‘Canada stays’

In­sid­ers say no change in strat­egy if Trump starts NAFTA pullout

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Pres­i­dent Don­ald Trump’s es­ca­lat­ing threat to trig­ger NAFTA’s can­cel­la­tion clause as a high-pres­sure bar­gain­ing tac­tic has raised the ques­tion of what Canada’s re­sponse might be in the face of a gun-to-the-tem­ple ne­go­ti­at­ing strat­egy. Sev­eral in­sid­ers say the cor­rect an­swer is: Noth­ing.

Canada should re­main at the bar­gain­ing ta­ble and likely will, for its own strate­gic rea­sons, say sev­eral in­sid­ers, in­clud­ing Canada’s chief ne­go­tia­tor for the orig­i­nal NAFTA, the head of the Com­mons for­eign af­fairs com­mit­tee, and a cross-bor­der trade lawyer.

Their rea­son­ing is shared by some high-rank­ing of­fi­cials in the Canadian gov­ern­ment who be­lieve the coun­try’s in­ter­ests are best served by calmly stick­ing it out rather than stomp­ing off and aug­ment­ing the pres­i­den­tial drama.

It’s an in­creas­ingly press­ing mat­ter. Trump has be­gun telling peo­ple he wants to trig­ger NAFTA’s Ar­ti­cle 2205, which al­lows a coun­try to with­draw with six months no­tice, be­cause he be­lieves it will scare Canada and Mex­ico into con­ces­sions.

Mex­ico has said it will refuse to ne­go­ti­ate un­der such a sce­nario. But some prom­i­nent Cana­di­ans, in­side and out­side gov­ern­ment, favour an op­pos­ing ap­proach, ar­gu­ing pa­tience is like­li­est to pro­duce de­sired out­comes.

One was the coun­try’s chief ne­go­tia­tor for the 1993 NAFTA.

“As tempt­ing as it might be to say, ‘Well, screw you, we’re gonna walk away,’ I think it would be bet­ter to just keep ne­go­ti­at­ing,” John Weekes said in an in­ter­view while at­tend­ing a Wash­ing­ton trade sym­po­sium hosted by the Cato In­sti­tute.

“We’ll just say, ‘Look, our po­si­tion is not gonna change at all as a re­sult of this threat. And if you de­cide after six months or some­time after that to pull the plug it’s go­ing to be dam­ag­ing to your in­ter­ests.’”

A back­lash is al­ready de­vel­op­ing in Wash­ing­ton.

Mem­bers of the pres­i­dent’s own party have be­gun voic­ing anx­i­ety. Mem­bers of his cabi­net have pointed out that a NAFTA pullout threat would be es­pe­cially painful for the deep-red states that voted for Trump and hap­pen to be ma­jor ex­porters of farm prod­ucts to Mex­ico.

Repub­li­can-friendly busi­ness groups are start­ing to sound the alarm. Eighty-six agri­cul­ture groups wrote a let­ter to the Trump ad­min­is­tra­tion this week say­ing the mere threat of a pullout via Ar­ti­cle 2205 would scare for­eign cus­tomers into seek­ing new sup­pli­ers and “cause im­me­di­ate, sub­stan­tial harm.”

The No. 1 busi­ness lobby in the coun­try, the GOP-back­ing U.S. Cham­ber of Com­merce, will be host­ing a pro-NAFTA event next week at­tended by se­na­tors from Kansas and Texas – Pat Roberts and Ted Cruz.

In­side U.S. Trade re­ported that Trump told a meet­ing of his party’s se­na­tors this week not to get “too ex­cited,” be­cause he’s han­dling the NAFTA mat­ter and be­lieves he needs to use a pullout threat to get the best pos­si­ble deal. Trump has made sim­i­lar com­ments in pub­lic.

The site re­ported that Roberts replied: “I am ex­cited.”

A Canadian par­lia­men­tary del­e­ga­tion heard this anx­i­ety when it vis­ited Wash­ing­ton this week. The head of the House of Com­mons for­eign af­fairs com­mit­tee said law­mak­ers be­lieve the pres­i­dent is pre­par­ing a strate­gic es­ca­la­tion.

“It’s sort of a con­sen­sus on (Capi­tol) Hill that it’s part of his ne­go­ti­at­ing strat­egy... that, ‘this is who we have as a pres­i­dent,’” said Bob Nault, a Lib­eral MP whose com­mit­tee met a half-dozen law­mak­ers this week.

“He’ll move to­wards cre­at­ing a cri­sis be­fore too long with the goal of get­ting ev­ery­one’s at­ten­tion that this is se­ri­ous and he’ll want sig­nif­i­cant changes to NAFTA, or he’ll walk away.”

Nault’s view on what hap­pens next: “I think Canada stays at the ta­ble. I think it will.”

An in­ter­na­tional trade lawyer spe­cial­iz­ing in Canada-U.S. mat­ters said it’s crit­i­cal the par­ties keep talk­ing. He said there could be a big bat­tle in Wash­ing­ton over the can­cel­la­tion of NAFTA – in­volv­ing pol­i­tics, trade pol­icy and the le­gal lim­its of pres­i­den­tial ver­sus con­gres­sional power. He said it helps the pro-NAFTA side to have peo­ple still at the ta­ble.

“It doesn’t give Congress a lot of am­mu­ni­tion to push back on the pres­i­dent if no­body is there (ne­go­ti­at­ing),” said Dan Ujczo of the firm Dick­in­son Wright.

“Canada and Mex­ico should be at the ta­ble ev­ery time. They should meet when­ever, wher­ever they want and say ‘We’re ready. We want to work with you.’ The op­tics of that are so ter­ri­ble if Canada and Mex­ico don’t show up.”

Nu­mer­ous ob­servers ex­pect a com­pli­cated and lengthy le­gal fight if Trump ac­tu­ally tries can­celling a ma­jor trade deal, a move un­prece­dented in mod­ern U.S. his­tory. That’s be­cause of an in­her­ent con­flict in the U.S. Con­sti­tu­tion – be­tween Ar­ti­cle One, which gives Congress power over in­ter­na­tional trade, and Ar­ti­cle Two, which gives the pres­i­dent power over in­ter­na­tional treaties.

“I think it would end up at the Supreme Court,” said Bill Rein­sch of the non-par­ti­san Stim­son Cen­ter.

“I think it will be lit­i­gated.”

Mem­bers of the pres­i­dent’s own party have be­gun voic­ing anx­i­ety.


U.S. Pres­i­dent Don­ald Trump speaks in the Oval Of­fice in Wash­ing­ton.

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