Renegotiating NAFTA can benefit all parties
North America has prospered under free trade, writes Brian Mulroney.
Over the decades, strong leadership has resulted in significant international achievements for this nation, including the negotiation of the Canada-U.S. Free Trade Agreement and NAFTA, more than 30 years ago, which now constitutes — with almost 500 million people — the largest, richest and most dynamic area in the world with a combined GDP reaching $20.7 trillion in 2015. With less than seven per cent of the world’s population, NAFTA partners in 2015 represented 28 per cent of the world’s total GDP.
The statistics speak to the success of the FTA. Trade volumes in goods and services more than tripled from $235 billion in 1989 to $881 billion in 2015. Trade exploded into the largest bilateral exchange between any two countries in the history of the world, creating millions of new jobs and record prosperity on both sides of the border.
Industries that were purportedly doomed like the vintners in Niagara, Ont., and the Okanagan in B.C., are flourishing with better-quality, higher-priced production.
The FTA proved to be precisely the jolt out of complacency that our firms needed. The economic results were even more positive than anyone envisioned at the time.
I would like to think that the FTA provided a maturing tonic of sorts for Canada as well. We demonstrated, in no uncertain terms, that we could compete successfully in North America. That confidence inspired similar support for broader tradeliberalization initiatives around the world.
NAFTA’s provisions ensure greater certainty and stability for investment decisions and have contributed to enhancing Canada’s attractiveness for foreign investors while providing more opportunities for Canadians to invest in NAFTA partners’ economies.
Free trade was one in a suite of economic policies that worked in tandem to better situate Canada in the world. It wasn’t a panacea on its own. However, the psychological fact of free trade was enormous, as it touched our historic uncertainty about identity, ability and sovereignty. That’s why free trade fuelled such an emotional national debate and why, ultimately, its adoption was so critical to Canada. Yes, it brought Canada into a much larger economic space, essential to our long-term prosperity. But it also cleared the air of the old doubts and fears about our capacity to grow and prosper as a mature, distinctive country living as we do cheek-by-jowl next to the richest and most powerful nation in world history. It required a change in our mentality — from defensive and fearful, to confident and ambitious.
Recently, the governor of the Bank of Canada stated that Canada’s future prosperity faces no greater challenge than the winds of protectionism now swirling around the new U.S. administration, which is why Canada must be prepared — in a world-class manner — to renegotiate NAFTA in a way that will not inhibit our growth, but continue to ensure unprecedented prosperity for the three great nations that occupy this continent, all of which have already benefited enormously from this agreement. The formal NAFTA negotiations that will begin probably in the fall are crucial for Canada.
The Americans will come fully prepared: Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer are both skilled and brilliant negotiators (with a boss in the White House who is no slouch either), who bring as well to the table successful life experience in international business and law.
They’ll have a list of demands and will not be shy about fighting for them.
Canada shall have its own list of demands and, with preparation, patience and traditional Canadian competence, I’m persuaded that the team put together by Prime Minister Justin Trudeau will do a top-flight job for our country.
Brian Mulroney was Canada’s prime minister from September 1984 to June 1993. This article is an excerpt from a speech he delivered to the Canadian Club of Vancouver on April 25.