trump isn't always of that view, right? A couple months ago, he said it might be a fine thing for Chinese automakers to come into DC to set up shop, to produce cars in the United States, so long as Chinese automakers are employing U.S. employees. So how do you make sense of that, right? How do you make sense of the fact that Trump is open to increased Chinese auto presence in the U.S. market when other members of his administration are criticizing the Prime Minister for the deals that he came to in January of this year. It's very difficult.  
 
And so, that leads me to my last point. Which is that in framing an international economic policy, in framing a foreign policy for this country, it's integral that the Prime Minister build out an international trade policy that is I think that prioritizes, is the best way I would put it, Canadian interests, because trying to follow what DC is doing, it's just going to be very difficult. More specifically, what that means on the China front is, yes, we need to proceed with an eyes-wide-open approach to China. There are problems that could crop up. I'm sure everyone knows in the bilateral relationship, look, this is not a regime that takes human rights seriously. It is a regime that has used economic coercion against Canada in the past. But increased trade with China is going to have to form part of Canada's economic strategy moving forward. We saw moves to this effect in January 2026. We might see some more moves in this direction when the Prime Minister gets out to China in November for the APEC summit, which is going to be held in Shenzhen. So, there's much more I could say on China, but perhaps I'll leave it there with those three opening thoughts.

00:41:17 Stanley U. Nweke-Eze:  
Thank you very much, Preston. That concludes the first round. So now we'll go to the Q&A. Bob, let me start with you. We got a question that says, and I quote, a lot of people have mentioned the idea of waiting it out until the next 2028 presidential election in the U.S. Do you think that the deteriorating relationship between Canada and the U.S. could easily be repaired if there is a transition to a new government in a few years, or have tariffs resulted in irreparable damage to our trade relationship? What are your views?

00:42:51 Bob Rae:  
Okay, we can't repair it easily because there's a considerable protectionist wing in the Democratic Party. That's the first thing. The second thing is we can't wait around in assuming that something is going to happen in two years' time. That's simply not a feasible strategy for the Prime Minister. It won't work. I think we have to remember that there's other elements of Canadian policy which are being pursued actively on the internal front in terms of infrastructure and real efforts to rebuild sectors of the economy that have been, that are very vulnerable. And secondly, dealing with internal barriers to trade and strengthening the Canadian Economic Union, as well as diversifying our trade, elsewhere, but when you have 70% of your exports going to the United States, which is where we are right now. It isn't really possible for those elements altogether to make up for the level of uncertainty, and frankly, unfairness that we're being faced with.

So, I still think but the logic of the Canadian position is we're ready to talk. The Americans say, well, we're ready. Nobody wants to be seen to be rushing to a table because the table has got 3 legs. I mean there's no stability there but I think it's a mistake to think that this will be quickly repaired, there'll be a Democratic president, everything will be fine, and nothing will change. And I don't think that's a sensible policy for us to be pursuing. I think we have to do whatever we can to work with our friends in the United States, and that includes the broader business community, stressing the benefit to them of having a strong trading relationship with Canada, as well as other relationships, security, resource access, lots of other things that are on the table that can be discussed and that has to be part of our overall approach. I don't think we can set that aside for 24 months or 36 months and hope that things get better. That's not a workable strategy.

00:45:19 Stanley U. Nweke-Eze:  
Thank you very much, Bob. Nicolas, we have another question that I'm coming to you regarding EVs. So, I quote, there is a strong suggestion that the whole North American car industry is doomed, no matter what happens in the current trade disputes. This is related to Asian innovation in electric vehicle development. The NA industry is rapidly obsolete. What do you think about this?

00:46:48 Nicolas Lamp: 

Well, there's a fair point to the question, which is that the entire world is moving towards electric vehicles, except the United States. But that doesn't mean that the industry is doomed. It's a huge car market, more than 16 million cars, and it effectively bans Chinese electric vehicles. We have 100%, not only 100% tariffs, but the Senate is also considering a bill that will ban connectors cars from China, thereby effectively banning Chinese electric vehicles, no matter what Trump says. And so, the what we're facing is essentially an internal combustion engine island developing in North America, while the rest of the world moves towards EVs. And the question for Canada is, what role are we going to play? An initial look that we are going to be part of the North American island when the Trudeau government put in 100% tariffs on Chinese electric vehicles itself, but of course, that was at a time when the Biden administration was trying to create space for North American EV industries to develop, and North American carmakers were making tens of billions of dollars in investment in EVs.

