Talking Trump: How the next U.S. President could impact Canadian businesses

Peter Lukasiewicz: My name is Peter Lukasiewicz. I'm the CEO of Gowling WLG and it's my pleasure on behalf of our firm, and on behalf of our good friends at Mintz Levin, to welcome you to our seminar entitled "Talking Trump". I don't know about you but I'm a recent Twitter user and didn't seem to get a lot of messages until I thought, well, it's the real world post November 7, I better sign up to the Real Donald Trump account. Boy, if you want to feel loved on Twitter just sign up to that account. Last night Donald said to me, "Thank you Ohio. Together we made history and now the real work begins. America will start winning again." You can get messages like that, if you have a sleepless night, there is usually something there for you around 3:30 - 4:00 in the morning. Our friends at Mintz Levin, for those of you that don't know Mintz Levin, firm of about 450 lawyers in the United States, headquartered in Boston with offices in London, in California, in LA, in Palo Alto, San Diego, San Francisco, and equally in New York City, Stamford, Connecticut and, as you'll learn momentarily, in Washington, DC or I guess as it's going to be known going forward, The Swamp.

With that let me introduce to you our panel. To my far right, to your far left, Bruce Sokler. Bruce as well practices in The Swamp with Mintz Levin. He leads their anti-trust section. He counsels and represents Fortune 100 companies in all anti-trust matters, spreading a broad range of industries, but has particular experience in communications, health care, retail and regulatory matters. He is, if you like, our regulatory expert on the panel.

To Bruce's left, to my right, is my old friend David McFadden. David is counsel to our firm, having been a partner for many years in the firm. He has extensive experience in advising clients on investments and operations in Canadian and international markets, with a particular focus on energy infrastructure, financial services and technology. In addition to being an outstanding and leading lawyer, David was the founding president of the Canada-US Business Association and also for a number of years served as the Chair of the International Trade Committee of the Toronto Board of Trade. In that role he participated and led in numerous high level meetings and discussions with US business and government delegations.

To David's left is a familiar face to many of you, the Honourable John Manley, who is the President and CEO of the Business Council Canada. John is the former Deputy Prime Minster of Canada. He was first elected to Parliament in 1988. Re-elected three times. Obviously a slow learner. And from 1993 to 2003 he was a Minister in the Government of Prime Minister Chretien, serving in the portfolios of industry, foreign affairs, finance, in addition to being our Deputy Prime Minister.

To John's left, to my right, Governor Bill Weld. Bill was the Governor of the Common Wealth of Massachusetts from 1991 to 1997 and, he too being a slow learner, most recently was the Vice-Presidential candidate in 2016 on the Libertarian ticket. Following the election he returned to Mintz Levin where he is a principal for ML strategies, which is a strategic consulting business owned by Mintz Levin, as well as a partner in the firm. In those roles he provides clients with advice and counsel related to domestic and international government strategies, international business transactions, cross border investments and international capital flows. He's currently a member of the council on Foreign Relations in New York and in Washington and is an associate member of the Interaction Council. That is your panel.

The format this morning is that we have a series of questions that I, as your moderator, will pose to the panel so you'll have to suffer through that for roughly, we figure, about 45 minutes. We then hope to have about 30 minutes for questions from the audience. With that we'll start with the Governor. Bill can you give us your thoughts on Trump, the candidate, versus Trump, the President-elect? Will he change and if so, in what way?

Bill Weld: Well, it was quite a ride being up close and personal with that campaign of 2016. No one made it more so than Donald J. Trump. He was consistently outrageous. It's funny. Each of the major candidates had a data analytics firm advising them and the one that was advising Mr. Trump was called Cambridge Analytica out of London, England. They painted a very different picture of the United States and all of our indigenous master pollsters and political pundits. The picture that they painted was of a very angry America. They looked at between the coasts and saw all those people who really resented the Chardonnay swilling, brie eating "Coastals", as I've come to learn we're referred to in the heartland of the country. I've had enough from you Coastals telling us how we should be thinking. They advised Mr. Trump that he had to keep the fervor of these people between the coasts and there were certain words that resonated with these folks and would spur them to action and spur them to come to rallies at one in the morning. Phrases that we might not, left to our own devices, have thought up. Like, for example, "Lock 'er up". Mr. Trump needed demons, not just concepts to run against. A demon is always easier to find if it has a human face on it which is why he spent so much time rallying against various other foreign countries and people who were going to…it was almost like Dr. Strangelove, the movie. They're going to sap our precious bodily fluids. They're coming for us. It was necessary for him to stoke up his base and that meant that he spoke only in superlatives, "It's going to be the greatest!" and there was nothing measured about his tone ever. That's Trump the candidate. I've known Mr. Trump a little bit when I lived in New York for the decade of the Op's and in social settings there he is quite mild, quite measured, so there really are two Donald Trumps.

