John Ivison: Trump’s Gordie Howe victory lap is the model for making deals with him

John Ivison: Trump’s Gordie Howe victory lap is the model for making deals with him One observer said on CUSMA, Canada has to propose something that allows Trump to take the credit ‘without doing something that’s bad’ Friday is always a good day to bury bad news, to borrow the unfortunate phraseology used by a British political advisor on 9/11. The unintended consequence is that anything released by governments on the last workday of the week is automatically considered suspect. Thus, the convulsions that accompanied Ottawa’s announcement late Friday that the Gordie Howe is set to open on July 27th, following the agreement of “cooperative measures focused on toll governance, including the establishment of a 15-year economic development fund tied to a portion of profits from bridge operations.” Recommended Videos The suspicion was that the Trump administration had shaken down the Carney government and secured a half share of toll revenues, even though Canadian governments paid the upfront $6.4-billion cost of the bridge. The president did little to allay such fears, posting on social media that the original crossing agreement, which provided for “surplus” revenues to be divided equally only after Canada recovered its costs, was not acceptable to him. “I was able to cut a MUCH BETTER DEAL for America,” he wrote. On Sunday, the Conservative Canada-U.S. trade critic, Shuvaloy Majumdar, wrote to his Liberal counterpart, Dominic LeBlanc, saying Prime Minister Mark Carney has “negotiated a terrible deal for Canada.” “We took the risk and the cost. We deserve to recover our money,” he said — and it’s hard to argue with that. Except, it is far from clear that’s what has happened. Carney was badgered at the Calgary Stampede by CTV and said the deal does indeed involve the payment of half the “net profits” to Michigan. “But the word ‘net’ does a lot of work… We get the revenues, the servicing of the cost of the bridge and paying the debt. What’s left over, there’s a split of that for 15 years,” he said. “There’s not going to be a lot of ‘net’ to split. It’s a good deal for Canada.” Majumdar is right to ask for more transparency. “What precisely will be divided?” he asked, “Gross toll revenues, operating profit, net profit after expenses or revenues after Canada has fully recovered its investment?” - John Ivison: Carney may lead the Trump ‘resistance,’ but Canadian casualties are mounting - John Ivison: Carney’s oil patch wishes might really come true - Advertisement 1Story continues below What’s clear is that, as long as the toll revenues are not given up, there is unlikely to be much profit to redistribute over the next 15 years. The estimate for traffic is that 9.6 million vehicles will cross the bridge in any given year, around 45 per cent of which will be commercial. Given the set tolls of $8 per car and $12 per truck, that generates around $93 million in revenue. We don’t know the rates at which the federal and Ontario governments borrowed, but for argument’s sake, a triple A-rated government would pay between $192 million and $307 million in interest on a capital cost of $6.4 billion. It’s hard to see where the “net profits” come from. On the other hand, the bridge will facilitate an estimated $1.9 trillion of trade. It is in the national interest to get the thing open as soon as possible. One Canadian trade official close to the current CUSMA negotiations said this offers a blueprint on how to deal with Trump: let him claim victory but stand up to him on the substance. “As I understand it, the White House blinked. They wanted a share of revenues,” the official said. Carney may have been reluctant to make the clarification publicly but, not for the first time in recent weeks, the roll out of the news backfired. The suggestion by some observers is that the bridge deal could be a template for the broader CUSMA discussion. The official said there is a growing level of discomfort in corporate Canada that was reflected in last week’s KPMG study that said four in 10 manufacturing companies have already moved operations from Canada to the U.S., or are planning to do so. There is method in Trump’s megalomania. Toyota said last week that it is planning to move some production from Mexico to a new US$3.65 billion plant in San Antonio, Tex. The trade official said there is a growing nervousness that Canada has missed its window and is going to start bleeding capital. The Conservatives have leapt on this sense, saying Carney’s claim that he could negotiate a win “is an illusion.” David MacNaughton, who was Canadian ambassador to the United States during Trump’s first term, said that Canada has to propose something that allows the president to take the credit “without doing something that’s bad.” He said he suspects there will need to be a defence and security component of part of any proposal, to counter the Section 232 (of the Trade Expansion Act) national security tariffs on steel, aluminum, lumber and automotives. MacNaughton said that, while tariffs are persuading some businesses to shift investment to the U.S., the uncertainty works two ways, hitting domestic American industries like tourism and wine and spirits. “We need to be talking to U.S. businesses and getting them to put pressure on the White House. The uncertainty isn’t good for anyone,” he said. MacNaughton does not advocate capitulation to Trump. “We went through the same with (Section) 232 tariffs in 2018, and when Mexico tried to cut a separate deal… Overall, we’re better off continuing to hold discussions and not to do a bad deal.” But, as David Coletto, CEO of Abacus Data, noted this week, polls suggest Carney has “a public license to operate” because of the external threat posed by Trump. He can afford to give the president the win, without it proving existential to his own political survival. Now might be the time to repeat the Gordie Howe bridge formula with a bold trade and security offer. Twitter.com/IvisonJ Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.