Chrystia Freeland and the art of the deal - Macleans.ca

Chrystia Freeland and the art of the deal

Spread thin and up against a bullying opponent, Chrystia Freeland saved NAFTA and emerged as the politician to watch in Ottawa. Now what?

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Canadian Foreign Minister Chrystia Freeland leaves the U.S. Trade Representative's office in Washington, U.S., Aug. 28, 2018. (Chris Wattie/Reuters)

When the deal was finally done, Chrystia Freeland could boast with a fair degree of credibility that she’d seen from the start how the tortuous NAFTA negotiations would unfold. “I predicted that there would be moments of drama,” the foreign minister reminded reporters in Ottawa on Oct. 1, the day after Canada came to terms with the U.S., as the clock ticked down toward the White House-dictated midnight deadline. “And I also spoke about our confidence that, at the end of the day, the economic logic behind this relationship meant we really believed it was going to be possible to modernize NAFTA in a way that was good for everyone.”

It was pure Freeland. The self-assurance that impresses many and rubs others the wrong way. The upbeat, matter-of-fact tone she relentlessly maintained through 13 months of gruelling, high-stakes bargaining to preserve the nearly quarter-century-old trade deal that underpins Canada’s most vital economic relationship. Had she failed, all her optimism, in hindsight, would be sounding painfully naive. Since she succeeded, that voice belongs to the most ascendant politician in Prime Minister Justin Trudeau’s Ottawa.

Nobody could have faulted Freeland if she had been solely focused for the past year and a month on salvaging the North American Free Trade Agreement. But the peripatetic 50-year-old journalist-turned-politician gambled on spreading herself thin—and won. In May, for instance, as the NAFTA talks entered a particularly intense phase, she toured a refugee camp in Bangladesh, showing support for Rohingya people driven out of neighbouring Myanmar. In July—shortly after an epic blow-up between Trudeau and U.S. President Donald Trump appeared to put the NAFTA talks on life support—she was pushing diligently behind the scenes for an international effort that would save hundreds of the heroic Syrian volunteers known as White Helmets.

If all that—and there’s lots more—doesn’t seem like a normal cabinet minister’s workload, it isn’t. Trudeau gave Freeland an unprecedented hybrid role. In an early 2017 cabinet shuffle, he promoted her from trade minister to foreign minister, but left her responsible for Canada-U.S. trade. The reason was obvious: Trump’s election the previous fall cast a dark shadow over the Canada-U.S.-Mexico pact. He had obliterated the conventional wisdom standing between him and the presidency while railing that NAFTA was “a disaster” and “the worst trade deal maybe ever signed anywhere.” Trudeau needed his top talent on the case.

As trade minister, Freeland got some practice salvaging trade deals by finalizing the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union. CETA was mostly negotiated by the former Conservative government. In late 2016, though, last-minute opposition arose in, of all places, the Belgian region of Wallonia. Freeland walked out of talks to assuage the Walloons and tearfully expressed her frustration in front of TV cameras. That sent EU officials scrambling, and the deal was back on a week later. “Okay, we did it!” Freeland enthused at the signing ceremony.

In the buttoned-down realm of trade treaty-making, she came off as unconventionally effective. But Trudeau’s faith in Freeland wasn’t based only on her conspicuous CETA win.

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Trudeau first sought her out in 2012, at a launch party for her book Plutocrats, which is about the clout of the global super-rich in an era of worrying income inequality. Back then, Trudeau was leading the third-place Liberals and, with a few of his key advisers, was recruiting star candidates for their bid to bring the party back into power. In 2013, Bob Rae, who held a downtown Toronto riding for the Liberals, retired, and Trudeau called Freeland at her home in New York to ask her to run in Rae’s vacant seat.

