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Following is the transcript of a First On CNBC interview with Francois-Philippe Champagne, Minister of International Trade of Canada. The interview was broadcast on CNBC on 23 March 2018.
All references must be sourced to a "CNBC Interview'.
Interviewed by CNBC's Bernie Lo, Akiko Fujita and Oriel Morrison.
Bernie Lo (BL): Joining us on the program is Francois-Philippe Champagne. He's Canada's minister of international trade. Joining us from Singapore, where he's meeting with region officials and promoting Canada's - ironically steel and aluminum industries after attending the Canada ASEAN Business Council forum. Minister, thank you very much for joining us on the program. From one up from one native Canadian.
Francois-Philippe Champagne: Good morning.
BL: Welcome. A big big big Canadian welcome to the program. You must be glad you're not China's minister of international trade this morning, sir.
Francois-Philippe Champagne: Well listen, first of all thank you very much for that warm welcome. Delighted to be in Singapore, you know Asia-Pacific is a very important region for Canada. We're very much a Pacific nation and being in the region, strengthening our ties with ASEAN, with Singapore, with the CPTPP bloc of countries, obviously is a priority for us. For me to be in Singapore this morning is a testament of Canada's resolve to be very much present in this part of the world
BL: Yes and we'll talk, we'll definitely talk. We'll talk about that at great length minister. Can I get your input on what has happened this morning with that the U.S. tariffs and then the counter-tariffs coming from China tomorrow. You're in Asia talking about steel and aluminum and the competitiveness of Canada in these product segments at a time when tomorrow we're waiting for something which has been pre-announced by the U.S. to kick in. Canada is not part of it because you're exempted from it so that's not a problem for the time being but the stuff that's going on this morning, the U.S. versus China. Can you comment on that. I mean is this going to become a full blown trade war. Everybody's out there saying pull back, pull back, you know restrain yourselves.
Francois-Philippe Champagne: Well first of all it's a very fluid situation. So we're obviously monitoring that. When there was a talk about tariffs we went out very quickly as you will recall to say this would be unacceptable and unwarranted from the Canadian perspective. In fact the U.S. has a trade surplus of about 2 billion when it comes to steel. We are as Canada, the biggest buyer of steels from the United States. And as you know well, as a fellow Canadian, our economies are integrated, so clearly we were happy to be exempted. And for us now, it's really to move and put our efforts and time in modernizing NAFTA. This is really what's on the agenda between Canada and the U.S.. And clearly, we were satisfied with that. But we need now to really get on and modernize NAFTA because we know this is the agreement which provided millions of middle-class jobs on both sides. And we're going to continue to work with the United States. And as you know, with respect to anti-dumping, Canada has very stringent laws to prevent that. So we're going to make sure that we work with our U.S. allies and other allies to enforce our rules to make sure you know, Canada wants to stand up for open rule based trade and fair trade. So we are going to be there, we're going to be with the allies in making sure that people respect trade rules.
Oriel Morrison (OM): Minister, it's Oriel here in Singapore. It's a real pleasure to have you with us today. Before we focus in on NAFTA and the situation with NAFTA and where we're standing at the moment, can I just go back to Bernie's point for a moment and that is the news that's hitting the wires as we speak just about the news that's coming out from China. The tit-for-tat between the U.S. and China. Now as you mentioned your economies are very much intertwined when it comes to trade. There is a big sell-off that we seeing in Australia. It is also very commodity-heavy economy. Now what does it mean for Canada if this situation does escalate.
Francois-Philippe Champagne: Well no one is winning obviously from trade wars. So definitely Canada, we're going to stand out with our allies to make sure that the rules are enforced. Like I said when it comes to dumping we have very stringent rules in Canada. We're going enforce them. We're going to work with the international community but you must understand that as a country like Canada, we believe in open trade and fair trade and certainly we're going to be monitoring as you said it's very fluid this morning. We have to make sure that we protect Canadian workers, we protect our steel and aluminum industry, and we have the laws on the book to do that. So now we're going to be monitoring with our allies and make sure that we enforce those rules. But like I said our priority as Canada is obviously to modernize NAFTA now.
OM: All right, let's get back to NAFTA then minister. Where do you think that you are at the moment? Obviously the auto sector has been a big sticking point. It looks like there may be a breakthrough on that front. Are we likely to see NAFTA extended over another three years as was talked about just yesterday. Or do you think an agreement will be coming much sooner than that.
