U.S.-Canada Trade and What’s Next for the USMCA

Show Notes

The Canada-United States-Mexico Agreement: Economic Impact Assessment, Global Affairs Canada, February 26, 2020

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Transcript

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Jill O'Donnell: Welcome to Trade Matters, a podcast of the Clayton Yeutter Institute of International Trade and Finance at the University of Nebraska-Lincoln. I'm Jill O'Donnell. Our guest today is Carl Pilon, Senior Trade Commissioner of the Consulate General of Canada in Minneapolis. His territory includes the states of Minnesota, Iowa, Nebraska, South Dakota, and North Dakota. All right. Carl, thanks so much for joining us today on Trade Matters. I'm really excited to talk with you about US-Canada trade and USMCA.

Carl Pilon: My pleasure.

Jill O'Donnell: So you are Senior Trade Commissioner in the Consulate General of Canada in Minneapolis. I'd like to start by having you tell our listeners a little bit more about what your role is, and specifically what you do to play a role in the functioning of the US-Canada trading relationship, and especially when it comes to Nebraska as well.

Carl Pilon: Yes. So my role as a trade commissioner and as a manager of a team of trade commissioners is to facilitate trade connections between Canada and the United States. Trade commissioners, I mean, its terminology that not a lot of people are familiar with. When I got the job offer all those years ago and I told my parents that I would be a trade commissioner, they looked at me kind of quizzically and looked and kind of said, "Oh, what is that?"

At the end of the day, what we do is we're matchmakers. Right? We try to match up opportunities in the market that we cover, which in our case at the Consulate General in Minneapolis are the states of Nebraska, Minnesota, Iowa, and the two Dakotas. So we find business opportunities in that territory and then we try to match them up with Canadian suppliers of goods, services, technologies, IP, etc. So that's the first aspect. The second aspect is investment attraction. American companies that are located in our territory that are looking to expand internationally, to set up production somewhere else for whatever reason, we try to convince them that the best somewhere else they can pick is just next door in Canada. So that's our second role.

We also work on trade policy issues, though most of the trade policy work would be done in the capitols. In our case, at the Embassy in Washington. Sometimes we need to work at the state or even local level to do deal with trade policy issues or to conduct advocacy on trade policy issues, whether it be to bring to the attention of local legislators or to senators that are maybe easier to access here than in DC, the Canadian position. So that's something else that we do. But at the end of the day our key role is really, or what underpins, I would say, our role is to contribute to the overall economic prosperity of Canada. So that's what we do on a day to day basis.

There was also the Nebraska angle. Now, as I said, Nebraska is one of the five states that we cover. So our role, and it's a bit challenging for us, I mean it's true for all of those that do what we do, and I'm thinking about, for instance, my counterparts from other countries who may only be posted at the trade office. For instance, for one of my previous postings, if I may go anecdotal for a second, one of my previous postings was Israel. They had one trade office located in Toronto, and somehow they had to cover all of Canada out of one trade team that was located in Toronto, which was quite a challenge, considering that when I was posted three years ago we had to cover a country that's the size of New Jersey, which is a bit easier when you're located in one city than covering all of Canada out of one city. So for us the challenge is to adequately cover the five states that are part of our territory, which include Nebraska. Actually, I was supposed to be in Nebraska for my first official work trip two weeks ago, but obviously something happened that threw a stunner in the works, so the visit was postponed. Once all the dust settles, then we can go back to normal operations. I've been to Nebraska before, because it just so happens that my previous partner was from western Nebraska and he had family scattered all over the state. So I've probably crisscrossed Nebraska more than the average Canadian, but that was not in an official capacity.

