NAFTA talks might outlast Trump
So it was all a dream! Those reports that the government of Canada was “convinced” the Trump administration was getting ready to pull the plug on NAFTA, enough to knock two- thirds of a cent off the Canadian dollar and nearly $ 2 billion off the value of General Motors stock: not true!
Or at least, it does not seem as if there is any imminent likelihood of American plug-pulling, whatever the Trudeau government may have been telling journalists earlier this week. That is, if Donald Trump’s own public statements are anything to go by.
While never shy about threatening to withdraw from the agreement if it is not renegotiated to his liking, Trump’s latest remarks, in an interview with the Wall Street Journal, were relatively soothing. The talks, he said, are “moving along nicely.” There’s “no rush.” And so forth.
Nonetheless, it would be hard to say the negotiations were going exactly swimmingly. And in view of the week’s confusion, it’s worth asking just what the government of Canada’s strategy is. Presumably it had some reason for panicking the markets as it did on Wednesday. Perhaps it was simply to spook the administration. Or to advertise its own readiness to stare into the abyss of abrogation. But if unpredictability is the effect they’re after, someone please tell them they’ve succeeded.
On the one hand, they are prone to occasional fits of bluster, as in the lately disclosed suit before the World Trade Organization, attacking the whole history of American use of countervail and anti- dumping laws to harass and restrict imports, not just from Canada, but the rest of the world. In the same vein, one assumes, was the ill-fated attempt to blackmail Boeing into abandoning its trade remedy suit against Bombardier, by threatening not to purchase Boeing-made “Super Hornets” for the Air Force — which bluff being called, ended with the government having to buy second- hand planes from Australia.
On the other hand, there is that sudden burst of “creative thinking” on the Canadian side, as the Foreign Affairs minister, Chrystia Freeland, described it, with regard to two of the Trump administration’s most vexatious demands: increased North American and even American content requirements for autos, and eliminating the binational dispute resolution panels provided for by the treaty’s famous Chapter 19. Perhaps on closer examination, these will not prove to be the concessions they appear, but they hardly sit well with the pugnacious pose the government was striking elsewhere.
This kind of good cop-bad cop routine is common in negotiations, of course. The question is just who it is aimed at: our negotiating partners, or the domestic audience? Is the tough talk intended to advance our demands, or to provide political cover for a retreat? Are we even trying to reach an agreement, or just preparing the political ground for the talks’ inevitable collapse?
For all the attention that has been paid to the demands the Trump administration has brought to the table, preposterous as they are, the Trudeau government has brought a few non- starters of its own: the same familiar Liberal hobbyhorses — gender, climate change, Indigenous rights — that helped scupper a final agreement on the Trans Pacific Partnership, and prevented talks from getting under way with China.
To be fair, if there’s confusion on the Canadian side, it is more than matched on the other. The president himself changes his mind with the weather; his administration is sharply divided between business- minded free traders and militant economic nationalists; and beyond the administration lies the Congress, now just 10 months away from elections.
Navigating those divisions would take on particular importance, should Trump make good on his threats and trigger NAFTA’s Article 2205, giving six months’ notice of his intent to withdraw from the agreement. For, while the president can formally withdraw from NAFTA, most legal scholars believe Congress would have to pass legislation giving it practical effect.
Hence the Trudeau government’s multi- pronged l obbying campaign: one part aimed at officials in the Trump administration, one part pressing Canada’s case with as many other of America’s many power centres as it can manage — not only Congressional leaders, but state governors, mayors, and business associations.
Whether any of this is working is another question. Early attempts to cosy up to Trump himself appear to have been abandoned, but the broader diplomatic initiative seems no further ahead: Maclean’s reports “a realization is setting in that the charm offensive has not had its desired effect.”
That, rather than any grand master plan, could explain Canada’s welter of conflicting stances. There may, in fact, be very little anyone outside America can do to save NAFTA: whether it lives or dies may rather depend on internal American politics, over which we can have little influence. In which case, perhaps it is better to quit trying. Certainly there seems little point in making concessions, such as on auto content, that risk turning NAFTA into a Fortress North America, saving continental free trade at the cost of raising barriers against the rest of the world.
There is, after all, a rather large wild card in all this: the president may no longer be president a year from now.
Conflict of interest, obstruction of justice, Russian collusion, his own health — there are any number of possible grounds on which he might conceivably be impeached or otherwise removed from office, especially if, as currently seems likely, the Republicans take a pasting in the mid-terms.
I still wouldn’t bet on it, but until the situation clears there’s an argument for playing for time — smiling, talking, not leaving the table but never actually coming to an agreement.