Smoke, mirrors, and Trump-induced confusion on trade
NAFTA is dead. Or maybe not. Canada is likely sidelined in any new trade agreement. Or, Canada is essential for any new deal. The new pact is bilateral, with Mexico only. Or maybe the new deal is a subdeal within NAFTA that can only become official with trilateral agreement.
Pick your reality. Donald Trump says the North American deal is gone and the new one is called the United States-Mexico Free Trade Agreement. First off, it’s important to note that no one seems certain whether he even has the right to unilaterally kill a deal approved by Congress.
Mexican officials disagree with Trump’s declaration, insisting that Canada must be part of the deal. Trump’s own administration disagrees — the U.S. Department of Agriculture issued a release praising the new deal as a benefit to farmers and referring to it as NAFTA. Leading Republicans welcome the agreement, but Senate Finance Committee Chair Orrin Hatch says: “A final agreement should include Canada” to ensure NAFTA continues to benefit Americans. Second-top Senate Republican John Cornyn says: “This is a positive step and now we need to ensure the final agreement brings Canada in to the fold and has bipartisan support.”
By now everyone knows that Trump sews confusion, uncertainty and outright lies as negotiating tools. Clarity and certainty are the enemy of how Trump works. So where does that leave us?
Mired in ambiguity, for one thing.
If you believe Trump, we have a new, bilateral deal. Canada may be or may not be allowed to join depending on how we behave.
If you believe most everyone else involved, including Trump’s own chief trade negotiator Robert E. Lighthizer, every effort will be made to include Canada, even it takes weeks or longer to make that happen.
In fact, according to Mexican officials, the entire deal is not even sealed yet, with at least two important issues still outstanding. It’s not clear what those are. Christopher Wilson, a NAFTA expert at the Wilson Centre think tank in Washington, said in an interview with Vox: “I wouldn’t say that the U.S. and Mexico have really reached a NAFTA deal”, but have only solved one bilateral trade issue, meaning “There is still a long road ahead.”
What is clear is that the U.S. and Mexico made major progress on the auto sector and the changes they agreed to, in principle, should benefit the integrated North American sector, including Canada. One of those changes would see more Mexican workers paid a living wage, which will level the competitive playing field. Other changes would increase the amount of North American material — including Canadian steel and related products — used in construction of cars that would otherwise be subject to tariffs.
Foreign Minister Chrystia Freeland is, or soon will be, in Washington. She will face the expectation that Canada might be able to sign a deal by Friday, which seems absurd. No doubt she’ll do what she has done all along and stand firm against bullying and unreasonable expectations. Granted, Canada needs to give something to Trump, perhaps around supply management. But one thing hasn’t changed, and that’s that while we want to be and should be a partner, the agreement has to work for Canadians first.
“This is a positive step and now we need to ensure the final agreement brings Canada in to the fold and has bipartisan support.” John Cornyn, Senate Republican