Trudeau must be willing to walk away from NAFTA

Surprise. Donald Trump means what he says. Those planning to deal with the new U.S. president, including Prime Minister Justin Trudeau, should keep that in mind.

Wednesday, the Trump carnival continued apace. Yes he is going to build a wall between the U.S. and Mexico, Trump tweeted. Just as he promised. And yes he is going to make the Mexicans pay for it.

If Mexico doesn’t like the idea, America’s Tweeter-in-chief continued, then President Enrique Pena Nieto might as well cancel his planned visit to the White House next week. Pena Nieto obliged.

This came after a television interview in which Trump said he may re-introduce torture as an interrogation tool (as promised).

He has issued orders to crack down on illegal immigrants (as promised). And he is reportedly ready to temporarily ban all visitors and immigrants from seven Muslim-majority countries (as promised).

In short, he is doing everything his critics said were either insane or undoable. And yet Ottawa still seems to think Trump will give Canada a pass when it comes time to renegotiate the North American Free Trade Agreement, a pact he yesterday called “a total disaster.”

It is true Trump has saved most of his anti-NAFTA venom for Mexico. He has threatened U.S. companies planning to build new manufacturing capacity in that country instead of America. Some have responded by changing their plans.

So far, he hasn’t mentioned Canada in his anti-NAFTA rants. But that may simply mean he has not yet turned his baleful gaze to the north.

The slogan of his inauguration, “Buy American; hire American” seems both clear and all-encompassing.

Still, the Trudeau government remains resolutely upbeat. It points out that Canada is the top export market for 35 American states. Its officials talk knowledgeably about supply chains and the economics of continental integration.

The Trudeau ministry was cheered when Stephen Schwartzman, the head of a business group advising Trump, showed up this week at their Calgary cabinet retreat to praise Canada.

But civil libertarians were equally cheered this month when four senior Trump appointees, including CIA Director Mike Pompeo, said they opposed torture. That didn’t stop Trump from raising this particular idea again.

Similarly, the views of Schwartzman, whose influence in Trump circles is unclear, may not reveal much about what the president thinks.

Some 23 American states export $1 billion each to Mexico each year under NAFTA. Yet that has not moderated Trump’s views. I’m not sure why the Canadian government thinks its facts and figures will be any more successful.

At a Republican congressional retreat yesterday, Trump said he wants to replace multilateral trade agreements with one-on-one deals. Does that formula apply to NAFTA? Does he want to replace it with separate Canada-U.S. and Mexico-U.S. pacts? He didn’t say.

When his negotiators eventually start talking to Canada what will they want? He didn’t address that either.

Some have suggested the Trumpites will want to strengthen domestic content rules that allow manufacturers to include a certain percentage of parts made outside of North America in goods allowed to move duty-free among the three NAFTA countries.

Depending on the circumstances, changes here might benefit Canadian manufacturers and workers.

The Canadian government talks of “modernizing” NAFTA by making it easier for more professionals to get visas. There are hints the U.S. would like stricter country-of-origin rules so that Canadian beef, for instance, would have to be labelled as such when sold in American stores.

All of these qualify as tinkering and can be done without too much harm to Canada.

But what if Trump wants considerably more? What if he wants to treat Canadian medicare, which is cheaper than the private health insurance many American workers have, as an illegal wage subsidy.

What if he wants to put paid to the supply management system that Canadian dairy and poultry farmers depend upon? What if he takes direct aim at medicare by insisting that U.S. private insurers be allowed to finance two-tier health care in Canada?

What if he demands that the big auto companies move their manufacturing plants south of the border?

The Trudeau government seems to think that rationality is on its side. It forgets that Trump operates under a different logic.

There is nothing wrong with renegotiating NAFTA. But is the Liberal government willing to walk away from free trade with the U.S. if Trump’s demands prove too much to bear?

It had better be. Otherwise, Trudeau enters these talks not as a partner but as a supplicant.

Some 23 American states export $1 billion each to Mexico each year under NAFTA. Yet that has not moderated Trump’s views. I’m not sure why the Canadian government thinks its facts and figures will be any more successful