Now that strategy has been completely destroyed, because the Trump administration has obviously cancelled the pitch to EVs, and it's become so difficult for Canada now to decide whether to hitch itself to the U.S. internal combustion engine wagon or try to play… somehow play a role in the EV industry. The problem is that car making is effectively regionalized. You have the European market centered around Germany. You have, you Asian production hub South Korea, Japan, and China, and then you had the North American one, and it's extremely difficult, not to say impossible, for Canada to do anything meaningful in North America without moving in alignment with the United States. And so, I see two scenarios. One is the Australian scenario, where we essentially lose our car industry, and then the benefit of that would be that we could import cars from anywhere, wherever they're cheapest and most technologically developed. Right? So many cars that are imported into Australia now are Chinese electric vehicles, and so you essentially have the pick of the world's best models or we try to essentially convince the United States that the only way they can preserve Canada as an export market is to relent on these tariffs, right? So, unless they allow us to be part of their car supply chains, then Canada doesn't really have an incentive to keep buying cars from the United States. And we've already been seeing that since the tariffs, the retaliatory tariffs were put in place by the Carney government in September last year, America U.S. car exports to Canada have plummeted. We're exporting importing way more cars from Europe and from Japan, and so, we really have to get it into the U.S. head that we are their only export market for cars and if they don't let us be part of their car industry, we have no incentive to stay there, their only car export market, and the U.S. will effectively no export market for their cars. 

00:49:06 Stanley U. Nweke-Eze:  
Thank you very much, Nicolas. Jim, let me hand over to you. 

00:49:08 Jim Farney:  
I want to, to kind of hang a question on an observation of Jessica's, so I'll send this question her way. There's a lot of attention to the distributional effects of this regional and sectoral in the economy. I'd seen less made of the point that you made about small and medium enterprises versus larger corporations, though. We certainly saw after Brexit that that was one part of the story that compliance costs are harder to meet for smaller companies. We're going to have to play things out in this complicated way with the U.S, but when we're looking at diversifying to other countries, to other partners, are there ways we could pay attention to those new relationships that would keep the compliance costs and the playing field a little bit more manageable for the companies that you're seeing having a hard time meeting these new and more complex obligations. 
 

00:50:04 Jessica Horwitz:  
So is your question about trade negotiations with other trading partners?

00:50:11 Jim Farney: 

Yeah, this because the other part of our response has been, well, we'll just diversify, we'll sign deepen relationships with the EU, with India, with, you know, the kind of Carney diversification scheme. And I thought the point you were making about compliance costs facing different sizes of corporations is important, given the scale of our economy. I wondered if you could play with putting those two things together, and how we could think about that going forward.

00:50:41 Jessica Horwitz: 

Well, I think, and this is kind of getting more into the trade policy comments, which some of my other co-panellists might be better positioned to comment on, but most of Canada's modern free trade agreements include chapters on trade facilitation, so customs facilitation and customs procedures, and that's actually a critically important aspect of a successful free trade agreement, because if the rules are too obtuse and complicated for the average business to be able to understand and access, nobody's going to use that free trade agreement. And that has what we've seen, frankly, we've had the Canada-Europe Comprehensive Economic and Trade Agreement, the CETA, for almost 10 years now, although technically it's not fully ratified, but at least for the tariff reduction has been in force, and the uptake among Canadian exporters has been, I think, a lot more sluggish than the Trade Commissioner Service and Global Affairs Canada would have hoped and part of that is because it is really challenging for businesses to navigate the regulatory environment in Europe and the customs import formalities that sometimes that's handled by the customer, but often it's handled by the exporter because they're the vendor, and if you want to give your customer a good experience, a delivered price you know, it just shows up on your doorstep and ready to go, and especially if it's something like e-commerce, where it's Canadian exporters selling directly to consumers, you can't ask the consumer to take care of customs forms. They're not going to know how to do it. So, the exporter has to handle that, has to figure out some kind of way. And, if there is not a good amount of support, provided by government agencies or available for free or for a low cost, it makes it much harder for small businesses to access. Not all businesses can afford, frankly, to go out and hire a firm like mine to teach them how to do that kind of thing. And so, I think the trade facilitation aspects of trade agreements are the less sexy parts of it, right? But in some ways, it's actually really the most important to make sure that tool actually gets some use after it comes into effect. So I'm not sure if that really addressed your question, but you're absolutely right that compliance obligations tend to be more disproportionately burdensome to smaller businesses, just because the steps that a company needs to go through to be trade compliant are the same, regardless of their size, so it's not like it's a marginal cost that's directly proportional to, like, scaling up with the scale. It's there's a certain upfront investment that you need to set out your systems, and then, it becomes more efficient if you, if you scale up. But I would be interested in hearing what Valerie has to say about this.

