PM must fight for NAFTA
Donald Trump’s tweak has turned into Donald Trump’s thump. An eight-page draft letter from the American president’s administration to Congress recently called for an overhaul of the North American Free Trade Agreement that would overwhelmingly tilt the scales in favour of the United States.
It might as well have ended with this PS: Canada and Mexico – watch your backs.
This isn’t the innocuous little “tweak” to NAFTA that Trump promised Justin Trudeau when Canada’s prime minister visited Washington last month. It looks more like a plan to tear down and rebuild with the best space and most privileges reserved for the Americans. Canada and Mexico can sleep in the basement. NAFTA was likely the last thing on Trudeau’s mind in those heady days after he won the October 2015 federal election. Thanks to Trump, it’s now the PM’s biggest foreign affairs challenge. Among other things, Trump wants to end the right of countries to appeal unfair trade actions to an independent panel. Canada has relied on this mechanism to settle countless trade disputes with the U.S., and never more effectively than when it ended punitive American duties on Canadian softwood lumber more than a decade ago. Scrapping this appeal process would hurt Canada.
Of course, Trump wants more. He wants to give the U.S. authority to unilaterally impose tariffs on imports from Canada and Mexico whenever an American industry feels threatened.
This reeks of the protectionist folly NAFTA was supposed to stop. Meanwhile, in an effort to enrich American farmers, Trump is taking aim at how Canada protects its dairy and poultry sectors. Yet any attempt to limit or end firmly entrenched agricultural marketing boards in this country would meet huge resistance and give Trudeau new political headaches whichever way he went.
Then, there’s Trump’s hypocritical approach to the rules for government purchasing. More “Buy American” restrictions to give preference to U.S. suppliers vying for lucrative U.S. government projects make perfect sense to the president. At the same time, his imagination is elastic enough to stretch around his demand for American suppliers to have greater access to government-funded projects in Canada and Mexico. This is farce trade, not free trade. Trudeau can surely be expected to do his best to defend and advance Canadian interests, and we hope he teams up with Mexico to stand up to Trump. But Trudeau faces months of hard bargaining.
Until now, Trudeau has relied on the sound strategy of sending key cabinet ministers to the U.S. to extol the mutual benefits of free trade. Regrettably, that hasn’t worked. American protectionist zombies are out of their graves and stalking the land. Likewise, Trudeau’s efforts to consummate Canada’s new trade deal with the European Union are welcome because they should open new markets for this country’s exporters. But America is Canada’s most important customer by far, snapping up 75 per cent of our exports. Europe will never match that. We wish Trudeau good luck in talking trade reason to an unreasonable president. And our fingers are crossed.