Freeland has said she was reluctant at first. At the time, she was a globe-trotting columnist for Thomson Reuters, married to a New York Times reporter and living in Manhattan with their three children. The timing wasn’t right. But Trudeau was seductively sympathetic. He had also mused publicly, before he ran for the Liberal leadership, about whether the job would take him away from his kids too much. He won her over. She moved to Toronto in the summer of 2013, capturing Rae’s old riding in a by-election that fall. Soon she was working as an influential voice on Trudeau’s key economic advisory group, which hammered out core elements of the platform on which his Liberals swept to power in the 2015 election.

It was Freeland’s career as an economics journalist that caught the Trudeau circle’s attention. But her family background is at least as intriguing. Born in 1968 in Alberta, she was nine when her parents divorced. Her father, Don Freeland, farmed in Peace River. Her mother, Halyna Chomiak Freeland, was a lawyer living at a Ukrainian socialist co-op in Edmonton. Chrystia grew up in both places, but her mother’s deep commitment to her homeland was formative. Chomiak, who died in 2007, had returned to Ukraine in the ’90s to help draft the country’s post-Soviet constitution.

READ MORE: How new-NAFTA could still go bad

Freeland studied Russian history and literature at Harvard, and was later a Rhodes Scholar at Oxford, but was at the University of Kiev when the Soviet Union fell. Through the tumultuous late 1980s and 1990s, she studied then worked as a journalist, largely in Russia and Ukraine. Her journalism career eventually spanned high-profile stints writing or editing for the Financial Times, Reuters, the Globe and Mail and the Economist. She moved with the Davos set that populates CNN’s Fareed Zakaria GPS talk show, and has continued to work those networks as a politician.

None of that would ingratiate her to Trump’s crew. Indeed, Freeland exemplifies the liberal, global elite Trump was elected to displace. Consider the contrast with his trade czar: U.S. trade representative Robert Lighthizer, 70, is a gruff, old-guard Republican who served in Ronald Reagan’s administration in the 1980s. When the NAFTA renegotiations foisted by Trump on Canada and Mexico began on Aug. 16, 2017, Lighthizer came in demanding deep concessions—taking aim at Mexico’s low-wage auto sector, for example, and demanding an end to NAFTA’s famous Chapter 19 dispute-resolution mechanism, which Ottawa holds sacrosanct.

Still, the negotiations at first looked surprisingly placid. “I am pleased to report we have found mutual agreement on many important issues,” Lighthizer said after round two in Mexico City early last fall. Freeland chimed in, “All three partners are absolutely committed to getting this done.” It took only a few weeks, though, for that veneer of amity to peel away. In mid-October, Freeland decried the American “winner-takes-all mindset,” slamming U.S. “proposals that turn back the clock on 23 years of predictability, openness and collaboration under NAFTA.” Lighthizer scolded Canada and Mexico for clinging to the status quo. “Frankly, I am surprised and disappointed by the resistance to change from our negotiating partners on both fronts,” he said.

A senior Canadian official who was often in the negotiating room, who spoke to Maclean’s on condition he not be named, says it took a few weeks for Freeland’s team to realize what they were up against. “We weren’t quite ready for how much they just wanted to turn this into a trade-on-American-terms deal,” he says. As well, the more Lighthizer and Freeland got to know each other, the more he seemed exasperated by her upbeat patter. “When she said, ‘There’s a win-win-win solution,’ ” the official says, “you could see Bob almost pulling his hair out because he thinks there’s no such thing—somebody’s got to win and somebody’s got to lose.”

Among the lobbyists, lawyers and academics who obsessively followed every NAFTA cut and thrust, Freeland began to gain a fan base. Lawrence Herman, a veteran Toronto trade lawyer who has watched many trade negotiations, marvels at how she stayed on top of NAFTA while evidently taking on unrelated humanitarian projects. “It’s exceptional—unprecedented—that the Canadian foreign minister would be responsible for trade negotiations with the United States,” Herman says. “She’s also very, very smart and tough, and isn’t prepared to be pushed around by American bullies, which is what she’s been up against.”

