What if Clinton or Trump do attack free trade?
Regardless of who wins the U.S. presidential election, Canada could face something it hasn’t seen in decades: an America no longer committed to free trade.
Antipathy to trade and investment deals is now a real part of the American election campaign. It may determine the outcome of November’s vote.
This isn’t just a story of grumpy, old, white guys who hate foreigners. It is a story of people who have been left out and who, not irrationally, blame free trade for their predicament. In the U.S., there are a lot of them. The rust-belt states of Michigan, Ohio and Pennsylvania alone count for 54 of the 270 electoral college votes that either Democratic candidate Hillary Clinton or her Republican rival, Donald Trump, need to win.
All three states went to the Democrats in the last presidential contest. This time, they may not.
Both Trump and Clinton understand the changed politics of this contest. Trump’s opposition to the North American Free Trade Agreement allowed him to clinch the Republican nomination. Clinton’s more recent conversion from globalization fan to critic was an attempt to appeal to the struggling, blue-collar working class.
Trump has promised to either renegotiate NAFTA or rip it up. He has also attacked the as-yet unratified Trans Pacific Partnership deal among 12 nations (including Canada).
Clinton has focused her criticisms on the TPP. But under pressure from the left-wing of her Democratic party, she has also promised to “review” existing deals like NAFTA to ensure they provide enough jobs for Americans. Do Trump and Clinton mean it when they attack free trade? Maybe not. Politicians have prevaricated before.
In the 1992 presidential contest, Democrat Bill Clinton promised to negotiate NAFTA side deals on labour and the environment. Technically, he kept his word, but the side deals were meaningless.
In 2008, Barack Obama, another Democrat, campaigned for the presidency on a promise to renegotiate NAFTA. He didn’t deliver.
What’s different this time is that opposition to free trade and globalization is gaining traction. It is no longer limited to protestors and black bloc anarchists.
Mainstream economists, such as Paul Krugman, who could usually be counted on to support free trade, now acknowledge that its benefits may be slight and its rewards unfairly distributed.
A recent Angus Reid poll calculated that only 25 per cent of Canadians think NAFTA beneficial, while one-third want it renegotiated.
All of this comes at a time when the Canadian political and business elites have fully signed onto globalization.
The Liberals, who made opposition to a Canada-U.S. free trade deal the defining issue of the 1988 election, are now, under Justin Trudeau, ardent supporters of both NAFTA and the as yet unratified Comprehensive Economic and Trade Agreement with the European Union. The New Democrats have dropped their blanket opposition to free trade and now take a more nuanced view (they support a 2015 deal with South Korea, oppose the TPP and won’t say where they stand on CETA).
While the parties may quibble over some deals, there is no longer any organized parliamentary opposition to NAFTA. It is taken for granted that trade with the U.S. must be the centrepiece of the Canadian economy.
The perceived need to keep Washington mollified and the border wide open affects virtually everything Ottawa does.
It is back of mind whenever Canada contemplates sending troops abroad — whether to Afghanistan, northern Iraq or the Baltic states.
We have reconfigured the country around free trade with the U.S.
So what do we do if the winner of November’s U.S. presidential vote insists on renegotiating or reviewing NAFTA? The main target may be Mexico, the pact’s third partner. But Americans will not be sympathetic to U.S. manufacturers that set up shop in Canada either.
Canadian politicians may hope Trump and Clinton are fibbing when they take anti-trade positions. But what if they are not? More to the point, what if domestic American politics around trade make a rethinking of NAFTA inevitable?
In 1988, free trade was promoted as the cutting edge of modernity. Opponents were called Luddites and accused of living in the past.
Now the past has become present again.
We shall see what happens after November. But the signs indicate this particular era of free-trade orthodoxy is coming to an end.