One is the business Donald Trump who can bluff his way through anything, who has the nerve of a burglar, who has threatened his way into getting hundreds of millions of dollars while his casinos in Atlantic City were going down the tubes. Every time they went bankrupt he walked out with another hundred million dollars in his pocket. That's the one who showed up for the campaign. On the downside, you ask who's going to show up in the White House? Is it going to be the gentleman from New York City or is it going to be the braggart warrior? You'd be inclined to think that it will be the bluffer and the braggadocio person who will show up in the White House. On the other hand I think the early signs are not bad. The combination of Mnuchin in treasury and Wilbur Ross, commerce, those are two of the most experienced business people to hold those offices in a long time. They do have a world view. It's similar to Mr. Trump's world view but if you listen to what Mnuchin said the other day…he stood for more than half an hour just standing up on the ground floor of Trump Tower. Talked to the press about what was going to happen and it was all of a piece with what had been said during the campaign and it kind of cohered. I think that the personnel decisions made so far, they give some promise that people are going to know what they are about. My own view is that the last appointment that Mr. Trump is going to make is Secretary of State appointment and I will surprise you by saying that I think he is going to pick my successor, as Massachusetts Governor, Mitt Romney. I'll tell you why I say that. In the last couple of days the press has floated the name of Sarah Palin, who's just anathema to the Democrats in Washington, as a possible cabinet member. Also in the last couple of weeks Kellyanne Conway, who is the campaign manager for Mr. Trump, has been on television lambasting Governor Romney. I'm not sure how loyal he would be. We don't even know if he voted for Mr. Trump. He didn't of course. He voted for Evan McMullin, the Mormon from Utah, I don't know whether that's public but believe that to be the case. I speak with the Governor from time to time.

Peter Lukasiewicz: Will be now.

Bill Weld: She's just been hammering on Governor Romney. Not a word out of Mr. Trump. Not a word out of anybody else. The only explanation I can see for that is that that's by pre-arrangement. You don't have your campaign manager wandering off on a toot and undercutting your freedom of action to make what appointments you want to make. My sense is the end game is going to be Palin to Veteran's Affairs so that the base will be satiated and stoked and think, "This is great. This is the Cabinet that we wanted." and then Mr. Trump will be free to make the move, that I think will be the glue of his presidency, namely the appointment of Romney as Secretary of State, and it solves a lot of problems for him. First of all, Governor Romney is camera ready as Mr. Trump has said. He can go all around the world. He can do all the diplomatic things that Mr. Trump really doesn't want to do. Furthermore it means the Republican party does not need to split in half this year, as I constantly predicted on the campaign trail. I said, "Ah no, I think the party is going to split in half" and you know something, Donald Trump agrees with that because he says, (this is me talking during the campaign), he says I see a very different Republican party in 5 to 10 years. Of course he saw the party of Trump. But I think the ideal end game for Mr. Trump would be Romney at state to kind of lower the decibel level. Trump looks strong because he has overridden his crazy right wing advisors. I think it helps me in many, many ways. Romney not only picks up the slack but symbolically it unifies the party so what happens is the Republican party doesn't split in half. What it does is swallow the angry white males who voted for Trump and it adds to them to its base, so that if that does happen and the party doesn't split, then you can see a scenario where the Republicans are the majority of the national party for the next 8 to 12 years. I think, whether or not that's good for the country, I think that unification and lowering of the decibel level that a Romney appointment would betoken would be good for the country.

Peter Lukasiewicz: John, you are the other, well the only member of the panel who has served in the national government in Canada, so you've seen a number of elections. Your thoughts on Trump, the candidate, and Trump, the President-elect, from a Canadian experiential prospective.

John Manley: Thank you for including me. I'd have to say of all the law firms I've never worked for, Gowling WLG is my favourite. As Scott was reminding me earlier this morning, that's not because I wasn't invited, but there are always new turns in the road of life, so who knows? I think one of the things that I learned in my time in politics, and it's always risky making comparisons between the Canadian and US systems, because the countries are actually quite different despite all the apparent similarities. The one thing I learned is when the prevailing mode becomes "it's time for a change" then about the best you can do is hunker down and let it blow through because it will move everything in its path. I think to some degree we all focused on the outrageous nature of the Trump campaign but below the surface you had a real desire for change. Defined probably in 50 million different ways but one candidate became the agent of change and one became the agent of the status quo. If it's time for change and you're the status quo candidate you'd have to say Hilary Clinton did pretty well to come as close as she did and get the majority of the popular vote. But time for a change underlies it rather than any particular set of campaign promises. I think we get ourselves into a little bit of unnecessary fretting and worrying if we take the statements made by Candidate Trump terrible literally. I think he will bring change. I think whether he can actually drain The Swamp, he seems to be surrounding himself with some of the same crocodiles that were there before, but he will bring some change. Will he do some of the really headline promise things that were in his campaign? He probably doesn't need to. We've seen him dialing some of those things back. It's always important when you look at US politics and statements, from the Canadian point of view, to remember that despite what the CBC portrays to us, it's actually not about us. I remember having a call from the Prime Minister after President Bush gave his first speech in Congress following 9/11 because the Canadian media were besides themselves that he hadn't mentioned Canada. I actually had to go on a platform the next day with the media with Colin Powell and get Colin to say, "No, we really do love Canada". But we tend to think it's about us. It's actually not about us. What we can sometimes be, Bill and I were saying earlier together, we can sometimes be collateral damage when there is something in the US that blows up, the pieces of metal that come flying across the border can sometimes cause us harm. But fundamentally that relationship is deep and sound and incredibly complex in terms of the numbers of tentacles that are together. Therefore, I'd say for the next couple of months, we ought to just watch hockey and enjoy the onset of winter. We'll deal with President Trump once we've got a little better fix on what he actually will want to do.

