In the abstract, the situation seems obvious. First, it's ridiculous to think that there are any marginal artistic works which are only created because the extra 20 years of protection in US law make them profitable, whereas they would not be made otherwise. Moreover, any such works can't be any good, so why worry about them? Second, it clearly makes no sense to extend the term of protection of already-existing works: they have already been created, so we don't need to provide the artists any extra motivation to create them.
What matters here, however, is not the setting of incentives for authors, but the incentives of trade negotiators. Here, the US is behaving rationally: if the US negotiators convince Canada and Japan to keep Mickey Mouse under protection for 20 more years, then more royalties will flow from Canada to the US. This may be bad for Canadians, but not so much for US citizens. More generally, since the US is a large source of popular entertainment but a (relative to its size) a small importer, it wants other goverments to fleece their own citizens in favour of US interests.
While I'm sad that Canada caved on this, Canada is a (relatively) small country next to a big one, and (for example) trade restrictions on lumber are far more significant to Canada than the copyright extension. I stil think they should have stood firm, but it's not such an obvious call as it seems.