00:54:00 Valerie Hughes:  
Thanks Jessica. I just wanted to add just a word or two. I mean, I think one of the …diversification big thing for Prime Minister Carney, and good on him, all there right behind him, but it's not like it's new. We've been talking about trade diversification for some time, and as you've said, and as some of the people on the Q&A have said, it just hasn't happened. We haven't taken the CETA as an example that Jessica talked about, but there are also other free trade agreements that haven't resulted in the diversification that we might have thought these would bring. And one of the reasons, I think, is just it's just too darn easy to send it down to the United States, put something on a truck, and off it goes. It's, it's been a way of doing things for a long time. You know your people, you know you know the guy who drives the truck, and you know the person at the border, and you know your customs officers, and everything is all just too familiar and too easy. But it's not as easy as it was, obviously, because these tariffs are getting in the way. We had tariff-free, almost trade in many ways, but now we don't, and we're probably not going to have a tariff-free system for a while. As Mr. Rae has pointed out the Democrats have a long history of being anti-free trade. So, it's not like diversification is a new idea; it's always been there. It's just been too easy to go to the U.S., and now that it's a little more difficult, maybe we'll see more take-up in some of these trade agreements. But we do have, of course, as Jessica mentioned, the Global Affairs does have, I think, an obligation to assist these small and medium-sized companies. But the small and medium-sized companies are too busy working to go and get assistance. I mean, this is something that is just is a circular thing. Yes, there's a way to help, and yes, there are systems that will help you, but I'm running the cash machine at the moment, thanks.

00:56:14 Jim Farney:  
If I could, Valerie, if I could ask one quick, quick question from the chat of you before we kind of turn to a final round and that is we've kind of talked about Global Affairs Canada, but what role should the provinces be playing in thinking through this trade piece at this unstable, unpredictable moment? How do they play in and speak in as government entities?

00:56:39 Valerie Hughes:  
So that's where things have changed a lot. They didn't used to have the role that they do now, but right now we can see, and I think it seems that this Prime Minister has been fairly successful in working with the provinces to get behind him in what he's doing to support his walking away from the table recently to support the kind of measures that he's trying to do with Europe to support the kind of diversification objectives that he has. When you have the industries that are affected, like the automobile industry, the steel industry, the lumber industry, obviously there's a lot of important labour and trade considerations that are going to come in, and the provinces simply have to be part of the equation. This will not work without their support and cooperation, and if you know, some of the provinces put the booze on the shelves and some don't. It's a bit of a problem for us, and I think we do have to have a unified approach, and so far, Prime Minister Carney has been generally successful with doing that. The provinces have to be a part of it and there's a lot, what we've seen now, which is different than what we had 25, 30 years ago, is that the departments of trade and the legal experts in each of these provinces have a lot of experience to bring, and a lot of contribution to make that is going to be very helpful. So, I think we do have the people in these provincial systems that are able and knowledgeable and can contribute, better than they used to be, so, very much part of it, and you have to see that Carney continues to try and keep everyone in line. This is the only way that his strategy is going to work. He has to have everyone do what they do domestically in their own province in order to make this work. But there that does I won't talk anything about it except to mention that we do need to think more about the internal free trade barriers, and that will be something where the provinces can make a major contribution, and it would be helpful to see some more progress there.

00:59:05 Stanley U. Nweke-Eze:  
Thank you very much, Valerie. So, it's this last round of questions. Although we've paid, rightly so, a lot of attention to the instability of the Trump administration and its role in trade policy, but it does seem that broader structural changes since COVID mean that we'll not be going back to status quo. Preston, let me start with you. What do you see as the structural changes in the world trade system that will outlast President Trump? And what do those structural changes mean for Canada's approach to trade, specifically, and our economic future more generally? Just one minute or two, and then I will go around to everybody.