Now, our work when it comes to Nebraska would be to get, again, Canadian companies to do business in the state. What's interesting, when I was reviewing the statistics of our trade with that specific state this morning, and it's actually pretty diverse in both directions. A lot of times our trade, well, it depends, but our trade with specific states will be focused on one specific sector. Like if I look at, just for an example, North Dakota, it's a lot of energy related products there specifically. But for Nebraska, our sales to Nebraska are in ag, chemicals, equipment and machinery, forest products, it's all over, there's a little bit of everything. And our imports for Nebraska, which are actually 1.6 billion US dollars' worth, so Nebraska has a very big trade surplus for Canada, about $700,000,000. So trading with Canada is actually to Nebraska's benefit these days, which is good. Trade brings benefit to both, and there's more than just looking at the balance of trade. At the end of the day, if we trade with each other it's because both parties find something good out of it. But Nebraska's sales to Canada, again, they're in ag products, they're in chemicals, energy products, equipment, machinery, the transportation sector, so it's a little bit of everything, so it's very diverse. That's one of the challenges that we have being posted here in Minneapolis is communicating to Canadian companies that there is more to the upper Midwest than just agriculture, because we're dealing with very diverse economies that produce and buy a whole bunch of different products and services, and we have to think beyond what people may have as the stereotype of the area. Like the upper Midwest is basically corn and wheat and hog production. There's a whole lot more to it than that.

Jill O'Donnell: That's a very nice segue into a question I'd like to ask you to follow up on all of that. Which is what would you say are the top one or two questions that you get from Canadians who might be seeking to do business in Nebraska?

Carl Pilon: Well, for us, usually the questions we get from Canadian companies, the easiest one that we deal with is, "Is there a market for my product?" Again, that's true pretty much the world over. I've been on five different assignments and that's always been the first question that we get is, "I am making X. Can we find a market for X in your territory?" That's always what they're looking for. Now, sometimes they've done a bit of their research and they already know that there's a market. Then in which case the question turns to, "Can you put me in touch with the right buyers, recruiters, agents, what have you, that's going to either help me sell my product or they will buy my product or my service?" So those are the key questions. Now, state specific, oftentimes it's what's currently going on in the state, in this instance in Nebraska, that would offer [inaudible 00:07:54] for what it is that I'm manufacturing, that I'm producing, that I'm coding in Canada.

Now, also in certain cases, because one of the areas, if I may go back to what trade commissioners do, it used to be way back when that trade commissioners focused solely on trade and goods, but over time, as I explained earlier, the scope of what we do has grown. We do, especially when we're in those countries where we're posted that are developed economies, we do a lot of work in advanced technology and innovation. So a lot of times questions that we get is, "We're looking for someone that is doing research in that specific area and we know that there should be people that do research in that area in this," let's say in this instance in Nebraska, "Could you put us in touch with the right people?" So, again, it goes back to our role as matchmakers is developing networks of people across all sectors of the economy so that when we get asked to make those matches we know directly where to go to find the right connection.

Jill O'Donnell: So you're really on the front lines of making trade happen, is the way I'm thinking about how you describe your role. I'd like to ask another question along those lines. You mentioned engagement with states and local level policy makers as part of your role as trade commissioner. I know you haven't been here to Nebraska yet in an official capacity, but that will happen at some point. I wonder what is your message to them. I think it's been really interesting to see more connections among policy makers at state and local levels with perhaps their counterparts in other countries or individuals like you who are posted abroad. I'm wondering what is your message, or what do you think it will be, to policy makers at the state and local level here?

Carl Pilon: When we speak with, as you say, policy makers locally, we emphasize the fact that at the end of the day trade is good, it's of benefit to both parties. Both parties engage in exchange of goods, services, and all that because they have developed a specialty in one area and they are better at making X than the other party which is better at making Y, but then if they exchange what it is that they're better at both parties then acquire a little bit of what they're not as good at, so both parties gain. I mean, to make an illustration out of that, where I'm from in Quebec we're pretty good at making maple syrup. Quebec produces 72% of the maple syrup on the planet. Now, obviously, Florida doesn't make any maple syrup, but Florida makes oranges. There might be a few Floridians that would like to have some maple syrup and there might be some Quebecers that would like to have some oranges. Again, in the abstract, trade is a way for Quebecers that they can transform their maple syrup into oranges and for Floridians to transform their oranges into maple syrup. At the end of the day, this is what trade is. Various areas have various specialties and economic advantages, and by putting those areas in touch with one another, they can benefit from each other's specialties and expertise and ability to produce X, Y, and Z, so that everybody's standard of living and quality of life increases. That is why we constantly emphasize the fact that trade is a positive good for everyone. So when we talk to local politicians this is the message that we emphasize. Sometimes, especially I would say over the last maybe 10 years and has been true in many countries across Europe, it's been true here in the United States and elsewhere, there has been an undercurrent of not having as positive an outlook on international trade. So what we try to communicate are the benefits to maintaining the free flow of goods and services, because it's often to everybody's advantage to do so. This is our key message.

