TRUMPING NAFTA
Trade reform high on agenda
There are two Donald Trumps. There’s the firebrand xenophobe progressives see, the one who spouted conspiracy theories and insults during his shockingly abrasive, fearmongering campaign.
The other Trump is more recent, and less scary: The one who gave a surprisingly conciliatory victory speech in the wee hours of Nov. 9; who praised Hillary Clinton for her service to her country; who at times seems more a would-be statesman than a rabble-rouser; the one who’s going to temper his incendiary campaign positions — which, you know, he maybe only said to get elected.
This is the Good Donald investors see when they drive the Dow Jones industrial average to a new record, hoping not only that his tax breaks and promised infrastructure spending will happen, but also that all his anti-trade, anti-corporation, anti-immigrant rhetoric was just so much election bafflegab.
This is the Good Donald our Canadian politicians hope to see, too, as they contemplate engagement with our largest trading partner. Maybe, they think, they can work with this guy.
Well, perhaps they — and we — should stop dreaming.
Notwithstanding his orchestrated attempt to appear presidential during that 60 Minutes interview on Sunday, Trump has pretty much reverted to the mean (in both senses of the word) since election night. He’s already back to bashing the media and tweeting insults to critics. He’s already lashing out at his loyalists in one of the most pre-emptive purges in the history of presidential transitions. (Take that, Chris Christie — you’ve had your day in the sun.)
Meanwhile, he has appointed as chief strategist Breitbart News supremo Steve Bannon, platform provider to the alt-right. (Nice to know such a level head will have the President’s ear.) On immigration, Trump said on 60 Minutes he’ll immediately deport millions. And one of his rumoured favourites for attorney general, Kansas Secretary of State Kris Kobach, has said the transition team is poised to implement a registry for Muslim immigrants. Well, that’s America’s problem, right? He’s barely mentioned Canada, thank God. Well, not so much. On Tuesday, CNN disclosed a memo reportedly drafted by Trump’s transition team, which outlines a “200-day plan” for the new administration. And Canada is firmly in the crosshairs.
At the top of the to-do list, to be launched right after his Jan. 20 inauguration, is NAFTA reform.
The memo suggests that the new administration will immediately explore the ramifications of scrapping the nearly-23-year-old free trade agreement. It will notify Mexico and Canada of its intention to amend the treaty, specifically when it comes to lumber, country-of-origin labelling, safety standards and currency manipulation. And the memo puts consideration of formal withdrawal from NAFTA at Day 200, which would be sometime in mid-August of next year. Mark it on your calendars. Oops. So I guess Trump really wasn’t lying about that NAFTA thing.
The good news is, the initial targets for renegotiation are largely familiar.
The bad news is, they could be the canaries in the coal mine for Canada-U.S. trade relations. Let’s parse each of them quickly.
First, on softwood lumber, the deal that resolved the longstanding dispute between the B.C. and U.S. industries a decade ago expired last year. Negotiations have been ongoing: the Americans want tighter quotas on Canadian imports, as they see access to Crown land as a subsidy, and if they can’t get quotas, they want tariffs. Billions of dollars and thousands of jobs are at stake.
The Trump team’s reopening of the rules could change the playing field for negotiations.
Country-of-origin labelling (COOL) is about meat. Until last year, U.S. COOL regulations required imports of Canadian and Mexican beef and pork to be labelled as such, despite the fact that the North American meat industry is highly integrated (kind of like the automotive, but anyway). The Canadian side argued, correctly, that COOL is an unfair trade practice, and the World Trade Organization agreed; even the U.S. industry didn’t like the regs very much.
Congress’s repeal of them last December is a thorn in the side of American protectionists on both the left and the right, so reopening the issue will be a political winner for Trump — even if no one in the actual industry wants it.
Safety standards? Fuzzier, but I’m guessing that has mostly to do with Mexican trucks’ access to the United States. As for currency manipulation, who knows?
One hopes it’s not just more conspiracy theorizing about a global financial cabal inflating the U.S. trade deficit. If it is, it’s hard to see how that applies to NAFTA.
Now, it’s worth pointing out that the Trump transition team did not confirm the CNN memo.
Nor is there any word whether Trump himself has even looked at it. It could be that it comes to nothing.
But if this memo is real and turns into an action plan, the best Canada can hope for is that its familiar targets of softwood lumber and COOL are as far as the action goes.
These are low-hanging fruits to U.S. special interests; it’s possible the Trump team is only looking for marginal victories to buttress its populist anti-trade appeal. Maybe Trump as president will have the good sense to pull back from the brink of ripping NAFTA up when next August rolls around. So we can hope. But that would be to put faith in the Good Donald — a pre-presidential façade in which the cracks have already started to appear.
The memo suggests that the new administration will ... explore the ramifications of scrapping the nearly-23-year-old free trade agreement.