Chrystia Freeland with Justin Trudeau and Gerald Butts during the final hours of the NAFTA negotiations, on Sept. 30, 2018. (Adam Scotti/PMO)

Beyond the technocratic world of trade wonks, Freeland gave the news-watching public an image that resonated. News cameras caught key words scrawled on her hands in black pen, like a student cheating on a test. Flying to a late negotiating session in Washington, she wore a T-shirt, a present from her kids, emblazoned with “Keep calm and negotiate NAFTA.” After Trudeau’s colourful socks, her sheath dresses and pearls became the most recognizable signature attire in federal politics. She recited rote media comments—“We want a good deal, not any deal”—with the message discipline of a seasoned pol on the campaign trail.

But those public flare-ups hinted at a deep divide between Freeland and Lighthizer. Back in the 1970s, he worked on trade issues as a Senate staffer, rising in the 1980s to serve as deputy trade representative under Reagan, at a time when competition from Japan looked like the major threat to American economic pre-eminence. He went on to build a career as a prominent Washington trade lawyer. He took aim at fellow Republicans in a 2008 New York Times op-ed, saying they “embrace unbridled free trade, even as it helps China become a superpower.”

As early as 2011, he defended Trump’s protectionism, at which orthodox free-trade conservatives were scoffing. Lighthizer detected in Trump’s rhetoric echoes of an older Republican tradition of wielding tariffs. Trump’s stunning 2016 presidential election win offered Lighthizer an unexpected late chapter in his career. He’s made the most of being the U.S. trade representative, surviving and thriving in an administration that’s chewed up and spat out other formidable figures—including Trump’s first secretary of state, Rex Tillerson, the former ExxonMobil CEO, who was Freeland’s best ally in Washington before Trump fired him late last winter.

Lighthizer is preoccupied with China as a rival to America. Indeed, the two most significant developments in global politics ran just beneath the surface of the NAFTA talks. Lighthizer fears China’s rise, and doubts international liberal institutions are up to the challenge. Freeland saw the Soviet Union fall, and believes that the same institutional order, which her beloved Ukraine aspired to join, remains the world’s best hope.

By late last year, though, her ability to shore up NAFTA as part of that global picture was in serious doubt. As total failure of the renegotiation began to seem plausible, the political stakes for Trudeau’s Liberals came into sharper focus. NAFTA, the 1994 successor to the earlier Canada-U.S. free-trade deal, supports about 1.9 million export-related Canadian jobs. And Canadians get it: a Pew Research survey found that 82 per cent of Liberals and 83 per cent of Conservatives in Canada supported NAFTA. In the U.S., though, just 68 per cent of Democrats and 30 per cent of Republicans liked the agreement.

Along with assigning Freeland to NAFTA, Trudeau poured extraordinary resources into the fray. He brought in Brian Mulroney—the former Conservative PM and architect of the original deal—to brief his cabinet. He pulled provincial premiers into the effort and dispatched cabinet ministers on dozens of pro-trade missions all over the U.S. He appointed a NAFTA council that included not just prominent Tories and New Democrats, but also top union and farming voices, along with executives from banking, auto parts, entertainment and tech.

READ MORE: The NAFTA story, as told by photos of Trump and Trudeau

James Moore, a former senior minister in Stephen Harper’s cabinet, was among the Conservatives on that council. In an interview, he said Freeland grew into a stature comparable to Paul Martin’s when Martin was taming the deficit for former prime minister Jean Chrétien, or the late Jim Flaherty when Flaherty confronted the 2008-09 financial market meltdown for Harper. Moore sees similarities between Flaherty and Freeland in the way they consulted widely in the face of crisis. “He went across the country to lots of roundtables, brought in advisers,” Moore says. “She is very much like that.”

All that reaching out, though, didn’t seem to matter much in the early months at the NAFTA bargaining table. In a bid to shake things up, Freeland’s negotiators took new ideas into 2018’s first negotiating round, held in Montreal. Trump’s top priority was protecting the U.S. auto sector, especially from the shift of production to low-wage Mexican plants. Light-hizer’s opening bid: require 50 per cent of the value of every car to be American-made. Freeland’s team tabled a counter-proposal: create formulas that would credit high-tech, high-value-added content in cars—the sort that tends to be made in the U.S. or Canada.

