NAFTA must be fair for Canada, too

OUR EDI­TO­RIAL: WHAT WE THINK

Lethbridge Herald - - READER'S FORUM -

U.S. Pres­i­dent Don­ald Trump’s threats to rene­go­ti­ate the North Amer­i­can Free Trade Agree­ment are com­ing to fruition. The United States of­fi­cially in­di­cated its in­ten­tion to rene­go­ti­ate the trade deal on Wed­nes­day, mark­ing the start of a 90-day con­sul­ta­tion win­dow be­fore for­mal talks get un­der­way.

Dur­ing the U.S. pres­i­den­tial elec­tion, Trump called the trade deal “a disas­ter,” and Thurs­day, U.S. Com­merce Sec­re­tary Wil­bur Ross said the Trump ad­min­is­tra­tion was putting the U.S. Congress, as well as trad­ing part­ners Canada and Mex­ico, on no­tice that “free and fair” trade is go­ing to be the new stan­dard for the U.S.

What a rene­go­ti­ated NAFTA will look like and how it will af­fect Canada is any­body’s guess, but the dairy and soft­wood lum­ber in­dus­tries are two key ar­eas of con­cern on this side of the bor­der.

NAFTA, which took ef­fect in 1994, was a three-coun­try ac­cord ne­go­ti­ated by Canada, Mex­ico and the United States with an aim to elim­i­nate most tar­iffs on prod­ucts traded among the three coun­tries.

The Coun­cil on For­eign Re­la­tions web­site in­di­cates that NAFTA “fun­da­men­tally re­shaped North Amer­i­can eco­nomic re­la­tions, driv­ing an un­prece­dented in­te­gra­tion be­tween Canada and the United States’ de­vel­oped economies and Mex­ico, a de­vel­op­ing coun­try.” The agree­ment also en­cour­aged a more than tripling of re­gional trade and cross-bor­der in­vest­ment be­tween the three coun­tries also grew sig­nif­i­cantly.”

Trump has blamed NAFTA for a num­ber of the U.S.’s eco­nomic prob­lems, but it’s de­bat­able whether the trade deal is re­ally at fault in all those cases. Ac­cord­ing to the web­site In­vesto­pe­dia, “While thou­sands of U.S. auto work­ers un­doubt­edly lost their jobs as a re­sult of NAFTA, they might have fared worse with­out it. By in­te­grat­ing sup­ply chains across North Amer­ica, keep­ing a sig­nif­i­cant share of pro­duc­tion in the U.S. be­came an op­tion for car mak­ers. Oth­er­wise they may have been un­able to com­pete with Asian ri­vals, caus­ing even more jobs to de­part.”

Re­gard­ing NAFTA’s ef­fect on Canada, In­vesto­pe­dia notes, “Canada ex­pe­ri­enced a more mod­est in­crease in trade with the U.S. than Mex­ico did as a re­sult of NAFTA, at an in­fla­tion-ad­justed 63.5 per cent (Canada-Mex­ico trade re­mains neg­li­gi­ble). Un­like Mex­ico, it does not en­joy a trade surplus with the U.S.; while it sells more goods to the U.S. than it buys, a siz­able ser­vices trade deficit with its south­ern neigh­bour brings the over­all bal­ance to -$11.9 bil­lion in 2015.”

The U.S. can be ex­pected to play hard­ball when the NAFTA ne­go­ti­a­tions be­gin, but its ne­go­tia­tors shouldn’t ex­pect Canada and Mex­ico to ac­cept a deal that is coun­ter­pro­duc­tive to their own economies. If the U.S.’s new stan­dard is “fair,” then it must be fair for all in­volved.

Com­ment on this edi­to­rial on­line at www.leth­bridge­herald.com/ opin­ions/.

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