Peter Lukasiewicz: Bruce, given your practice and given where you practice, the President-elect has made a number of statements about the economy and seems to be, at least in that area, following through. Has already announced that he will withdraw the US from TPP. He's made a number of statements about the economy. What steps do you think the new Trump Administration will take to improve the US economy?

Bruce Sokler: I think for the most part we should not focus on some of the minor steps that the President-elect will take to feed his space, such as the carrier plant in Indiana that he "saved" by giving the owners $7,000,000.00 in tax credits this week. But I do think in the first 100 days of the Administration there will be several concrete things they will attempt to get through in several different ways. Their campaign promise, which they probably can't beat, is they want to get the economy in the United States growing over 4%25 a year. It has never in our modern history done that. But there are several levers that he could pull and presumably he will do all of them relatively quickly. The thinking in the Republican Administration, and the Trump campaign, is that the United States is overregulated, business is over-regulated. I think there'll be a strong thrust to roll back regulation. Anything that isn't finished will be stopped in its place. There are some regulations that he can get rescinded by executive on January 20, 2017. We'll see a headline the next day about 12 things he did. There is a congressional statute that allows Congress to vacate regulations that were passed on the last 100 legislative days in the Obama Administration, so anything back to May is at risk. Finally, the United States needs to pass a budget. The United States fiscal year started October 1 but we still don't have a budget for this year. What we have is a continuing resolution that runs through March and I think there'll be a budget reconciliation bill and you can put things onto that bill that is finance orientated. I think there'll be a significant thrust for the tax reform bill to be done and be done quickly. That will include major changes; corporate taxation that will help economy as well as various types of tax cuts for individuals. There is a divergence in what the campaign said and what the Republicans in congress have proposed but I think that gets worked out in the first 100 days.

Peter Lukasiewicz: David, John spoke about the fact that it's not about us, even though as Canadians we do think it's about us, and Bruce has talked about some of the changes that he believes the Trump Administration will bring about. What about the relationship between our Prime Minister and the President, something that we certainly value, do you think there will be a relationship between the President-elect and our current Prime Minister, and how will that affect the economic relationship and trade decisions that are made respecting our two countries?

David McFadden: Let me say one thing regarding what Bruce said. Godspeed on increasing the GDP in the United States by 4%25 because that will help us get our GDP up to 3, probably, maybe more. There is no doubt about it. There are two economies in the world that can really make a difference to change the dial - the United States and China. I hope what you're suggesting is successful. Because this is one thing where North America, rising water to float all boats, the relationship is interesting. If you look back over history, the relationship between the US President and the Prime Minister of Canada, can lead to both good and bad things. I suppose you could go back to the 30's and 40's. Franklin Roosevelt and Prime Minister McKenzie King had a very close relationship and it was very helpful in terms of building a lot of ties. Canada worked very closely with the United States in a lot of initiatives. Very positive period. The Reagan/Bush Mulroney relationship was unusually close, I think. From everything I saw and I'll mention an example of it in a moment. We would not have had a free trade agreement between Canada and the United States if it hadn't been for the Reagan/Mulroney relationship. There is not a chance in the world that Premier Pierre Trudeau was Prime Minister and Reagan would've ever sat down and worked out a free trade agreement. It wouldn't have happened. Can you see Trudeau and Reagan in Quebec City singing "Irish Eyes are Smiling"? I mean it would have never happened. The fact was that that relationship was really vital. A small example of that, to my mind, was when I was President of the Canada Business Association. I was very much involved back and forth across the border. One person I got to know very well was the head of the Canada office in the Department of Commerce in Washington. If any countervail actions came up against Canada it would have to go through his office and then work its way through the commerce system and eventually a decision would be made whether countervail was going to be imposed on Canada or any other country. His name was Bill Cavett, some of you may even remember Bill, but anyway I remember talking to him several years later and he said, "I always knew when Mulroney called Reagan or Bush, we'd be out to lunch at countervail action and we'd hear from the commerce secretary and basically the message was, "I talked to the White House and we don't think we'll go ahead with that action so just stop it." He said he just knew the call had been made from Ottawa to the White House. This relationship is really important. I'll give you an example of when it has been very counter-productive was the Diefenbaker/Kennedy relationship, which was toxic. In fact it was so toxic, Governor, that Kennedy actually sent up some of his campaign operatives to help Lester Pearson defeat Diefenbaker at the polls. That is now documented. It's funny that there was rumour of it at the time but now there is evidence of that, including his pollster Harris, was sent up to help the Liberals defeat the Conservatives. I think another example was the relationship between Reagan and Trudeau was poor. They didn't get along. They didn't see eye to eye on very much at all. So that brings us to today. How is the relationship going to go down between our Prime Minister, Justin Trudeau, and Donald Trump? On the surface you'd say, "Boy, they don't have a lot in common." But who knows? They may hit it off. You never know. With any luck it will because we definitely need that relationship to be a positive one, because on a lot of little and big issues, it can be very important to us. So we'll have to see. It's going to be interesting to see the two T's getting together and see if they get along.