Jill O'Donnell: So following up on your key message there that trade is good, I'd like to turn now to the US-Mexico-Canada agreement or Canada-US-Mexico agreement, as it's known and referred to in Canada. As our listeners know, the North American Free Trade Agreement was renegotiated and that concluded back toward the end of 2018, and we are now at a point where all three countries have ratified it. I want to talk first a little bit about how public perception of trade and NAFTA and USMCA or CUSMA might be the same or different in Canada versus the United States. So first I'd like to just quote from the government of Canada's Economic Impact Assessment of the USMCA. The piece I'm quoting from there says, "While overall NAFTA has been a positive economic driver, discontent with the effects of globalization and job dislocation has led some, in particular in the United States, to question the benefits of trade liberalization and call for increased trade protectionism."

My question for you is that this seems to imply that discontent with globalization and trade, and sometimes those two things get conflated, they're not exactly the same but they are often wrapped up in the same conversations. My question is do you think that any public discontent with trade and what it may or may not be responsible for in terms of jobless dislocation is stronger in the US than in Canada, or not?

Carl Pilon: From my own standpoint, my Canadian point of view, I would tend to say yes, that it was stronger in the United States for domestic reasons. Obviously, at the end of the day, there's an old aphorism, I'm sure you know it, all politics is local. Right? So politicians will reflect their local, whatever happens in their own constituencies. So for domestic reasons, the issue surrounding swirling around trade has gone in one direction in the United States and may not necessarily have gone in the same direction in Canada.

Back in the 1980s when the predecessor to the North American Free Trade Agreement was negotiated, which the predecessor was an agreement between Canada and the United States, it led to basically having an entire federal election in Canada in 1988 being run, basically, solely over the issue of free trade with the United States. Back then in Canada you had a very strong position that was not... Let me rephrase that. There was a very large proportion of the population, big enough to basically carry an entire election over, that was not in favor of free trade with the United States. The people feared that the Canadian economy would be flooded with American goods, that Canadian businesses and manufacturing plants and the like would close from coast to coast. So there was a lot of worry, and obviously politicians need to respond to those concerns. As I said, the election basically turned into a referendum on the free trade agreement that had been negotiated by the government of the time that was, at the time, led by Brian Mulroney. Ultimately, the party that was in favor of free trade that had negotiated the agreement, at the time the progressive conservatives, were reelected. So in 1988, after the election, Canada and the United States signed the agreement. After a few years, Canadians started to realize that, lo and behold, the world hadn't ended. Then it was agreed upon by the two, the United States and Canada, for various reasons, that we should bring Mexico into the fold, which led to the Canada-US agreement becoming NAFTA in 1994. Again, Canadians realized that Mexico came in and, look at that, the economy is doing okay, we're doing all right.

If we fast-forward from the mid-90s when NAFTA was ratified up until now, there has really been a seat change in the political mindset across Canada, across the entire political spectrum, with regards to trade. I think the best illustration of that is that within the last few years Canada has signed two, well, actually now three major trade agreements. One with the European Union, which we call colloquially CETA, the Comprehensive Economic and Trade Agreement. Then we signed one with several of the Asian countries and a couple of countries in the Americas, the CPTPP, the Comprehensive and Progressive Trans-Pacific Partnership. And we signed what we call, as you alluded to, CUSMA, USMCA here in the US. All of those agreements are with very big economies. Canada signing an agreement with the EU, the EU is a market is 500,000,000 consumers, Canada is 38,000,000 or 37,000,000. The CPTPP is equally big, though the economies are smaller, the population and all that is certainly very sizable. When we look at all those trade agreements that were negotiated, all of that took place, basically it's background business. The government does it, people don't really pay attention to it, elections aren't run on it, it just kind of happens. There's no party that's running at the federal level that would be against those agreements. They might want this tweaked one way and another party would want that other clause to be tweaked in a separate direction, but in the main everybody agrees that having multilateral frameworks to organize the flow of trade and goods, services, and the like is a positive good.