00:59:45 Preston Lim:  
Absolutely. Well, I think what I'll do here is just pull together and buttress a couple themes. So, I agree absolutely with Bob that this kind of strategy of just waiting Trump out is extremely unlikely to work, and I'll maybe add two pieces of proof to that. First even during, kind of, the Biden interregnum, a lot of the protectionist trade policies that were in place during Trump 1 stayed on, right? So there is this desire to onshore, to reshore manufacturing, to kind of unlock the American economy in a way that uses protectionist mechanisms. And so, I think this is a very important point. The second indicia that I'll point to Trump got a large share of the popular vote, both elections over 46% for his first mandate, over 49% for his second mandate. So, again, this idea that the U.S. is magically going to go back to the way things were, even once President Trump is out of office, that's an idealistic posture; it's not a realistic posture.  
 
And I'll close by saying the Prime Minister is going to face a lot of headwinds. We've mentioned the difficulties on the international trade front. All of these deals may not amount to the market share that we had in terms of our bilateral trade with the United States. On the internal trade front, this has been a focus for many years. We've had some wins, they've been pretty small. I think a third idea that hasn't gotten as much airtime today basically making Canada's investment climate a little friendlier, and I think there are great steps in this direction. The productivity mega deduction, I think, you know, a lot of tax lawyers are saying this is a massive step in the right direction in terms of kind of the capital posture here in Canada but on all of these points, there's a lot of work to be done. It's too early, really, I think, to provide a sound empirical assessment, and we're going to need some hard thinking on all three of these policies mentioned in the years ahead.

01:01:49 Stanley U. Nweke-Eze:  
Thank you, Preston. Jessica, any thoughts? 
 

01:01:53 Jessica Horwitz:  
Sure, I would say a trend that's most likely to outlast Trump, and I mentioned it in my opening remarks, that trade design, I'm not going to say only compliance, but trade and supply chain design is now a C-suite issue. It's something that businesses, I think going forward, I hope going forward, will pay more proactive attention to when designing business structures and strategies, as opposed to treating trade issues in a reactionary, reactive sense only when something goes wrong. Supply chains that have contingency plans and that have good visibility over all of their information and their exposures and vulnerabilities are going to be more adaptive and more capable of pivoting quickly when unexpected things come up. And I'll also just say that a silver lining of in particular, the most the last year and a half of the trade war with the United States, because as we know, it's not the first time, and probably won't be the last, frankly, but this whole USMCA exemption that was in effect for a long time in connection with certain categories of the U.S. tariffs, including the fentanyl tariffs that forced a lot of Canadian companies to learn about free trade agreement rules of origin and compliance and certificates of origin, how to do that because a lot of Canadian companies that were shipping to the U.S. were not claiming USMCA because the goods were duty-free anyway, or they had very low duty rates, so they thought it's just not worth it. Suddenly, it was worth it, and now that businesses have had that exposure and that experience of having to go through those steps, they realize, and this kind of ties back to my comment that I made before about the trade facilitation challenges, so as not to be fully pessimistic about it. I think that when companies actually put some energy into trying to understand and set up systems to comply with these trade agreements, they find it's actually not that difficult. Like, it really is not if you're set up for it, and so I think that that will make our businesses, and particularly our exporters, more resilient going forward.

01:04:16 Stanley U. Nweke-Eze:  
Thank you, Jessica. Nicolas?

01:04:20 Nicolas Lamp:  
So, I think trade policy is changing in fundamental ways not just because of the United States. It's also because of the rise of China, the experience of the COVID-19 pandemic, the climate crisis and I would identify four ways in which it's changing. The first is regarding the objectives of trade policy. So, Jessica already mentioned the shift from efficiency to resilience. An issue that hasn't come up much is security is now foremost, especially when we're thinking about the relationship with China, but also increasingly when we're thinking about our policy with the United States. We're concerned about our security.

There's a new emphasis on manufacturing jobs, preserving manufacturing expertise. And these, we see many countries pursuing trade policies that prioritize these objectives over economic welfare. A lot of what the U.S. is doing to protect, to regain manufacturing employment is shooting itself in the foot economically. Same with climate, what the EU is doing, a lot of that has huge economic cost. So, we see countries prioritizing a wide range of objectives in their trade policy in a way that they didn't used to. We also see a fundamental change in how countries think about their trading partners. I mean, the way we rethink our relationship with the United States is just the best example for that, but it used to be that we were willing to trade with everyone, and even if there are strategic competitors, we hope to bring them closer by trading with them. Now we're much more careful in distinguishing between strategic rivals, friends, like in Canada's case, maybe Europe, and countries with whom we have to deal with, but have to be very careful.