Bill Weld: Can I jump in on that Peter? I want to say I think so far PM Trudeau, this PM Trudeau, has played it absolutely perfectly. In their first telephone conversation he said to Mr. Trump, "You know, you and I are very much alike." and Mr. Trump says, "Oh?" and PM Trudeau says, "Yeah, neither one of us is supposed to win. We are both outliers. We're kind of outcasts." Trump kind of goes, "Oh, yeah. That's pretty good." Then Trump rattles the sabre about NAFTA is the worst Treaty ever negotiated and "I'm going to rip it up and stomp all over it." and if PM Trudeau had said, "Oh no, I just have to say you can't touch a hair on the head of that nice NAFTA Treaty." they would've gotten off to a bad start. But what does he say instead? He says, "I'm there with bells on. Sure, I'm absolutely happy to renegotiate the NAFTA Treaty and aspects of it with Mr. Trump. There are things that can be done there that would move us all forward." and what a constructive approach that is. I mean, that apple didn't fall from the tree, in terms of just innate political cunning. Further to what John said, while unaccountably I've never received an offer of employment with this firm, I'm very grateful to Gowling WLG for having made all of this possible and it reunites me with my fellow other, John Manley. In 2005 John and I wrote a book for the Council of Foreign Relations called "Building a North American Community". We really were a pair of commies so we proposed a common external tariff and we could get away with that in 2005. Maybe they should call us back into service, John. Thank you Peter.

John Manley: I never thought I'd be addressed as a commie. As Mark Twain said, "I was never radical in my youth for fear of becoming a conservative in my old age." The other thing that happened on that call, is to the surprise of Prime Minister Trudeau, the President-elect claims to have known his father. Had very favourable things to say about Pierre Trudeau. I agree totally with what David said. We saw it in the government that I was part of, the chemistry between the heads of government can be very important. What my Prime Minister had with Bill Clinton was quite different than what he had with George W. Bush. Although they did maintain a very professional relationship, what Trudeau had for the brief time that they overlapped with Obama, very different from what Stephen Harper had with Obama. So, these things can matter. Not only was the FTA a result of the Mulroney/Reagan relationship but the US bureaucracy steadfastly resisted the acid rain treaty and the President said, "I'm doing that for Brian." and basically made them all stand down. Colin Powell told me about the discussion around the shipping through the Northwest Passage, he said, "Brian would come into the Oval Office with the maps and he'd spread them all out over Reagan's desk. It would take me months to sort it out after Brian had been into to talk to the President." He convinced him. I think the thing that's interesting about this relationship though, is you've got what I would guess is the last baby boomer President of the United States. Justin is definitely not in that generation and he appeals on a whole different basis. It's not just policy orientation. There's also going to be this curious thing about how they relate to each other across what is a meaningful generational divide.

Bill Weld: But you know, they both have big personalities, and they're both comfortable in their own skin, and those two things both count for a lot. I think there's hope.

Peter Lukasiewicz: Let me ask, given that we've focused and talked about the relationship, or potential relationship, between our Prime Minister and the President-elect, let me put to you the hypothetical that none the less, the President-elect is pressed to advance the idea of re-negotiating NAFTA. How can Canadian Business, John, get involved in that issue and how do you think the government will react to pressure from the United States to reopen NAFTA and where do you think the focus will be, if in fact, the United States goes in that direction?

John Manley: Needless to say, this is from the Business Council point of view, I represent the heads of about 160 of Canada's largest companies. Our tagline is our members manage seven trillion dollars in assets and would have about a trillion dollars a year of annual earnings. There's a lot of concern about what that promise by the President-elect would entail. Now, a few facts, we may live in a post-fact world but a few facts are always useful to think about. One is that when you take oil out and just look at trade in goods, the US runs a trade surplus with Canada. When you look at trade between the US and Mexico, of imported goods coming into the United States from Mexico, 40%25 originate in the United States. Although apparently NAFTA is the worst trade agreement ever, we don't actually know what particularly the President-elect doesn't like about it. Is it that tariffs are gone? Well, when you actually look at the big trade picture you'd have to say, "What happens in North America?" and that's sort of what we were trying to achieve with our "Building a North American Community" 11 years ago, is that we're trying to be competitive, not among each other, but with essentially China. Putting tariffs on supply chains within North America would reduce North American competitiveness. Is it the dispute settlement mechanism? We wouldn't really like to give that up. On the other hand we do have a little bit of experience, David, with the US not actually respecting the decisions of those panels when they go against them. Is it the categories of people that have mobility under NAFTA? My gosh, most people think the problem with those is they haven't been updated since 1994 and, in fact, if you know anything about computers you're probably not in any of the categories. So, what is it that has to be done? Would he like to roll softwood lumber into the NAFTA Treaty? That would probably be something that we would enjoy doing and maybe what was in Mr. Trudeau's mind. But you have to remember with softwood lumber, back when Bill Weld's State included what is now the State of Maine, the first dispute about Canadian lumber arose, George Washington was the President at the time, and we've been arguing about it for over 200 years. So I'm not sure that one's going to get solved. The other thing in the leaked memo from the Trump campaign was country of origin labeling. That actually was a ruling of the WTO. It had nothing to do with NAFTA. We're kind of groping in the dark here. But on the side of Canadian Businesses, a lot of apprehension because, of course, you are assessing risk and the downside is quite large even if the risk is small. People are certainly waiting with some anxiety about what may come.

Bill Weld: Some things you have always with you. When John and I were working on this deal back in 2005 I took a lot of dictation from John. I would assume the stenographic position and he would say, "Okay, Weld. There are four things that you're not allowed to talk with Canadians about. Everything else is on the table but you cannot mention softwood lumber, beer, water or Canadian television. Okay? Those are the four no-no's." So if you just add meat to that list you'll know what the pressure points are going to be this year.