I'd like to compare that to another one of those countries where I've been posted, which was Sweden. Sweden and Canada find themselves in the same situation. They're small economies who cannot rely solely on their domestic market to provide the prosperity to their citizens. They need to engage in international trade for their companies to grow, to generate wealth. So when I was posted in Sweden was when Canada and the EU were negotiating. Once in a while, as the head of trade section in Stockholm, I would get communications from our trade policy team at our mission to the EU asking me, "Well, what's the Swedish government's position on this and that?" It was always if it was about trade, they're in favor of it. They can't wait until that agreement is signed, like let's get down to business. I had a much easier time talking trade with my Swedish counterparts when I was in Stockholm than my colleagues that were in other European countries where the approach to trade is not as positive. So Canada is in that same position. We rely upon global markets for our prosperity, so we need to secure access to those markets through frameworks that are out there in the open that everybody can easily understand and that provide a certain amount of confidence to the business community that the way that they choose to operate, the framework within which they operate will remain consistent and they have confidence that that will remain for the foreseeable future. That attitude now transpires across the political spectrum and also within the overall Canadian population. As I said, we ran, I mean there's been several elections over the last, I'd say since the early 2000s, and trade has never been an issue. As I said, it's part of the machinery of government. People know that those agreements are being negotiated, and once it's done people are happy, but they don't focus on it. It just happens. That's a very long answer to your question. I'm sorry.

Jill O'Donnell: Well, it's important historical context, especially for myself as an American listener, and others of our listeners. That historical context about the initial US-Canada FTA was actually negotiated on the US side. That negotiation was led by Clayton Yeutter, the namesake of our institute here, which was a significant achievement, of course, for him and for all of us. So I think it's interesting that you noted that there was some nervousness perhaps among the Canadian public when the US-Canada FTA was about to come into force. But it sounds like attitudes have evolved, based on what you've described, from that point to where trade is relatively accepted, broadly speaking, among the public. You described it as the machinery of what the government is doing to secure access to global markets for a smaller economy. I wonder, do you have a perspective on how that shift in attitude took place? Did people just sort of realize over time as this agreement took effect, the US-Canada FTA, and then NAFTA after that, that they were able to just see and feel those benefits, or was there some messaging taking place by the government to its own people to bring that opinion along, or how would you say that actually happened?

Carl Pilon: I think it was mainly because, obviously, there were some shifts in the overall structure of the economy, like some sectors faced with competition that they hadn't been expected, that they hadn't been used to, suddenly found themselves not as competitive as they thought. So it wasn't necessarily easy across the board, but overall people saw that the Canadian economy was doing well, that the catastrophe that had been foretold by some was not materializing, and that in the main the overall situation of the country, as well as their own, was improving. So I think that did a lot to assuage those people that had been worried about it, to assuage their concerns that free trade would wreck the Canadian economy and turn Canada into basically just a supplier of raw materials to the US. This is not what happened in any way, shape, or form, so I think just by the fact that the country's situation just improved year on year, many people realized that those agreements actually have value to them, it's a positive good. Again, now we're going back many, many years, so my recollection may be faulty. But I don't remember necessarily there had been massive kind of advertising campaigns or anything of the sort to let people know that, well, we're doing this for your own good, so you better start liking it. I don't think that's how it happened. It was just an organic change towards it by people looking at what was going on around them.

Jill O'Donnell: Okay. So shifting gears to the current agreement that we have before us, which is the US-Mexico-Canada Agreement, or CUSMA in Canada, as it's referred to there. On March 13th, just not too long ago at all, Canada was the last of the three partner countries, US, Mexico, and Canada, to ratify the agreement. Now, the Trump administration here in the US is pushing for this agreement to take effect on June 1st, but there still are issues to work out and I want to just remind our listeners of a few items here.