We're also adopting a much more product-specific trade policy. We used to have a kind of one-size-fits-all trade policy, like, just liberalize everything. And now, like, it's very we have a very different trade policy when we're talking about critical materials or about toys, or about steel, or cars. We're very much calibrating our policy, trade policy, for specific products, depending on the partners that we're dealing with and what all this has led to is also an explosion in the types of tools that we use in our trade policy. It was mostly we used to be mostly negotiating trade agreements, that was trade policy. And now we are employing a lot of unilateral tools, tariff rate quotas, for example, Canada's using them on steel and on electric cars from China, export restrictions have come to the fore, a lot of unilateral instruments for environmental purposes. So, it's a very different world, and I think we can track it along these four dimensions. Thank you.

01:06:51 Stanley U. Nweke-Eze:  
Thank you very much Nicolas. Valerie, final thoughts? 

01:06:54 Valerie Hughes:  
Yes, I would just, I'd continue my cheerleading for the multilateral cooperation, the multilateral institutions even. I mean, you might say, well, these institutions are just big cumbersome places where, you know, talk shops, but it's, it's not, it's true in some respects, but it can be a good place to get things done and what we can take advantage right now of the star power of our prime minister, he seems to have an ability to, well, his speech at Davos, I think set things off, and invited to Australia and of course associate member of the EU, whatever that means.

I think we do, and Mr. Rae will know better than I, as a Canadian at the UN, will be the way that we can we've always been sort of in the middle, and we can work with two sides of an issue, because we're in the middle of it and can work at both because we're Canadians, because we're part of the Francophonie, because we're part of the Commonwealth, we just have influence in a lot of different spheres, and using our current Prime Minister's star power to push that. I mean, and if you think about institutions, are they really the thing to pursue? Right now, what's quite interesting is that the CPTPP, which has obviously been in place for some time, they are actually starting to think about developing a Secretariat, to manage the CPTPP, because, of course, there are a lot of requests for membership.  There's the dispute settlement aspect that has to be done, just the what the Secretariat does. And so I can see Canada having a role to play because of our international star power, but our experience in multilateral institutions, so I continue to be the cheerleader for the multilateral approach with the middle power that we've been so successful at promoting.

01:08:47 Stanley U. Nweke-Eze:  
Thank you very much, Valerie. Bob?

01:08:51 Bob Rae: 

Agree with so much of what's been said. I would just reiterate a couple of things. The first one is we're not going to have any successful trade or industrial strategies unless the provinces and the federal government really get their act together. We have allowed ourselves to get into…we have ads on our televisions now talking about protect Ontario. We don't need to protect Ontario. We need to build a resilient Canada and that spirit has to be much, much stronger, and old-fashioned ideas of provincial protectionism have to go right out the window, because they are really holding us back in a big way. We've got to use our institutions like our universities. We've got to use our research policies. We've got to be creative about our tax policies in terms of making Canada a better place, an easier place to invest and do business and to innovate, and, frankly, we need to maintain our doing what we know how to do well, and I'm so glad that this has been talked about. Valerie talked about it very eloquently. We do have a strong reputational capacity for building good multilateral institutions.

Don't forget people talk about the WTO before the WTO. Canada was at the center of building the GATT. We had people coming out of the Second World War saying, let's build this international institution. We held the pen on that and so we have a network and a history to which we can be really proud, but we have to build on it and we have to recognize the unprecedented nature of the challenge we're now facing. This is different than anything we've faced since the Great Depression and in many ways, it's even more challenging, because such a big part, such a reliable, deep partnership in our economic structures that's been building up over the last 75 years and particularly intensifying in the last 40 years is now being blown apart by Donald Trump and by the policies that he's carrying out. We don't just throw up our hands and give up. We figure out, okay, what do we do now? We don't wait for something nice to come along. We start to do things. So, we tear down the internal trade barriers, we build up our investment structures, we refocus on our security relationships with Europe and with the Pacific, and we build on these things, and we build the industrial and the intellectual strategies that are going to allow us to innovate successfully. And it's an exciting time. It is very difficult, but it's exciting.

01:11:38 Stanley U. Nweke-Eze:  
Thanks, Bob. Over to you, Jim, to close.

01:11:43 Jim Farney:  
Yeah, I have little to add to that note other than to say thank you to our panellists, and in the spirit of multilateralism, it's been great to work with the Faculty of Law pulling this together, and friends on the outside, as it were. And thanks, too, to the audience. Your questions made today lively, and I hope you've taken something of information and profit away from our discussion. We could go much longer on this topic, but it is a Monday afternoon, so perhaps just thank you and good day to you all and we hope to see you again soon.