John Manley: It was actually dairy and poultry that we couldn't talk about.

David McFadden: What about live swine? One of the cases I was involved in, it was a Canadian panel settlement, dispute settlement, with live swine. That went on for 2 years. I got to know a lot more about live swine then I thought I'd ever know in my life.

Bill Weld: I will not have you insult the President-elect.

David McFadden: It's amazing what you learn about people. We finished 2 years and what happened then was, we had a descent from one of the panelists, who was a US trade lawyer, and we wind up an extraordinary challenge. We're the first one to go to extraordinary challenge, interesting enough, and this was vital to the whole survival of the dispute settlement process. In the extraordinary challenge era you had Superior Court judges, from Canada and the United States, who would look at the process and ensure that it was followed and it was reasonable. Anyway, we were sustained unanimously and majority of the judges were Americans. The process itself really works. It's not as formal, say as some of the GAT processes, but I think it really works well. I don't think Canada would have ever entered into the FTA, John, if we had not had a dispute settlement process. I mean there is no way that you'd just sort of get into a deal and then it's subject to local domestic courts. You have to have some process and I think that is one of the really good features of the agreement. I haven't seen what Mr. Trump is saying about that aspect but I would hope that they don't start it because there's some traders in the United States who would attack that. They say it's an attack on American law, American process, but without it you can't very well have an international agreement without some sort of effective dispute settlement process.

Bruce Sokler: Peter, let me offer a prediction because predictions are easy to make and people, even though this is being recorded, won't care how my predictions come out but I'll give it to you anyway. The attack on NAFTA by Trump was clearly part of the strategy he successfully used to break the so called "loose state fire wall" that Hilary Clinton had. It was code for the loss of manufacturing jobs in those mid-Western states. Politically I think it is pre-ordained that NAFTA will be touched and as Bill says, Trudeau I think is playing it correctly. I think there'll be some modifications, mostly South looking to NAFTA, that whatever those modifications are the President will call it a big win, just like he called, as I alluded to the saving of a thousand jobs in the Indiana carrier, a big win and a lot of people got under the hood of that and didn't really think it was that much of a win. But I don't think he will care about the dispute. I don't think he will care that much about changing things, going North, and if as I expect it will be, the people, if you will the Canadian side of the table, play their cards well and are willing to give sleeves of their vests on a couple of things, this one will come out all right. But I don't think he will blow up NAFTA entirely and I don't think it is reasonable or feasible to think that NAFTA will be untouched.

Bill Weld: I think as long as the Canadian's play it cool, and the PM is shown every indication that he's going to do that, that there won't be big problems North of the border. Mr. Trump's speeches were not laced with the virulent rhetoric of all those low wage jobs up in Canada, stealing American manufacturing capacity. I don't think there is a lot to fear North of the border up here. It's important to keep the right tone.

David McFadden: Although, as we were saying earlier, the damage is done to Canada when it's often directed somewhere else. Because we are kind of often below the radar, except on a few issues that tend to be the same ones that keep coming back, when President Obama sent Max Baucus to Beijing as Ambassador, it took a big load of pressure off of us because he was fixated on lumber. You do get these issues. But our concern has to be that the changes that are intended to address the supposed problem with Mexico actually end up hitting us without the intent of doing so.

Peter Lukasiewicz: Let me change the focus of the conversation and let's talk about energy for a moment. Something that is near and dear to the hearts of all of us. Let me ask David. President-elect Trump has made it clear that he favours Keystone XL Pipeline. He's also, however, questioned climate change although recently acknowledged that maybe human activity have something to do with it, or it's the Chinese. You've said he's going to bring back jobs to coal country and we, on the other hand, have just adopted a national carbon pricing scheme. We are signatories to the Paris Climate Change Accord. What does this difference in view, difference in approaches mean for Canada? Does it put us, as a country, does it put our industries at a disadvantage? I'll let you lead, David, then I'm sure others will have a point of view on the question.

David McFadden: Number one, just dealing with the Keystone XL, for Alberta that is vital. It's going to create jobs in Western Canada which badly needs it. It'll create jobs even in Ontario because we are going to be producing pipe, equipment and whatever parts for a pipeline, so I think that it will be positive economically, certainly for Western Canada. I think this generally to get moving ahead with that pipeline and other pipelines. So I think in that respect building the Keystone Pipeline is positive for Canada. Secondly, on the energy file, it depends on really where they're going to go with this move back into coal strategy. If what the intention is, is to get into coal production in an expanded way and to bring down energy prices in the United States, that's a problem for us up here. For sure. I haven't seen any, and Governor you may know some more details about what Trump is thinking about in this area, but certainly from a climate change environmental point of view, we certainly wouldn't want to see coal getting back into production, heavily. Ontario's the only jurisdiction in the world that's got rid of coal 100%25 and you'll notice we don't have any smog days anymore. We wouldn't want to see suddenly coal get back in as the king but it could happen.

John Manley: We also can't afford our electricity bills but that's another matter.