Auto rules of origin are a major facet of this agreement. So just as a quick reminder, that includes a requirement that 75% of the content of a motor vehicle must be made with parts sourced in North America in order for that vehicle to receive preferential treatment under the agreement. There's also a labor value content rule, as you know very well, that approximately 40% of the content of a light vehicle should be made by workers making $16 an hour, again, for that vehicle to receive preferential treatment. The COVID-19 pandemic also introduces a lot of uncertainty, of course, into everyone's life and into trade. So in light of all of these issues, there have been some calls among those in the US Senate. For example, US Senate Finance Committee Chairman Chuck Grassley has urged the administration to reconsider this June 1st timeframe, as has the auto industry. A major auto industry grouping released a statement saying that the COVID-19 pandemic has disrupted their supply chains and have also noted that the three countries involved in USMCA still have to issue draft regulations on the uniform automotive rules of origin so that each country has a common understanding of how to implement these auto rules of origin rules. So two questions for you. One is do you think that the COVID-19 pandemic is going to slow down or should slow down the target entry into force date of the USMCA, which is June 1st? Secondly, can you tell us a little bit about where Canada's efforts stand on drafting the rules to comply with the new auto rules of origin in the USMCA?

Carl Pilon: Yeah. Well, first, I will take a step back from those two questions just to illustrate how important that whole thing, the agreement itself, is. The ratification process in Canada involves several steps, as in all other countries, but for us the process starts with the government of today bringing the agreement in front of the House of Commons and then the House of Commons needs to study it, review it, et cetera, et cetera, et cetera. So that had been done last Spring, in the Spring of 2019. Then they lead it all the way, almost all the way to the vote, and then the House rose for the Summer recess, and then we had an election in the Fall. When there's an election, everything that goes on the other paper basically vanishes into thin air, and when the new government reconvenes they get to start the process all over again. For us, we reelected the liberals. Though, this time they were in a minority situation in the House, but then the liberals could pick up where they left off. But that did mean though that the entire ratification process had to start from the top, so it needed to be brought back to the House again, the implementation legislation, which was done. President Trump signed the US ratification on the 28th. Just by pure coincidence, the government brought the legislation in front of the House in Ottawa on the 29th. Now, on March 13th, the very last thing that the House did before it rose because of the pandemic was to vote to ratify the USMCA, or CUSMA, and it was a unanimous vote in the House. That highlights the importance that Canadian politicians of all stripes put on the agreement. Immediately after, in our process, any legislation needs to be passed in the House and then it's passed in the Senate, and then it's signed for, I'm sure your American listeners are probably going to have a wry smile at that, but it needs to be signed for Royal Assent, so it means that the House votes on it, the Senate votes on it, then it goes on the Governor General's desk, and then the Governor General signs it. All of those steps took place in one half day on March 13. Usually it takes a few days, if only because the Governor General has business of her own and she doesn't necessarily sign on the day that it's voted on. That was so important that we wanted all of that to be done before Parliament basically rose because of the pandemic. That being said, with regards to the implementation process and to go back to your first question on the impact of the COVID pandemic on it, I mean, regulations are written, at the end of the day, by bureaucrats. Just speaking from my own point of view as one of those bureaucrats and knowing what's going on in Ottawa, the Province of Ontario is now shut down, in that all nonessential businesses are closed, people have to stay at home. That includes bureaucrats that live in Ottawa, because Ottawa is in Ontario. So, basically, the entire federal government now is working from home and teleworking. Just logistically, it introduces challenges that obviously would not be there otherwise. Our trade policy colleagues are caught up in the same stay at home rules and regulations that everybody else is, so it's hard to tell, at the end of the day, the impact that it will have on ensuring that those regulations are in place by June 1st. I do not know what the official position for the government of Canada is with regards to the implementation, because right now everybody is kind of flying blind because of the pandemic. So it would be kind of, I think, really foolhardy of me to make any kind of pronouncement, considering where I'm sitting here in Minnesota, as to how it will impact.