The Canadian twist didn’t immediately seem like a winner. “At first, they kind of laughed us out of the room,” says one senior Canadian official. “But one round later, the Americans came back and they were saying, ‘Okay, we saw what you were trying to do there, here’s our spin on it.’ And that’s where we get labour-value content.” This would emerge as the single most crucial element in the final deal: a new requirement for at least 40 per cent of auto content to be made by workers earning US$16 per hour or more, a major concession by Mexico and a plus for both the U.S. and Canada.

Freeland contends that Lighthizer’s agreement last spring that a pact could be built around auto workers’ wages brought a deal within reach. “I think that was probably the single pivotal moment,” she said on Oct. 1. “We could see a landing zone, and the question for us at that point became, ‘How do we get there?’ ” The answer, as it turned out, was to endure several more months of nail-biting tension and turmoil.

Foreign Affairs Minister Chrystia Freeland, U.S. Trade Rep Robert Lighthizer and Mexican Secretary of Economy Ildefonso Guajardo Villarreal in Washington, Oct. 17, 2017. (Yuri Gripas/Reuters)

Multiple forces with the potential to snuff out NAFTA 2.0 were in play. Early this year, Canada launched a wide-ranging challenge at the World Trade Organization against Washington’s use of anti-dumping and anti-subsidy duties, mainly against Canadian lumber. Freeland sought to keep the WTO action separate from the NAFTA talks, but that, of course, was impossible. Lighthizer denounced the Canadian move as “a massive attack on our trade laws.”

And then—about the time Lighthizer was proposing the auto-wages solution in early March—Trump announced that the U.S. would impose a 25 per cent tariff on steel imports and a 10 per cent tariff on aluminum. Canada and Mexico were initially exempted, but only on a month-by-month basis. On May 31, Trump slapped the threatened tariffs on his NAFTA partners. Trudeau and Freeland swiftly announced retaliatory tariffs on everything from U.S. ketchup to whisky, pleasure boats to playing cards. Trump threatened a 25 per cent tariff on autos, an escalation that TD Bank economists called “carmageddon” that could cost Canada a staggering 160,000 jobs.

Worse was yet to come. In late June, Canada hosted the annual Group of Seven summit of leading economies in Charlevoix, Que. After Trump left the G7, Trudeau was asked at a news conference about the U.S. tariffs and said Canada “will not be pushed around.” From Air Force One, Trump fired off a tweet about “Justin’s false statements” and deployed surrogates to the Sunday political gab shows, where, among other bon mots, his chief economic adviser, Larry Kudlow, declared that Trudeau “really kind of stabbed us in the back.”

Grumbling that the Liberals were badly misplaying the Trump administration began in earnest. Freeland’s critics pointed out that she had delivered at least two widely noted speeches that couldn’t have failed to annoy the White House. Back on June 6, 2017, in the House of Commons, she delivered one on Canada’s historic commitment to multilateralism. Without naming Trump, she declared that the U.S. “has come to question the very worth of its mantle of global leadership.”

A year later, in Washington to accept Foreign Policy’s Diplomat of the Year award, she defended “the international rules-based order” before assailing those steel and aluminum tariffs. “They are a naked example of the United States putting its thumb on the scale,” she said in Trump’s capital, “in violation of the very rules it helped to write.” That must have rankled Trump loyalists, but Freeland’s high-powered network applauded how she hitched NAFTA to wider Trump-era anxieties. “By standing up against possible bullying of Canada, Chrystia is standing up for the liberal international order,” economist Larry Summers, who was treasury secretary under former U.S. president Bill Clinton, and whom Freeland calls a mentor, told Maclean’s by email.

