Exporters pessimistic on NAFTA, mull creative solutions: poll

Nearly one-quarter of Canadian exporters believe they are negatively affected by looming NAFTA renegotiation uncertainty and are turning to creative solutions to succeed even if the free trade agreement fails, according to a poll by Export Development Canada.

The federal agency supporting export-oriented companies reported Friday that among the 23 per cent of firms surveyed that said they were negatively affected, several are contemplating strategies including moving operations south of the border, diversifying away from the U.S. or delaying investment or hiring.

Canada and the United States both expressed their hope in late summer that a new North American Free Trade Agreement agreement could be reached by year-end, but tense and combative discussions have necessitated extending negotiations to a March 2018 deadline.

However, Scotiabank economists believe even the March deadline is unlikely given that NAFTA negotiations have stumbled on several major U.S. demands, such as a new requirement to increase U.S. parts in automobiles, and the end of Canada’s dairy, poultry and egg supply-management systems.

Still, Scotia said NAFTA uncertainty has not yet dented investment growth in Canada or Mexico and forecasts that the trade policy deal will survive any prolonged “zombie phase.”

“We do not believe this is the end of NAFTA. It remains very unlikely that any material changes in the trading relationships between Canada, Mexico, and the United States are in the offing,” the bank said in a report released Thursday.

The firms that are most affected by cross-border tensions, Canadian exporters — a sector that has been decimated since the 2008 global recessions — appear much more pessimistic. About 75 per cent of Canadian exports go to the U.S.

The Ottawa-based EDC said its semi-annual survey revealed a significant drop — from 10 per cent to five per cent — in the number of Canadian exporters looking to expand to new markets in the next two years who are considering the U.S.

Some firms surveyed by the EDC suggested they could move to the U.S. to avoid potential border disruptions. The Canadian Press