Calling Trump’s NAFTA bluff
The new deadlock in talks to renegotiate the North American Free Trade Agreement (NAFTA) has fed the “all is lost” sentiment among those NAFTA watchers who have long taken U.S. President Donald Trump at his campaign-trail word that he wants to kill NAFTA, not renegotiate it.
So how bad would life be without NAFTA?
Oddly enough, the consequences of NAFTA’s death, according to Colorado-based think-tank ImpactEcon, would fall heavier on the U.S. than Canada.
ImpactEcon estimates that Canada would lose 125,000 NAFTArelated jobs to America’s 250,000 lost jobs. Mexico would suffer most, with an estimated loss of close to one million low-skilled jobs and the hollowing out of its manufacturing sector.
But there’s more opportunity here for Canada than risk in rejecting outrageous U.S. demands.
Trump having repeatedly expressed his fondness for Canada, it’s a likely prospect that absent NAFTA, Canada and the U.S. would simply revert to the pre-NAFTA U.S.-Canada Free Trade Agreement dating from 1989. (ImpactEcon’s job-loss estimate for Canada doesn’t account for that turn of events.)
Whatever the outcome, Canada has a chance to step into the void Trump has created in U.S.-Latin American relations.
Late last week, Juan Sartori, founder and chairperson of global money manager Union Group, told an all-American panel of Bloomberg economic commentators, “Lucky for you, the Canadians are nicer people, but you are turning Mexico from a partner to an enemy. Look around you: Canada is upset with the U.S., Mexico is upset, Cuba, Venezuela, which you may go to war with using sanctions. It’s not a nice neighbourhood that Trump is creating.”
Canada would benefit from applying a strong dose of civility in Latin America, the global region where Canada’s bonds of friendship are weakest — a condition not rooted in enmity, America’s historical problem, but simple neglect. China is the one to watch As recent reports have noted, China has eclipsed the U.S. as the world’s largest economy, the most prodigious manufacturer and the biggest exporter.
That prompts Bloomberg columnist Noah Smith to tag China “a formidable superpower that just hasn’t yet felt any reason to exercise its dominance.”
Even after restraining its overheated economy, China still boasts annual GDP growth of about 6 per cent, triple that of Canada or the U.S.
In a recent poll of respondents in several countries, the Pew Research Center found that 42 per cent of Canadians called China the world’s top economic power, and only 32 per cent believe America holds that status.
But as China makes further gains on the U.S., it’s important to remember that the People’s Republic remains a police state, where free expression is prohibited and unorthodox innovation discouraged.
A rough and ready Silicon Valley simply isn’t possible in China, not yet. Corruption is rampant among Chinese state officials and business executives alike.
There are approximately 800 riots in China each day, most of them strikes and other factory disruptions, but also outbreaks of ethnic conflict.
Approximately 4,000 Chinese die each day from conventional air pollution, such is the rush to build new coal-fired power plants to fuel the torrid economic growth. And China has only a primitive socialsafety net.
There will shortly be an outpouring of scare-’em books about the “Chinese threat,” to match the plethora of 1980s hand-wringing over an ascendant Japan.
The reality is that China will be among the century’s most interesting countries because it has so many challenges to resolve, not due to growing economic or military hegemony.
As such, China should be embraced as one of the biggest business opportunities in history for Western enterprises, as abettors of positive change in what we once quaintly called the Middle Kingdom. Japan’s new pretender The person to watch after last Sunday’s national election in Japan isn’t Shinzo Abe, who was comfortably re-elected, but Yuriko Koike, leader of the opposition Party of Hope.
With a snap election called more than a year early, Abe may have succeeded in his gambit to catch the opposition in disarray.
But Koike, a fiscal conservative, wisely chose to remain as governor of Tokyo as she campaigned. That makes her a de facto national politician.
With a population of about 28 million, Tokyo-Yokohama is the world’s biggest urban area. Koike will be a powerful and persistent critic of an Abe cabinet whose popular approval rating has plunged to 37 per cent.
Abe’s vaunted “Abenomics” program that long ago brought him to office has gone stale, with no new ideas for accomplishing the structural economic reforms it promised.
True, the economy notched six straight quarters of growth prior to the election, unemployment is low at just 3 per cent, and the Nikkei 225 stock average closed at a 21-year high earlier this month.
But Japan remains mired in the deflation that has kept the Japanese economy from breaking out of its 27-year funk since the bursting of immense stock-market and real estate markets of the late 1980s.
The country is also saddled with the highest debt-to-GDP burden among the G7 countries.
In calling for economic discipline and strengthening her young party ahead of the 2020 election, Koike stands to benefit from a PM distracted by the North Korean nucle- ar-weapons crisis; by Abe’s longshot bid to reboot a Trans-Pacific Partnership trade zone with Canada’s support that Trump has killed; and an epidemic of Japanese corporate malfeasance at leading Japanese enterprises including airbag maker Takata and Kobe Steel.