But had Freeland talked herself out of a hearing at the NAFTA table? It began to look that way. With Canada relegated to the sidelines, the Mexicans and Americans settled in for five weeks of bilateral summer negotiations, lasting into late August. On Aug. 27, Trump held an extraordinary White House media event to announce a two-way deal with Mexico. “We’re going to call it the United States-Mexico Trade Agreement,” Trump said. What about Canada? Trump issued a blunt threat. “It will either be a tariff on cars or it will be a negotiated deal,” he said. “And, frankly, a tariff on cars is a much easier way to go, but perhaps the other would be much better for Canada.”

READ MORE: Trudeau’s biggest threat after NAFTA—himself

Freeland cut short a working trip to Europe and rushed to Washington. Grinding marathon negotiations began at Lighthizer’s headquarters near the White House. Freeland emerged every few hours to offer reporters—sweating through a Washington heat wave outside at the curb—a few rote sentences about “goodwill on both sides” and her fixed objective of getting “a good deal for Canada.” Once, she brought them a bag of popsicles—but never word of a breakthrough. By late last month, she appeared disengaged. On Sept. 21-22, Freeland hosted female foreign ministers in Montreal for what she touted as the first summit of its kind. She was booked solid for the final week of the month in New York for meetings around the United Nations General Assembly.

But behind the scenes, officials were moving the ball. Lighthizer had set Sept. 30 as the deadline for a deal, and it turned out he meant it. Rather than just putting pressure on Trudeau and Freeland, a senior Canadian official argued, the firm date gave Canada leverage. The breakthrough came when Lighthizer agreed to let NAFTA’s Chapter 19 dispute-settlement section remain intact, which Trudeau had set as an inviolable Canadian demand.

Canada compromised, too. Among other concessions, American dairy exporters will get more access to sell into Canada’s tightly controlled market. Extended patent protection means cheaper generic medications will take longer to reach Canadian consumers. There is plenty of room for debate about details, but the sigh of relief shared by many Canadian business and labour leaders was palpable. It was Freeland’s moment. “No minister in a generation has been given a more difficult task than this one,” Trudeau said to her as they stood side by side for a victory news conference, “and you delivered.”

Rae, who first met Freeland when she decided to go after what had been his Toronto riding, doubts it will go to her head. He laughs at the inevitable speculation that she now looks like a potential successor to Trudeau—an odd thought given that the PM, at just 47, hardly looks set to exit anytime soon. “I think she’s smart enough and I think she’s grounded enough to know that you can go from hero to zero and back to hero in 30 seconds in this business,” Rae says. “I don’t think she pays much attention to that stuff at all.”

Last fall, Trudeau appointed Rae his government’s special envoy on the Rohingya crisis, a Freeland priority, so they’ve worked together. They also live in the same upscale Toronto residential enclave. Rae sees her around the neighbourhood sometimes when she’s riding her bike. They chat in her garden. But he suggests she’s never fully off duty. “She has this habit of writing everything down,” he says. “Even if you’re over at her house for dinner or a drink, she’s taking notes. Sometimes she writes on her hand!”

Her family steadies her, Rae says. Unlike some politicians, Freeland doesn’t seem to worry about erecting a boundary between her public and private spheres. Last April, for example, her children fixed Sunday brunch for the visiting G7 foreign ministers. Freeland tweeted a photo of them crowded around the table in her casual-looking dining room. Pavlo Klimkin, the Ukrainian foreign minister, invited by Freeland to join the ministers from the major economies, seemed particularly touched. “It was amazing how she organized it,” Klimkin told the Canadian Press, adding that she’d created “a friendly atmosphere of hospitality.” Trudeau briefly brought her family into the NAFTA narrative at that final news conference by thanking her husband, Graham Bowley, and their three children, Natalka, Halya and Ivan, by name.

Rae agrees that her links to Europe, especially Ukraine, underpin her passion for global institutions. “That is a very important part of where she’s coming from,” he says. “I think the challenge for her is also the challenge for Canada.” His point is that Canada is too small to thrive without the multilateral rules, including trade deals, that Trump routinely derides. NAFTA has now survived the threat he represents, and Freeland has risen as a result. Her next moves—and she’s shown a propensity to keep moving—will be among the most closely watched in Canadian politics.

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