Time is on Canada’s side when it comes to NAFTA, says David Johnson.
Time is on Canada’s side when it comes to NAFTA agreement
Today, in the White House, Canadian Foreign Affairs Minister Chrystia Freeland will sit down opposite U.S. Trade Representative Robert Lighthizer to resume negotiations on revising the North American Free Trade Agreement (NAFTA). To say these talks will be fraught with tension would be an understatement.
At stake is the economic well-being of the entire North American economy and, for Canadians, securing a free and fair trade deal with our single greatest trading partner, the United States. But looming over these negotiations is the spectre of U.S. President Donald Trump, his bullying “America First” mantra, his limited knowledge of American-Canadian trade relations and his visceral contempt for Prime Minister Justin Trudeau.
What the Canadian negotiating team is up against in the White House was revealed last Friday through leaked transcripts of an interview the president gave to Bloomberg News. As Trump confirmed on Saturday, his approach to the trade negotiations with the Canadians was to offer no compromises at all. The revised NAFTA deal, so the president said, would be “totally on our terms,” that Canada would have “no choice” but to accept what Trump wants or face the consequences.
These consequences were spelled out by the president in a tweet on Saturday morning: “There is no necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out.” But he went on, in a telling manner, revealing both a concern, and a deeper sentiment: “Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will all be better off.”
For a man who won the White House, in part, by trashing NAFTA, claiming it to be “one of the worst trade deals ever” this continuing contempt for the agreement is not surprising. Also not surprising is that the American economy has grown enormously since 1993, the year NAFTA came into effect, that American trade with both Mexico and Canada is at an all-time high, that America has an overall trade surplus with Canada, and that American businesses overall are the greatest beneficiaries of NAFTA trade.
President Trump, of course, refuses to acknowledge any of those foregoing economic points, even when they are documented by his own Department of Commerce. So, how to renegotiate a NAFTA agreement when the American president, deep down, does not believe in free trade, does not like NAFTA, and clearly does not like Justin Trudeau and his brand of liberalism?
The best advice for the prime minister and his negotiating team is to hang tough, keep talking with their American counterparts as long as possible but to safeguard core Canadian economic interests. And, if and when talks break down again, Chrystia Freeland and her team have to be prepared to walk away from the negotiating table while stating we are prepared to resume talks, later.
For all of Trump’s bluster on NAFTA there are certain fundamental truths that not even Donald Trump can change. Time is on our side, a NAFTA agreement without Canada will not work, and, perhaps most importantly, American businesses big and small want to maintain strong, mutually advantageous trade and commerce relations with Canada.
The end of free trade between these two countries would be detrimental to both countries witnessing declining economic activity on both sides of the border, job losses, higher consumer prices and lower GDP.
These are realities sensed by American business leaders and also by governors of states that have Canada as their main trading partner, and members of the U.S Congress, both Democrats and Republicans. Trump senses this, too, hence his tweet urging Congress not to get involved in his negotiations.
But, of course, overseeing American trade relations with other countries is part of Congresses’ job. And with congressional mid-term elections coming on Nov. 6, American trade relations with us and Mexico will be a ballot issue.
Following that day, President Trump may be fatally weakened. Time is on our side.