The Great Divides

As the Montreal round of the negotiations over renewal of the North American Free Trade Agreement kick off this week, the Canadian government, led by International Trade Minister Francois-philippe Champagne, snuck out the side door and embraced a renewed commitment to the eleven-nation Trans-pacific Partnership agreement that many believed had been scuttled by the American president’s turn toward nationalist protectionism.

With NAFTA, Trump’s childish petulance is threatening the agreement’s very existence. Pretending to be an ally of the American working man, Donald Trump has eliminated his country’s long-standing commitment to freer international trade and embraced the regressive protectionism that has hindered economic development for centuries. He has argued that the NAFTA agreement – in spite of the evidence – has done immeasurable harm to American working people by allowing goods produced in Canada and Mexico to undermine American producers, eliminate jobs, and produce sizeable trade deficits, all of which undermines American ’greatness’

This has been a fairly easy sell to his most devoted followers, who distrust anything born, produced, or manufactured elsewhere, but numerous producers have pointed out rather vigorously that abandoning fee trade would lead to supply problems and important price increases for American goods. Just this weekend, he has imposed a 30 per cent tariff on imported renewable energy resources, hiking the cost of environmental responsibility (with which he is clearly not concerned) and firmly entrenching America’s role as global environmental pariah. Meanwhile, he has hampered renewable energy development in his own country. Renewable energy, of course, is the only responsible option for the planet’s future, but it threatens the dominance of fossil fuels, which, while plentiful in North America, do pose an existential threat to the survival of our civilization and the diversity of earth’s biological component.

Big Oil has been a major player in the American economy for well over a century and its producers have gained as much importance on the American political scene as any other corporate entity, matched only by the military-industrial complex and the automobile industry, which has, it must be admitted, been devastated by less expensive, more efficient vehicles from Europe and the Far East. Giants such as Chrysler, General Motors, and Ford have all taken heavy hits from foreign competitors. This has threatened the very existence of many of the country’s most well paid and well-represented workers and has devastated communities like Detroit and Flint, Michigan, which once boasted thousands of unionized workers and helped create the “American Dream.” Protectionism sounds pretty tempting to some. Meanwhile, foreign manufacturers have slid past protectionist tariffs by building manufacturing facilities in places like Alabama and Mississippi, where workers’ rights are not an issue. The result has been a serious decline in wages and benefits for most workers. On the other hand, outdated American manufacturing processes have seen some relief and gained the time needed to almost catch up to their foreign competitors.

In this regard, Canada has long benefited from its incorporation into the American manufacturing system with the PRE-NAFTA Auto Pact. The auto parts sectors has particularly benefited from the bilateral agreement and the subsequent NAFTA rules. New ‘content’ demands from the Americans could well result in the decimation of the industry.

In the short-term, a revived American protectionism could very well revive some industries, stimulate greater investment, and create some jobs. On the other hand, Americans will be left behind in many areas, like renewable energy, which already creates more jobs than fossil fuels, In his search for past ‘greatness’ Trump sees none in the future but ultimately, the market will demonstrate its proverbial wisdom as renewables vastly outperform fossil fuels in terms of cost, efficiency, and environmental responsibility. Trump is fighting a losing battle in this one, but as long as the argument sells to his xenophobic base, this is not his concern.

Canada’s decision to join the remaining TPP members is a slickly-timed notice to our American counterparts that they aren’t the only game in town and offers considerable advantages in dealing with them.

Canada caused considerable consternation last fall when Prime Mister Trudeau chose not to attend a crucial TPP meeting. He justified his absence by stating that Canada was ‘not yet ready’ to sign the agreement due to differences over labour standards, women’s rights, and cultural issues. These obstacles have been overcome through compromise and a deal in principle has been agreed upon. The deal has not yet been formalized, but even a provisional agreement has demonstrated that Canada is not helpless in its dealings with a newly-unfriendly partner and that it has defences against a bully. On the other hand, it is an admission that the Americans might not recognize NAFTA’S value for their own economic well-being and that alternative partnerships are both possible and desirable. Canada has now reached trade agreements with the European Union and ten other Pacific-rim countries and is essentially informing the United States that if it doesn’t want to get on board the global bandwagon, it makes that choice at its own peril.

With its current belligerence, intransigence, and schoolyard bully approach to international relations, the United States has insulted and abandoned traditional allies and has cozied up to dictatorships that value brute force more than anything and which represent the polar antithesis to the traditional values the country has always claimed to espouse. In doing so, it has shocked a western world that has been dependent on it for survival and has triggered a longoverdue introspection and retreat from dependence on American might.

As with any agreement, the TPP revival will produce both winners and losers, but it’s overall effect is bound to provide the kind of benefits that will enrich the country. It also will help produce more international standards of which we are in dire need. The world’s economic integration is an inevitable process and any nation that chooses to abandon it is also bound to suffer the consequences. America could easily become an outlier in the global scene and cease to be a beacon for the world and become its reject. America’s wealth and vast resources assure that the country can survive alone, but hardly prosper, and its isolation and negativity towards other nations can only backfire in the end. The world’s economies are catching up to America’s and new economic powerhouses are emerging to challenge American dominance. America is still number one, of course; but for how long?