Whither the NAFTA negotiations?

Canadian negotiators stronger when they work in concert with Mexican counterparts

When it comes to the Trump administration and the NAFTA renegotiations, Canada does not have a whole lot of viable options. But that doesn’t mean that the Trudeau government should completely ignore engaging in prudent strategizing.

We can probably assume, of course, that the remaining tripartite negotiating sessions are not going to be easy. In fact, many of the most difficult issues, which is often the case in these types of mega-trade negotiations, have been left to the end of the process. Accordingly, this is when the true intent of the U.S. trade negotiators will be revealed.

The best approach at the moment, then, is to continue along the lines of business as usual— that is, attending all of the negotiating sessions, exchanging notes in good faith and working on mutually agreeable proposals and language. There is absolutely no need to make any fundamental compromises on Chapter 19, “Buy America” and rules of origin on auto content.

Another thing that the Canadian negotiators should remember is that they are stronger when they work in concert with their Mexican counterparts. With the Mexicans by our sides, it will make intimidation and bullyboy tactics by the U.S. less attractive and thus less likely.

Furthermore, it is not exactly clear that if the NAFTA negotiations collapse and the deal expires that the 1989 Canada-U.S. free trade agreement would automatically snap back into place.

Even still, we should avoid a straight Canada-U.S. trade deal like the plague. There is no reason to believe that the Trumpistas would act any differently if Canada opted for the bilateral route with the U.S. — which is likely Washington’s ultimate endgame.

It is also not crystal clear whether President Trump himself actually has the constitutional competence to terminate the NAFTA deal. I’m sure that members of Congress will have something to say about that. For many of them, authority over trade deals — including their launch, approval and implementation — rests largely with the legislative branch of the U.S. government.

But as both the White House and U.S. legislators dig in their respective heels, an army of lawyers will surely be enlisted. This whole NAFTA tug-of-war will likely be tied up in the courts for some time, perhaps even years. In the meantime, the overall trade pact will still remain in place.

What this means in practical terms is that Canadian officials should double-down on their lobbying efforts of the U.S. Congress. That will necessitate a full-court press on individual lawmakers, key House and Senate committee chairs, members and their staffs and particularly U.S. senators (preferably in red states) where NAFTA-related jobs (especially in the agricultural and auto sectors) could be lost if the deal evaporates.

Additionally, the Trudeau government should give some serious thought to launching a wide-ranging public education or PR campaign to sensitize the U.S. population to the huge downsides of scrapping the NAFTA. The point here is to make Trump think twice about the electoral fallout from nixing NAFTA.

There is no need, then, for Canada to sell the store to only walk away with a bad trade deal. Ottawa will simply have to stand its ground, remain steadfast and wait out the Trump administration (perhaps to the 2020 election cycle even).

That doesn’t mean that the Canadian side should be unreasonable and unwilling to be creative or flexible on the final agreement’s details. But the last thing that we want the American side to think is that the Canadians are desperate for a deal no matter what.

Put simply, Canadian officials should stay at the table until the U.S. side collects up all of its papers and declares an end to the talks. Under no circumstances should we make it easy for Washington to point any blame Canada’s way.

And as an old political science colleague of mine once wisely told me: when all else fails, buy time. Indeed, as long as the trade negotiations are ongoing or the deal is being contested from a legal standpoint, Canada continues to operate safely under the NAFTA.