Canada has op­tions if Trump kills NAFTA

Toronto Star - - OPINION - Thomas Walkom Thomas Walkom ap­pears Mon­day, Wed­nes­day and Fri­day.

If U.S. Pres­i­dent Don­ald Trump deep-sixes the North Amer­i­can Free Trade Agree­ment, there are es­sen­tially three things that Canada can do. It can try to sal­vage a bi­lat­eral deal with the U.S. It can, in con­cert with Mex­ico, keep what re­mains of NAFTA on life sup­port in the hope that Trump will even­tu­ally be re­placed by a pres­i­dent more amenable to free trade.

Or it can ac­cept that the idea of con­ti­nen­tal eco­nomic in­te­gra­tion is dead and strike out on a new path.

The choice Trudeau’s Lib­eral govern­ment will make is un­clear. What is clear is that Ottawa un­der­es­ti­mated how much Trump — and the vot­ers who back him — de­spise NAFTA.

When Trump calls the pact ty­ing to­gether the economies of Canada, Mex­ico and the U.S. the worst deal ever, he means it.

Talk­ing to re­porters in Wash­ing­ton Wed­nes­day af­ter an in­con­clu­sive meet­ing with Trump, Trudeau said Canada has al­ways been pre­pared for un­pre­dictable twists and turns in the NAFTA talks.

But on this topic, Trump has been both pre­dictable and con­sis­tent. He thinks Mex­ico is us­ing NAFTA to hose the U.S. He prefers bi­lat­eral agree­ments to mul­ti­lat­eral deals like NAFTA, a point he re­peated to re­porters Wed­nes­day.

And while he has fewer com­plaints with Canada (at one point he said the trade re­la­tion­ship need only be “tweaked,”) he does make de­mands that Ottawa would find hard to ac­cept.

One such de­mand is the elim­i­na­tion of a pro­vi­sion that al­lows the NAFTA sig­na­to­ries to chal­lenge one an­other’s trade prac­tices be­fore an in­de­pen­dent panel. Canada sees this as a nec­es­sary to pre­vent the U.S. from act­ing even more ar­bi­trar­ily than it usu­ally does. Trump sees it as an in­fringe­ment on Amer­i­can sovereignty.

In the talks, Trudeau’s strat­egy has been to use sweet rea­son to per­suade not only Trump but U.S. of­fi­cials at all lev­els that NAFTA is good for Amer­ica. The prime min­is­ter has also set out to per­son­ally charm the pres­i­dent. The charm worked; Trump said Wed­nes­day how much he likes “Justin.” But the sweet rea­son did not. No mat­ter how many graph­ics are pro­duced by the Cana­dian Em­bassy in Wash­ing­ton, Trump’s base still doesn’t like NAFTA. Nei­ther do a good many Democrats, in­clud­ing the lead­er­ship of the trade union move­ment.

For that mat­ter, nei­ther do a good many Cana­dian trade union­ists.

Most im­por­tant, the pres­i­dent him­self has not been moved. His strat­egy has been to make max­i­mal yet un­yield­ing de­mands. If Canada and Mex­ico agree to th­ese de­mands, then Trump wins. If they don’t agree and NAFTA falls apart, Trump also wins.

This may not be nor­mal bar­gain­ing. But it is bar­gain­ing Trump style.

So what does Canada do if the talks fall apart over Trump’s in­tran­si­gence?

First, it can try for a bi­lat­eral deal with the U.S. In­deed, if NAFTA is ter­mi­nated, the 1989 Canada-U.S. Free Trade Agree­ment will au­to­mat­i­cally come into play again. But should that hap­pen, Trump is likely to de­mand that it too be rene­go­ti­ated, which would put Ottawa back in the same soup.

Sec­ond, Canada and Mex­ico could keep the shell of NAFTA alive un­til Trump is re­placed. This is the strat­egy Ja­pan hopes to use with the rem­nants of the 12-na­tion Trans-Pa­cific Part­ner­ship, a trade deal from which Trump has al­ready re­moved the U.S.

But like the Ja­panese gam­bit with the TPP, any at­tempt to keep NAFTA mi­nus the U.S. alive would be based on the as­sump­tion that Trump is an ac­ci­dent of his­tory, an ano­maly in a world still de­fined by glob­al­iza­tion.

In fact, it may make more sense to view Trump as the vis­i­ble ex­pres­sion of a much more deep-seated re­ac­tion in the U.S. against glob­al­iza­tion. If that’s the case, at­tempts to keep alive NAFTA and pacts like it just won’t work.

Third, Canada could try some­thing new. It could look beyond North Amer­ica.

It would still be a trad­ing na­tion. In fact, a re­cent study by the Cana­dian Cen­tre for Pol­icy Al­ter­na­tives notes that even with­out NAFTA, 41per cent of Cana­dian ex­ports to the U.S. would face no tar­iffs, while the re­main­der would face, on av­er­age, only mod­est ones.

All of which is to say that end­ing NAFTA need not re­sult in the sev­er­ing of all eco­nomic ties to the U.S. But, by forc­ing us to look for other mar­kets and other trad­ing part­ners, it could lessen our de­pen­dence on Wash­ing­ton, which wouldn’t be such a ter­ri­ble fate.


Prime Min­is­ter Justin Trudeau has suc­ceeded in charm­ing U.S. Pres­i­dent Don­ald Trump, but thus far has not con­vinced him that NAFTA is good for the U.S., Thomas Walkom writes.

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