David McFadden: And John, you're touching on the really sensitive point. If in fact what happens through a combination of strategies in the energy field is that the United States gets lower energy prices, that could particularly hurt a Province like Ontario. Everybody here from Ontario knows we've had a huge ramp in electricity prices. They doubled in the last 10 years and they're going to go up further. Combined with that, as of January 1, we are going to have a charge now per litre of gas under our climate change legislation. The risk here is that we become less and less competitive, particularly in those industries which rely on electricity, and secondly, the feeling develops that the United States is a lot more favourable, for a lot of reasons, to locate there, particularly industries that have some energy intensiveness. That's the worry and right now in terms of Ontario's sort of industrial heartland, or whatever you want to call it, financial services heartland, we have to be conscious of the fact that our energy prices are making us less competitive which is the first time in history we've been in that position in the last several years. If the Trump White House heads the United States into lower energy prices in the United States, it could hurt Canada. For the exception of building the pipeline and servicing the US market.

John Manley: So except for the last point about competitiveness I think the Trump presidency is almost an unalloyed plus for Canadian oil and gas. You're going to get better prices for your oil, you're going to have better access to markets, with not only Keystone but other pipelines to the Pacific. Much as the President-elect doesn't like TPP, I think if you look at some of the statements made by Wilbur Ross, the commerce secretary designated in recent days, it appears that the real reason is that they don't like multi-lateral treaties. They prefer bi-lateral treaties. But that's not to say that there's not going to be emphasis on trade with the Pacific and more pipelines going to the coast and that will be very good for Western Canada, and I think Canada as a whole, opening up those markets for Canadian energy and other Canadian goods.

David McFadden: Peter, first of all I'm not sure how many of these pipelines are actually going to get built. I think it was a major step forward this past week that the Federal Government gave permission, I guess is almost too strong a word, they permitted. Governments can give you permits. They can't give you permission. Getting the Trans Mountain Pipeline built is still far from being certain. It's true that along the route every indigenous group, save for the one at the very end of the pipeline, everyone supports it. The communities, save for the City of Vancouver, support it. I can tell you, I think, I don't want to be an alarmist, but I think you're going to need the Canadian army to protect the construction of that pipeline to get it done. We're seeing this play out in North Dakota now in a different pipe with a different set of issues. Keystone made a lot of sense when oil was $80.00 a barrel. The economics around building pipelines is more challenging and the pipeline companies are increasingly looking to the suppliers to put the capital at risk to build a pipeline. I think quite apart from whether the permit is issued for Keystone XL, I think there's still some decisions to be taken about whether it makes sense. From the Canadian point of view, quite honestly, a pipeline that transports more of our oil to the refineries in Texas, is not really the solution that we're looking for. Generally speaking, Canadian crude is realizing a discount of about $10.00 a barrel. At points over the last year or so it's reached over $40.00 a barrel discount. That's the problem you have when you are a supplier to only one customer. I think from a Canadian point of view we desperately need pipelines to the Pacific so that we're selling our product into global markets and we're not captive of a single US buyer. On some of the other issues I actually don't think that coal is going to make a very significant recovery in the United States and that's because the country is floating on natural gas. Which when we were doing our report it was a very simple proposition. Canada had energy. Mexico had low wage labour. When you stirred that whole mix together with the dynamism, entrepreneurialism and market size of the United States, you'd have an amazingly competitive world player in a global economy. What's changed since then is that the United States becomes self-sufficient in energy, without Canada. I tend to think that this transfer from coal to gas is going to continue in the United States for a variety of reasons. It doesn't help our competitiveness issue and it's not going to bring back those coal mining jobs in Ohio, but it's the reality of the market.

John Manley: I would strongly agree with that. It's the market that has killed those coal jobs in the United States and that's a difficult verdict to appeal, so to speak. I don't think that the coal industry is going to be successfully reestablished in the US to the extent that's a concern.

Bill Weld: Peter, let me just add a couple of quick thoughts. One is, I think one of the themes we have touched upon several times this morning is we shouldn't take a lot of Trump's campaign promises literally. They may be directional but they're not necessarily literally. The second thing is that I'm of the school, and I think many people are, personnel selections or policy. That is, who you pick and put in various important places will tell you a lot. In fact a lot of us in Washington who make a living of this have been looking carefully at those personnel selections. And that leads me to the third point which I think is relevant to the energy discussion. In the environmental area it is clear that the personnel that are leading the transition are likely to lead the EPA and some of the important positions are very much, if they're not climate deniers, they're regulation deniers. There is going to be a fair number of regulations in the environment area, whether or not Trump pulls out of the Paris Accord, which I think is a jump ball, that's going to affect the energy equation in the United States tremendously. I think coal was one of those campaign promises that when you get into the detail there's really nothing Trump will do that will necessarily change that. But in terms of domestic gas, domestic oil, it's going to be a lot a easier to continue to explore, a lot cheaper to explore and a lot less expensiveness in compliance.

