Trudeau will need colos­sal nerve to defy Trump on NAFTA

The Hamilton Spectator - - Opinion - THOMAS WALKOM Twit­ter: @tomwalkom

The North Amer­i­can Free Trade talks are at an im­passe. Wash­ing­ton is in­sis­tent on win­ning con­ces­sions that Ot­tawa has so far re­fused to make. Prime Min­is­ter Justin Trudeau said again Wed­nes­day that he won’t sign “an un­favourable deal.”

Will he keep that prom­ise? Can he keep it?

And what does he mean by “un­favourable?”

The NAFTA rene­go­ti­a­tions were ini­tially char­ac­ter­ized by Canada as a way to “mod­ern­ize” the 24-year-old pact. It was gen­er­ally as­sumed in those in­no­cent days that U.S. Pres­i­dent Don­ald Trump would fo­cus most of his de­mands on Mex­ico and largely leave Canada alone.

In or­der to pre­vent Trump from car­ry­ing through with his threat to tear up the pact, Ot­tawa mounted a so­phis­ti­cated cam­paign to con­vince U.S. na­tional and state leg­is­la­tors that NAFTA served Amer­i­can in­ter­ests.

In this, the Cana­di­ans were largely suc­cess­ful.

But by re­mind­ing the Amer­i­cans how key NAFTA is to their econ­omy, Ot­tawa high­lighted some­thing else: The free trade agree­ment is even more im­por­tant to Canada. When Trump even­tu­ally turned his bale­ful gaze north­ward, he kept that firmly in mind.

Us­ing the age-old strat­egy of di­vide and conquer, U.S. ne­go­tia­tors out­ma­noeu­vred the Cana­di­ans by strik­ing a sep­a­rate deal with Mex­ico. Then they of­fered to let Ot­tawa sign onto this deal on a take-it-or-leave-it ba­sis.

If Canada ac­ceded, its au­towork­ers would gain the same pro­tec­tion from lowwage Mex­i­can oper­a­tions that the Amer­i­cans won.

But Canada would also have to cross what Trudeau had called his red lines.

First, it would have to agree to a so­called sun­set clause that sets a time limit for the pact (Ot­tawa quickly did that).

Sec­ond, it would have to give up the Chap­ter 19 dis­pute-res­o­lu­tion sys­tem that ex­ists in the cur­rent NAFTA.

Third, it would have to ei­ther elim­i­nate or sig­nif­i­cantly change the sup­ply man­age­ment sys­tem that pro­tects Cana­dian dairy farm­ers.

Some­where along the line, the Amer­i­cans also res­ur­rected their long-stand­ing de­mand that Canada stop pro­tect­ing its cul­tural in­dus­tries.

As well, they called on Ot­tawa to con­cede to an ar­ray of patent and in­tel­lec­tual prop­erty de­mands that, among other things, would make the de­liv­ery of a na­tional phar­ma­care plan more ex­pen­sive and dif­fi­cult.

This week, For­eign Af­fairs Min­is­ter Chrys­tia Free­land left the talks to brief the prime min­is­ter in per­son. That’s usu­ally a sign that im­por­tant po­lit­i­cal de­ci­sions are in the off­ing.

The prime min­is­ter has long said that no deal is bet­ter than a bad deal and that he won’t sign a re­newed NAFTA pact un­less it’s good for Canada. What Trump’s ul­ti­ma­tum presents him with, it seems, is a mixed deal which, while po­ten­tially good for Cana­dian auto work­ers, oth­er­wise falls woe­fully short.

Will he sign on any­way?

He need not do so. Re­gard­less of NAFTA, trade will con­tinue be­tween Canada and the U.S. In most cases, this trade will be ei­ther tar­iff-free or sub­ject to min­i­mal tar­iffs set by the World Trade Or­ga­ni­za­tion.

Trump’s threat to im­pose 25 per cent tar­iffs on au­tos, which would hurt U.S. work­ers as much as Cana­dian ones, may come to naught.

In the­ory, Ot­tawa could be­gin to re­ori­ent the econ­omy away from the ex­ist­ing sys­tem of con­ti­nen­tal in­te­gra­tion cre­ated by NAFTA.

Po­lit­i­cally, given Trump’s un­pop­u­lar­ity in Canada, a de­ci­sion to con­front the U.S. pres­i­dent’s NAFTA de­mands might work out well for the Lib­er­als.

But aban­don­ing even a fa­tally flawed NAFTA car­ries great risk. Does Trudeau have the nerve to take that risk and defy Trump? Does any Cana­dian po­lit­i­cal leader?

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