NAFTA doomed, and it’s Canada’s fault

and punt talks until 2019.

“By May 1, if there is no agreement in principle, the U.S. will reinstate steel and aluminum tariffs on Canada and Mexico, talks will break down and that will allow Trump to walk away,” said Cunningham.

U.S. anger against NAFTA is strictly against Mexico with its low wages which is why, I have argued, Canada should have sided with the U.S. toward Mexico.

“We opposed NAFTA in 1994,” former Canadian Autoworkers Union leader Buzz Hargrove told the conference. “Where was Donald Trump when we needed him?”

He recited the degree of hollowing out that NAFTA has wreaked in Canada.

“We lost 100,000 jobs in Canada, our deficit with Mexico has gone up fourfold to $18 billion a year, there has been zero investment in the past five years in the auto sectorinCanadaandMexico now produces 80 per cent of the cars in North America,” he said.

The only solution, he added, is that NAFTA must require Mexicans to allow unions to organize their workers and dramatically increase wages to level the playing field.

By contrast, the American strategy is to make doing business in Mexico impossible by demanding wage hikes, by capping production, and by scrapping the dispute resolution mechanism. American negotiator Robert Lighthizer describes the dispute clause (that Canada supports) as a jobrobber that provides “government risk insurance for foreign outsourcing.”

Canada should agree to drop the clause and also agree to shut the backdoor entry by trade cheaters into the steel, aluminum and autopartssectors.

If this is done, compromises on the other issues — dairy and lumber — will be easier.

The reality is that NAFTA is doomed. Without massive wage concessions in Mexico, NAFTA will never pass Congress even if a Democratic majority is elected this fall. And if wage concessions by Mexico are dramatic, it will never pass Mexico’s Senate either.

The best option is simply to reboot the Canada-U.S. Free Trade Agreement and rekindle the special relationship.