Peter Lukasiewicz: There is one thing that is interesting listening to our panel discussion this morning, and maybe it's typical of more the seniority of the panel here, you haven't heard a word about renewables. We've talked about oil. We've talked about gas. We've talked about coal. But renewables are now becoming an increasingly important factor. A lot of the environmental movement doesn't want to hear about any of these things. Period. Full stop. They want to head fully into renewables. Certainly Ontario has made a major commitment there as has other parts of Canada. A lot of states in the United States have moved on it. Partly it has been driven by tax policy, in fact a lot of it, so the question becomes if some of those tax incentives disappear what will happen to the renewable industry? But certainly that's the one area that is growing. Has brought popular support. It will be interesting to see how Mr. Trump deals with that because coal is anathema to the renewable group. For philosophical reasons as well as for business reasons. It will be interesting to see how he comes out on the renewable end of the spectrum. Personally I think that's where the future is. The next 50 years is not going to be in coal. It's going to be in renewables. Whether you're talking about solar wind storage or all of the other new ideas that are coming forward. So it will be interesting to see because the United States is a leader in that area as well. Canada has obviously taken a lead and we've got a lot of good companies in this area and we've done a lot of things but the United States have got some wonderful companies. Tesla being obviously one of the ones that jump out, an innovation company, but there's all kind of US companies that are taking a lead in that. It will be interesting to see what the Trump White House does in their renewable sector which didn't get much attention, at least from what I saw, certainly from Mr. Trump.

Bill Weld: Peter, can I say one last thing because I sense we are coming up on the Q&A period, but whatever else you may think about Mr. Trump, two things you know. One, he likes to build things and two, he loves to spend money. I think we're going to be growing over 3%25 in the US. One dynamic that has changed with the Republicans holding both houses, and now having the White House, is that the famous grid lock of Washington, DC has been broken and things are going to happen now. Because when the Republican congress of the House and the Senate pass things, they're going to get signed, not vetoed. I think you're going to see very quickly, as I think Bruce was saying earlier, you're going to see tax reform. You're going to see those rates come down. You're going to see corporations able to expense capital expenditures in the year in which they're incurred, that's going to be HUGE, to coin a word, for the American economy. Look what the stock market is doing? So I think we are going to see boom times coming and that's got to be good, not bad, for Canada as well as the US.

Peter Lukasiewicz: Right. With that, if anyone has a question raise your hand. Jacqueline here has a microphone. Right here at the front, we'll work from the front back.

Audience: The most integrated sector between US and Canada is the automotive, at least in my view. Auto backed NAFTA, how do you gentleman crystal ball what will happen to the auto sector?

Peter Lukasiewicz: Who wants to take that? John do you want to take the lead on that?

John Manley: One of the challenges that will quickly become apparent is, if you want to change NAFTA, you don't want to destroy the supply chain efficiencies that exist in the auto sector which are already somewhat challenged. The typical North American manufactured motor vehicle, when you combine all of the parts, they come from either Canada, US or Mexico. Crosses one of the two borders on average 28 times. You've got a lot of border crossings there. 7 times then when you multiply that out you've got, when a shipload of 400 vehicles comes in from Korea, it crosses a border once, when you multiply that out, 7 times 400, that's a lot of border crossings to deal with and we're getting very efficient at it. I remember when we discussed this with Tom Ridge, he called me one day when we were the counterparts on border issues, he'd just been to the Cadillac plant in, I think it was in Grand Rapids in Michigan, and he said, "You know, now I understand what you've been talking about. When a car starts on the assembly line, it's been ordered by Mrs. Jones in Illinois and she's specified what she wants. When that chassis begins its journey the seats that she has specified don't exist. There is an automatic order that goes to Woodstock, Ontario. By the time the chassis reaches the point later in the day on the assembly line when the seats are to be installed, they've been made and shipped from Woodstock, Ontario and the robot installs them onto the chassis and the vehicle rolls off the assembly line. You don't disrupt this, save at your peril. I think that what we're finding is that for Ford, GM and Chrysler to be competitive, the efficiency of those supply chains is vital. The components that have a large labour element to them tend to be made in Mexico. That's how you continue to compete with the Korean's and others that are making cars and shipping them into North America. I think the outcome is going to be benign just because I think the reality is going to settle in. That you don't want to disrupt that.

Audience: I have two questions. The first one is any thoughts on upcoming changes in ObamaCare? And the impact that could have for Canada, as probably are diverting away from each other on health care.

Peter Lukasiewicz: Bill?

Bill Weld: Well, Mr. Trump has signaled that he wants to keep the two most expensive features of ObamaCare which is requiring insurance companies to cover pre-existing conditions, and letting people stay on their parents health care plans up to age 26, and that was after his first meeting with Mr. Obama in the White House. That's all well and good. I think the legislative branch has signaled that it feels, and I think correctly, that ObamaCare tilted the balance too much in favour of all the decisions being made by a combination of the government and insurance companies. Paul Ryan has said he wants to get more decision into the hands of doctors and patients who have an interest, not merely in cutting costs, but also in the quality of care. That will require somewhat radical surgery. For example, tinkered with the mandates so that instead of mandating a cradle to grave coverage for every conceivable possible medial result, and instead required people to have catastrophic coverage, and after that let them shop for what they wanted through health savings account or just cash out of pocket, pay as you go. That would cut the cost of the program very dramatically without doing violence to the progress that's been made to date.

Audience: Many countries in ASEAN are also equally nervous about the upcoming changes in the US. Is there an opportunity for Canada to act as a gateway to North America?

Peter Lukasiewicz: John and then David.