The question should it have an impact, one would hope that it wouldn't. Will it have an impact? It might. We find ourselves in a very challenging environment right now, so it's a hard question to answer. I'm afraid that I don't think I can provide you with the right answer for it.

Now, the question as to where we stand on drafting the rules. Again, we've known, the concept of the agreement has been known for a while, and the regulations among entering the agreement have been in the drafting process basically in parallel. The process did not start the day that the agreement was ratified, so those rules and regulations are probably very far into the process of being drafted, just so that on the day that the agreement does come into effect that everything is ready at the same time. That would be my assumption.

Jill O'Donnell: Okay. Thank you for that. One more question on how the pandemic might be affecting trade, the COVID-19 pandemic. One statistic that I have seen is that over two billion dollars worth of goods and services cross the US-Canada border every day. We know we have a really strong trade relationship, so that's a lot. We also know that the US and Canada have suspended all nonessential traffic across our shared border in an effort to control the spread of this virus. Officials have said that this will not affect trade. What I'm wondering about is the impact on trade from other standpoints.

For example, restricting business and personal travel that can't happen now between our two countries. For example, if there's a Canadian or US businessperson that wants to travel to the other country to supply services that's in exports, how are you thinking about that right now?

Carl Pilon: Unfortunately, that gets caught into the net. When Canada and the US agreed to that border closure, with the exception, the exception is basically shipment of goods so that the supply chains can keep on operating so that the economies don't grind to a halt. What's important, if I put myself in Canadian shoes in Canada, is earlier I kind of amusingly referred to trading oranges and maple syrup. Having access to produce that, because it's still Winter back home, arrives from California is very important. We need to let that go through. But there are other types of agreements that right now, or other types of trade relationships that unfortunately need to, and it's unfortunate, and I say that as a trade commissioner whose role it is to facilitate trade, but that those trade relationships need to take a back seat. Basically, if someone is not crossing the border with something that the other country needs in the back, whether it's a semi or another way of shipping stuff, then that person probably is going to be stopped at the border. We have reached that stage. It is unfortunate and it will create challenges, but in the main the flow of goods will continue. Now, if there are Canadians on the American side or there are Americans on the Canadian side who have temporarily relocated to deliver services, well, they can keep on delivering that service because chances are they won't be able to go back home. Though there is an exception for citizens of either country to actually go back to their country of origin, but then there are issues with regards to, and now we're entering into the public health measures with regards to when you travel then you have to self-quarantine and all of that. But people can still move, up to a point. The very important key point with regards to the border closure was that the flow of goods not stop, because it's essential for both countries that the flow of goods not stop. There's a lot of American food that's produced with Canadian ingredients and vice versa. We can't have that stop overnight. It's critical.

Jill O'Donnell: Okay. Thank you. One more question for you, just a bigger picture question on Canada's overall approach to trade. You had already mentioned some of the other free trade agreements that Canada has in force. For example, the Canada-EU agreement and the CPTPP. I've also read recently that Japan in particular is leading a push within the CPTPP to include more Asian economies in that agreement, like Thailand, Taiwan, Indonesia, the Philippines, in an attempt to diversify supply chains away from China. I'm wondering, even before the COVID-19 pandemic, for example, started, has Canada's approach to diversifying its trading relationships changed recently, even before this pandemic began?

Carl Pilon: Canada's international trade approach, for as long as I've been aware of it, and before that, has always been to diversify. Canada is blessed with having the world's most affluent market next door, which means that all of our trade, that's kind of an exaggeration, but 75-80% of our trade is with the United States. Trade, international trade, international commerce, whatever title we've had over the last 50 or 60 years of whatever political stripe, have always had as their goal to diversify Canadian exports. Year in and year out, when the numbers come out, it's always, again, between 75 and 80 or 82% of Canada's exports go to the US. You can't fight geography. The United States will always be next door to Canada. It's always going to be easier, cheaper, for all kinds of reasons, for Canadian companies to sell to the American market. It's even, in many cases, easier for a Canadian company to sell to the American state next door than to sell to a Canadian province that's across the country. Companies in Vancouver, BC probably have bigger trade connections with the state of Washington than with Newfoundland that's halfway across the lake, it's on the other side of the country. Same with companies in New England and trading with companies in Quebec and in the Maritimes, and companies in the Prairies trading with the upper Midwest. So it's just natural that Canada would trade with the United States.

