Canada can still make a good NAFTA deal
As talks aimed at a new North American Free Trade deal resume today, Canadian negotiators should stay cool and focus on the agreement that is in sight.
To be sure, disrupter-in-chief Donald Trump is acting as if he can bully this country into accepting a bad deal, one dictated entirely by his narrow-minded, supposedly America-first agenda.
And it’s also true the American president is applying maximum pressure on Canada with crude, divide-andconquer tactics that started last week with a tentative U.S-Mexico trade accord and continued with a formal, 90-day notice to Congress that this bilateral deal is going forward.
Canada, Trump says insultingly, can join “if it is willing.”
Meanwhile, to twist the vise even tighter, Trump boasts he’ll make no concessions and that if Canada resists, he’ll slap a 25-per-cent tariff on imports of Canadian-made automobiles. Talk about bad-faith negotiations.
The painful experiences of the less-than-two-yearold Trump presidency have taught the world not to underestimate his capacity for wreaking havoc. Have no doubts — he can cause grave harm to this country.
But Trump’s pot-holed track record also reveals his deep limitations. And if he thinks he can force Canada into inking a humiliating, inferior trade deal, he’s wrong. A reasonable, honourable accord is achievable for Canada.
At stake is about US$600 billion in annual trade between the two countries, and the president knows this.
Trump himself is facing increasing pressure from members of Congress as well as the U.S. Chamber of Commerce and the American labour movement who are all demanding that Canada be part of any new trade agreement.
The reality for Trump is that he’s mandated to negotiate a new, tripartite trade deal, not a bilateral one. While massive, his presidential powers are, thankfully, limited. And the clock is ticking for him in a way it isn’t for Justin Trudeau’s Liberals.
The U.S. is headed into nationwide elections this fall. If Trump picks a fight with Congress, the business community and labour movement, those critical midterm elections could end badly for him, severely limiting his actions in the two years left in his term of office.
So, however much Trump blusters, brags and swaggers, he needs a deal. Canada, therefore, has leverage.
We leave it to the Canadians closer to the negotiations to settle on the best tactics. But we think they should adopt a strategy of making concessions in some areas while holding firm in others.
Give a little. Hold on to what is most important to Canada — its economy and people.
The priority for today and the days ahead must be to preserve the dispute-resolving mechanism known as Chapter 19, or a slightly revised version of it.
Chapter 19 deals with punitive duties, and some commentators have argued it’s not as crucial as it once was because the World Trade Organization can handle trade disputes. The trouble with that line of thinking is Trump has threatened to pull out of the WTO.
Canada must preserve some form of Chapter 19, and to achieve this it will unfortunately have to give ground in some way on supply management in the agricultural sector.
In practical terms, this will mean opening up more of Canada’s dairy market to the Americans.
This will cause political fallout for the Liberals in rural Ontario and Quebec, home to most of the country’s dairy farmers.
But whatever the pros and cons of supply management, the greater national good will be served best by securing a new NAFTA deal, and one that includes Chapter 19.