John Manley: First I would say I think the Canadian trade strategy has been, based on a couple of things, first of all the European Trade Agreement is a crucial part of it. I think we're very close to having that realized. There's been a slight delay in the vote in the European parliament but we're pretty confident that we have the votes in the European parliament to get see the past and probably implement it as early as April 2017. I think that once Brexit resolves itself, which is a non-trivial matter, a trade agreement between Canada and the United Kingdom would be on the first things that's accomplished. If they've got the horse power to actually negotiate one, we've very few issues with the United Kingdom, lots and lots of investment, I think that will easily happen. Our negotiating position on TPP was that we couldn't afford not to be in it. I think the unfortunate thing about TPP from my point of view is that it was not that, I didn't think it was that important as a trade agreement, although Japan is a major prize in it, but it's far more important as a geo-political instrument. By withdrawing from it I believe the United States does two things: one is it completely loses it moral authority as the leader and champion of trade liberalization on the planet, a position that it's held since 1945. You've taken 11 other countries to the alter and the church was full and then you didn't show up. It's going to be very hard for the US to ever exercise that kind of leadership for a generation. The second thing it's done has left what I would describe as a China sized hole in the Asian trading map, I guess is the right word, and China's already moving to fill that. TPP was part of President Obama's pivot to Asia. I think it's very important from a geo-political point of view, less important from a trade point of view, and it does therefore open some opportunities for Canada if we can negotiate bi-laterals with Japan. Which would not be necessarily very easy, partly because of the auto sector and the Japanese will start with they want what's in TPP, and we could give them that in the context of a 12 country agreement. It would be very hard for us to give it to them in a bi-lateral but also ASEAN, add that together with CETA and UK agreement. In a peculiar way Canada becomes a bit of a hub to the North American market. My guess is that the Canadian government will be pretty aggressively moving toward that kind of agenda. They seem to be the last player standing that truly is, despite being publically ambivalent about TPP, the Trudeau Government has been pretty consistently pro trade liberalization and really deserves a lot of credit for actually completing CETA. I think there's some good opportunities there.

David McFadden: My experience has been that investors from Europe and Asia look on Canada as sort of America lite. They'll often come here in my experience to sort of get their feet wet in North America and then very frequently will expand in the United States and invest there. So, it's sort of like a stepping stone for a lot of companies. People are often intimidated with entering the United States full on. Canada's a nice easy way to come in. It's looked on as more multi-cultural, so on and so forth, the advantages of being perhaps not a super power, and then once they get comfortable in North America they start saying, "Okay, now I'll set up a branch or I'll do something else in the United States." I would think that that kind of role in the economy, going back to what John has said, is exactly what I think is going to happen. I think that will just continue. It doesn't hurt the United States. A lot of these people would be very reluctant to go there as a first step anyway. But we become a stepping stone but ultimately, again, these companies enter with a North American strategy. They're not coming in necessarily as one or the other country.

Audience: I have a question about the future of Dodd Frank and CFPB and if they're being eliminated or reduced or watered down? The impact on the US banking system, if you could offer a comment.

John Manley: There will be some changes in Dodd Frank. I think at a minimum the so called Volcker Rule will be repealed or watered down into irrelevance. I don't think, again, personnel is power. Because of a court case Trump will have the ability to replace the head of the CFSP immediately. That wasn't the case as the way the statute was written and it's clearly going to happen. I think there will be ultimately some additional Dodd Frank "reform". I don't think it'll be repealed. But again, there is a long list of things vying for the attention of the Administration and the Congress for that first year. A lot of the personnel changes inevitably take 4 to 6 months after inauguration date to actually execute themselves. I would be surprised if Dodd Frank is in the short first 100 day list but I think we'll wake up 2 years from now with a different law. Much of it will still be on the books.

Bill Weld: I'm not absolutely sure the Volker Rule is going. I think actually Mr. Trump said something nice about it the other day. Even though he's populating his Administration with Wall Street types, he is kind of a populist in attitude when it comes to the big banks. He will sign legislation, in fact push for legislation, to repeal the capital gains treatment for private equity principals which should be done. I used to be in that business and the capital gains treatment for private equity managers carried interest makes no logical sense so I think he'll do that and I'm not so sure the Volker Rule is going because that is a populace sentiment, big banks not playing with our money.

John Manley: I think there will be reform on smaller and regional banks and I agree with Bill that the carry interest rule will go, both on the merits and because they'll need to be able to score some revenue gains for some other things.

Bill Weld: Yeah. They're going to cut a lot more slack for smaller and regional banks. That'll be the major reform to Dodd Frank, I think.

Peter Lukasiewicz: We have a question over here.

John Manley: One second. The impact on Canadian financial institutions is interesting here because the question becomes how does the US deal with the continuing increase in capital requirements that seem to be coming out of Bosal, and what does that do to the relative competitiveness as we keep bumping up, including buffers, capital requirements in Canadian financial institutions, many of whom have the US strategies. Everybody is looking at how are those capital requirements going to be followed in the US. So, stay tuned.

Peter Lukasiewicz: There's a question here.

Audience: Thanks. The refugee issue is a very important issue for Canada. Canadian families mobilized. Seems the refugee crisis is privately sponsoring thousands of refugees coming to Canada. We would like to see how the government sees their refugee policy or the approach towards the refugee issue in the Trump Administration. And, just in brackets, you know after the results of the election were announced, we saw an escalation in violence and in the position of Russia, the bombardment of Russia. How do you see that issue Governor?

Bill Weld: I wish I could be more optimistic. I mean it is true that Mr. Trump has walked back his rhetoric from the campaign in a number of areas. He totally walked back, lock her up, poor Mrs. Clinton. He walked back the repeal of ObamaCare. He walked back the deportation of 11 million undocumented immigrants, we're now down to 2 million and those are only people with criminal record