Talking trade? Stick to trade

When you are in someone else’s house, you are expected to respect the host’s rules. You may be asked to leave your shoes at the door. You may be asked to smoke outside if so inclined. But a host would not expect you to maintain these rules after you have returned to your own home. Nations, however, seem to think they have the right to insist other jurisdictions follow their rules.

This practice is becoming the norm in trade negotiations. When the original NAFTA was negotiated in the 1990s, side agreements were made on labour and environmental standards. In its zeal to show off its moral superiority to the world, the Trudeau government has indicated it will not only seek changes on these two issues but Aboriginal and gender rights as well.

On labour standards, the Canadian negotiating team may play into the protectionist mentality of the U.S. administration, which has taken the view that Mexico has an unfair advantage because of lower wages. Jerry Dias, the president of Unifor, the union representing Canadian autoworkers, and a member of the Canadian government’s NAFTA advisory committee, has insisted that Mexico has an unfair advantage because of lower wages, showing himself to be a soulmate of the Trump administration and its policy on trade. Dias has also argued that Mexican autoworkers have not benefited because of NAFTA because they earn less than US$4 an hour. But is Dias correct?

A recent World Bank paper on the Latin America middle class suggests the opposite is true. The authors went to great lengths to determine a definition of Latin American “middle class” and arrived at a standard of income being more workers cannot afford to buy the cars they build. So what? Can Italian autoworkers afford Ferraris? Do Britain’s Rolls-Royce autoworkers drive Phantoms? Like those Italian and British workers, Mexican autoworkers build cars for richer buyers, but earn enough to go beyond the basic necessities in their own lives. They Canada’s minister of foreign affairs Chrystia Freeland confers with U.S. trade envoy Bob Lighthizer, left, next to Mexico’s Ildefonso Guajardo Villarreal last month. it wants Canadian labour made more competitive by compelling the competing pool of Mexican labour to be more expensive. Anyone planning to buy a new car in the near future might want to hurry, just in case Unifor gets its wish, which will place significant upwards pressure on car prices.

Was the Liberal government wise to add Aboriginal and gender rights to its wish list? All three NAFTA members have different historical legacies, cultural norms and legal precedents. The U.S. or Mexico may resent being preached to. They may react by proposing their own nontrade issues for the negotiations. The U.S. might argue that Canada and Mexico adopt human-rights trade policies toward Cuba along the lines of its own, given that Cuba’s a country that continues to restrict freedom of speech and harass and detain opposition group members and critics, according to Amnesty International. Or perhaps, in the interest of border security, the U.S. could press Canada and Mexico to adopt recent American policies on refugees. Mexico could bring up the plight of the homeless and insist that Canada and the U.S. adopt squatters’ rights similar to what exists in Mexico. There is no end to the issues that could be raised by posturing politicians.

Surely it would be better to take a back-to-basics approach to trade negotiations — and just stick to trade negotiations.