Francois-Philippe Champagne: Well you know the word is cautiously optimistic. You know we saw positive signs from the White House and Ambassador Lighthizer. So, obviously we're monitoring that. We want to modernize now as you know. NAFTA's an agreement that's been in place for more than two decades, has been amended about 12 times. There's chapter like for example, e-commerce that did not exist. And the reality in North America, there's no two nations who are trading more you know, we exchange 2.4 billion of goods and services per day. We have 400,000 people crossing the border every day. We buy more from the U.S. than China, Japan and the U.K. combined. So you appreciate that when we are in this discussion it's not a relation of buyers and sellers. We make things together, and because of that we have created prosperity on both sides of the border and we want to continue that. We want to modernize NAFTA. And like I said, what we heard from the White House and Ambassador Lighthizer gives us comfort in saying that we are cautiously optimistic about the speed and the outcome of these negotiations.
Akiko Fujita (AF): Minister I wonder if Canada has a plan B here if in fact NAFTA doesn't go through.
Francois-Philippe Champagne: Well there's never been a better time to diversify. I'm saying that to Canadians. Clearly the U.S. will always be our largest trading partner because of the size of the economy and the geography. On the other hand, I think Canadians understand that the center of gravity of the world economy is shifting toward the Asia-Pacific. And when you think about trade, you have to look over decades, so that's why we did a free trade with Europe. We were part of the CPTPP to be part of writing the rules of trade in Asia-Pacific, that was very important for us. And we're discussing with the ASEAN nations, so my presence here in Singapore is a testament to that that we're very much a Pacific nation. We understand that we need to position Canada for the future and for the next few decades, and that's why for us it wasn't important to be part of the CPTPP.
AF: I know you've talked about modernizing NAFTA here, and Canada is exempt from the steel and aluminum tariffs, but the Trump administration has made it very clear this is contingent on the NAFTA negotiations. In other words, they're willing to come back to the table and think about slapping these tariffs on Canada if they don't get a favorable deal on NAFTA. Now you know, this is all seen as a very transactional thing for this administration, and I have to wonder, for somebody who has been in this space for a very long time. Do you think this is the way international trade deals should be made.
Francois-Philippe Champagne: No, I mean we've been very clear from the start that those are separate tracks. You know when it comes to steel and aluminum, I said you know the U.S. has a steel surplus with Canada. We buy more steel than anyone else from the United States. And you know to suggest in any shape or form that Canada would be a threat to U.S. national security when we're partners, friends and allies. And I know that, for example, NATO was definitely unwarranted. You know, we make things together and I think that message was received in Washington that you know our industry are integrated and the best way forward is to work together with respect to that. And if there are concerns, we should address them together. Now when it comes to NAFTA, like I said, let's be clear this is an agreement that needs modernization and this is an area which has provided millions of good middle-class jobs. This is something that we know President Trump has had in his campaign and our prime minister as well. And one decision on one side of the border will have impact on both sides, so that's why we have been at the table. We are positive, we are constructive. But we have also been firm, you saw us when it comes to softwood lumber, when it came to Boeing, because we're always going to be there to protect Canadian industry and obviously Canadian workers and that's something that nations respect, when you stand up for your own obviously workers and industry.
BL: Yup. Minister final, before we let you go. You know, we're still talking a lot about the WTO and really kind of, there's a renewed debate about the relevance of it because looking at the different angles from which the administration in the U.S. is taking on trade, some of it is dredging up some pretty old statutes on the books, on the basis of national security. I mean that's a bit of a curveball to the world. Are we getting into a fragmented world where that's going to be defined by bilateral and multilateral and things like the CPTPP? And is the WTO just going to fade away into the history books like an old picture in a photo album?
Francois-Philippe Champagne: Well I would say, I would urge caution. Those who are questioning the World Trade Order, let's remember that the IMF, the World Bank, the WTO were institutions that were built after the Second World War which have provided stability, predictability and peace around the world and making sure that the rules of international trade are established, that they are fair they are understood and they are fairly applied. So I would say to anyone, caution, because this has provided, has lifted millions of people out of poverty, has provided a lot of stability. And we know that if you're investors, you want stability, protected in rule of law. And we have all benefited from that rule based trading order so certainly, Canada is going to be at the forefront with other allies with other nations, to make sure that we certainly improve. But that we maintain what is good and making sure that this way, we preserve growth in the world and that we continue to improve to progressive and inclusive trade. I think that's what citizens expect from us now is certainly to modernize institutions but certainly let's make sure that we preserve predictable stability that we had for over many decades now in international trade.
BL: Minister, merci beaucoup very much for your time today appreciate it. Have a good rest of your trip.