Diversifying has always been the goal of our international trade approach, is to get Canadian companies to look at the rest of the planet, and those trade agreements have been signed over the last few decades with that in mind. Yes, since the mid-80s we've had this agreement with the United States and then Mexico, but we've signed agreements with Israel and Jordan, we've signed agreements with and we have agreements with Columbia and Peru, we have agreements through the CPTPP with Japan and several Asian and Latin American economies, we have agreements with CETA. So always with the goal of offering more and more market opportunities to Canadian companies, because though it is a blessing to have the world's most affluent market next door, when things go bad with that market it means that things are going to go bad for Canada. So it's an insurance policy as well to have a more diverse client base. If you rely upon one single client and then that client, for whatever reason, decides not to buy your product anymore, you're going to have problems. So it's to your ultimate benefit as the producer to have as many clients as possible so that anything affecting one specific client doesn't take your business down. So, for us, that another member in a multilateral agreement would seek to bring in more members, we'd welcome that approach because, again, the overall position for the Canadian body of politics is to be in favor of trade, so the more the merrier in that regard.

Jill O'Donnell: Thank you for that, Carl. So it sounds like you're saying that geography is almost like a magnet for trade, there's always going to be a natural foundation for trade between the US and Canada because of our geography and other things, like shared business culture as well. That's, I think, why it's important for us to understand each other's sides so well, and for us to understand the Canadian point of view and vice versa. Thank you for doing that for us today. I've learned a lot from you in this conversation that we've had, and I know our listeners will too.

I have one last question for you, which is the same one that I ask every guest on this show. That is what have you read lately about trade, anything, a book, an article, or report that has been particularly striking to you?

Carl Pilon: That's a good question. Over the last few days everything that I've been reading has been focused on one topic and one topic alone, which is not trade related but does have an impact on trade. What I would say is that, again, emphasizing the importance of global connections. And what I've been reading that's tangential to trade is the fact that even though... It was if I'm not mistaken, a writer on Slate, making the argument on reopening economies, that today the global economies are so interconnected that even if country X decides from one day to the next that damn the torpedoes we're reopening, we're going back in business, if the rest of the economies with which it's connected aren't following suit, basically, countries cannot necessarily do it on their own anymore. Because the web of connections is so strong that if your supplier next door and the country next door hasn't resumed operating, even though you want to start your plant, you're not going to get your parts, because they're not being produced these days because the country next door is under quarantine. So something that, at the end of the day, is obviously a health pandemic, in the abstract is not a trade issue, but it affects everything else. Because now the supply chains of most companies have grown so intricate and complex, something that's happening, a policy decision that's being made 6,000 kilometers from where you are, will have an impact upon whether or not you can produce your sofa in your plant, because you can't get the fabric that you use to upholster your sofa because the company that produces that fabric, they're still under a shelter in place rule. It was interesting to read that because of those interconnections local policy decisions end up having an impact hundreds of miles away because of the interconnectedness that's been brought about by trade.

Jill O'Donnell: Yes. I think this pandemic has certainly shown us a lot about the sensitivity of our supply chains to public health threats, and so we're all learning and seeing that connection in a very real way right now. Carl Pilon, thank you so much for joining us today on Trade Matters. We really appreciate it.

Carl Pilon: My pleasure.

Jill O'Donnell: That's it for this episode of Trade Matters. Thanks for listening. And a big thank you to Bryce Doeschot and Brianne Wolf for helping produce this podcast. Please subscribe to Trade Matters on iTunes, Spotify, Stitcher, or wherever you get your podcasts.

If you have ideas or topics that you would like to hear about on Trade Matters, we'd love to hear from you. Send us an email at yeutterinstitute@unl.edu or follow us on Twitter, @YeutterUNL [corrected]. Opinions expressed on Trade Matters are solely those of the guest or host and not the Yeutter Institute or the University of Nebraska-Lincoln.