04/19/2017 02:34 EDT | Updated 04/19/2017 03:12 EDT

David MacNaughton, Canada's Ambassador To U.S.: Relax, There's No Trade Spat Brewing

David MacNaughton says despite some U.S. rhetoric he still expects there will be "constructive discussions" between the two countries.

HALIFAX — Ottawa's envoy to Washington downplayed talk of growing trade irritants with the U.S., a day after President Donald Trump sharply criticized Canada's well-guarded dairy sector.

Ambassador David MacNaughton says despite some U.S. rhetoric — and his own rebuttal letter released Tuesday — he still expects there will be "constructive discussions" between the two countries because so many jobs on both sides of the border depend on trade.

After a meeting Wednesday with the Nova Scotia cabinet, MacNaughton said upcoming negotiations around revamping NAFTA won't be easy, but the process will work out "just fine" in the end.

David MacNaughton, Canadian Ambassador to the United States, speaks to reporters at a Liberal cabinet retreat in Calgary on Jan. 22, 2017. (Photo: Jeff McIntosh/The Canadian Press)

He did not address Trump's comments directly, and avoided questions about whether they signal the onset of a cross-border trade war.

"All I can tell you is I've had ongoing discussions with the White House ... and all of those discussions have been positive and professional — they've been extremely responsive," said MacNaughton. "Our relationship with the U.S. administration is extremely strong and I think it's going to pay dividends in the long run."

In the meantime, MacNaughton said Canada needs to be prepared on every single issue when it comes to cross-border trade and shouldn't isolate any one sector.

"We've had a tough time on softwood lumber for 30 years. I'm sure we'll hear lots about dairy and we'll hear lots about other things and I'm sure there will be a lot of things that we will want to talk to them about too."

"I think the Government of Canada wants to be seen to be standing up for its dairy farmers."

Trump called out Canada by name Tuesday amid a brewing trade spat that has seen the U.S. dairy lobby accuse Canada of "systemic disregard" of its trade obligations.

Trump also signalled he wants to do more than simply tweak the North American Free Trade Agreement, saying he is looking for "very big changes" to the trilateral pact that includes Mexico, or else he will scrap it once and for all.

MacNaughton said his intent with the letter was to correct the record following a letter critical of Canada's supply-management dairy system from the governors of Wisconsin and New York. He said both he and Ottawa would continue to speak out for Canadian interests when necessary, and expects U.S. politicians to do the same.

"They (governors) want to be seen to be standing up for their dairy farmers and I think the Government of Canada wants to be seen to be standing up for its dairy farmers," he said.

MacNaughton said it remains to be seen how quickly NAFTA talks can get underway because of a looming election in Mexico, and the fact the U.S. Congress still hasn't granted negotiating authority to the Department of Commerce.

He said he expects three-way talks on the trade agreement, but said there would be a number of ongoing bilateral talks on issues that affect Canada and the U.S., but not Mexico.

"I would like to see it happen quickly, just because I think to remove the uncertainty for the business community would be helpful," said MacNaughton.

Nova Scotia Premier Stephen McNeil said the Atlantic provinces have built a good trading relationship with the New England states and he expects that will continue despite some of the "noise" coming from south of the border.

"Ultimately governors and people in the states recognize the importance of our relationship and that it's two-way, and we are going to continue to build on that," McNeil said.

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