NAFTA options

Re: Why NAFTA talks won’t wrap up soon, Kevin Carmichael, May 19

The Canadian government had an option — it could have told the Trump administration that it would listen to the proposals of the American negotiators, and if the Canadian side did not like what they heard, Canada would move toward abrogation with a view to putting in place an amended Canada U.S. Trade Agreement (CUSTA) that existed before NAFTA. As a previous PM has noted, it may have been unwise for Canada to carry that big piano called Mexico on its shoulders.

I can hear the guffaws now based on our inability to stand up to that bully Trump in any bilateral negotiations, and the huge benefits that NAFTA has brought to Canada. Let me just say, the U.S. and Canadian economies are closely integrated and this includes American ownership of much of Canadian industry. Trump may shoot himself in the foot, but not that often.

On the huge benefits of NAFTA, I have my doubts especially since most of those could be captured in a bilateral agreement. Your columnist suggests that we should point a renegotiated NAFTA into the future, which would involve an expanded service sector and a shrinking manufacturing and specifically auto sector.

Ha-Joon Chang, the Cambridge University economist, has pointed out that economies which we think of as post industrial such as Switzerland, Singapore and Japan have among the highest per capita manufacturing outputs (and living standards) in the world. In what for me is one of the most significant economic analyses in recent years, Ben Tal (CIBC) has noted the difficulty of the Canadian economy in creating secure jobs with good pay and benefits. As well, jobs have tended to be created in industries paying lower wages.

Of course, the government, health and education sectors have been exempt from the restraints of international competition. “You want a bigger raise? We’ll move to Mexico or elsewhere” is not something they need to worry about. However, the creation of many good paying and secure jobs in the public sector has now become unsustainable in the absence of a rapidly growing tax base in the industrial sector. Of course, NAFTA alone is not responsible for these difficulties but it is not part of the solution either.

Harry Baumann, LaSalle, Ont.