Learning from a mouse that roared
Negotiators set off last week for a foreign capital for talks to secure a new economic relationship with the huge market to the south.
The outcome is crucial, even existential, such is the volume of trade between the two partners and the number of jobs depending on it.
But despite taking place against a backdrop of bellicose rhetoric and threats to tear up the existing relationship wholesale, hopes are growing that a mutually beneficial deal can be reached.
No, it doesn’t sound like Brexit. Those negotiators took off from Ottawa headed for Mexico City, and were joined yesterday by Chrystia Freedland, Canada’s internationally respected foreign minister. Definitely no similarities there.
Despite the different tone, comparing parallel negotiations over Brexit and the North American Free Trade Agreement (Nafta) is an instructive exercise when considering the latest row over timing and how talks are structured.
The UK side spent much of last week in Brussels complaining that the European Commission’s Article 50 taskforce was straightjacketed by inflexible guidelines and couldn’t negotiate.
Once he was back in a London TV studio, David Davis complained that the EU were negotiating, and it wasn’t fair. “They’ve set this up to try and create pressure on us on money, that’s what this is about,” the Brexit Secretary said. “They’re trying to play time against money.”
Time is working against the UK, with as little as a year until a withdrawal agreement has to be ready for a gruelling ratification process in 27 member states.
Money is about the only thing working in the UK’S favour, thanks to its position as the EU’S biggest net financial contributor. Brexit will leave the EU’S other big economies paying more to fill the gap, and may also leave its poorest members getting less. In any negotiation, you play the cards in your hand. Complaining about the other side using theirs is one of the stranger reactions to where the country now finds itself.
It is a predicament mostly of the UK government’s making. Pressure is building because Theresa May started the twoyear countdown in a year when the two biggest EU member states have elections, slowing down the negotiations. The Prime Minister then called one here, using up even more time – and ultimately weakening her hand.
May had already waited eight months from entering Downing Street to triggering Article 50, much of which was wasted in the Supreme Court over a Commons vote that she could have won.
What that time wasn’t used for was any actual preparation for talks, either in setting out what the UK wants from Brexit – which continues to dribble out vaguely in “options papers” and may not be fully clear until 2018, when a major review of immigration concludes – nor in finding out what the reaction would be in European capitals.
This latter point will be crucial when the UK’S deal is at the mercy of domestic and regional politics across Europe. The opportunity for a charm offensive, where positions could have been sounded out despite a ban on “pre-negotiation”, was never seized.
Freedland knows the consequences of failed European retail politics by bitter experience. She was reduced to tears in front of the world’s media when the regional assembly of Wallonia nearly collapsed after seven years of work on an agreement with Canada.
On Nafta, the Canadian government has been bracing for a showdown at least since the results of the US presidential election started coming in, and likely before.
On the campaign trail, US president Donald Trump won over voters in depressed communities where manufacturing jobs have been shifted overseas by threatening to pull out of Nafta, which he claims is “one of the worst deals ever made”.
It was the current Canadian prime minister’s father who said his country was a mouse next to a sleeping elephant – a twitch or a grunt could be fatal.
Canada’s economy is dependent on trade, and 70 per cent of it, worth US$577 billion a year, crosses the US border. Trade with the US accounts for an astonishing 49 per cent of GDP in the province of Ontario. Its leverage, however, is relatively small, and its position is arguably much worse than the UK’S.
With their much larger domestic markets, trade with Canada makes up less than 10 per cent of output in all but two American states, even though Canada is the number one export market for 35 of of the “lower 48”.
Justin Trudeau’s government sought to change that equation. Rather than trying to sway a chaotic and ideological White House, ministers and officials fanned out into US states and cities where jobs depend on Nafta, meeting with members of congress, governors, mayors and local officials to turn them into lobbyists for Canada’s position. Every connection was leveraged, with former prime minister Brian Mulroney sent to tap up Trump associates living near his Florida holiday home.
And when it came to consulting on and setting out her objectives, Freedland was transparent, inviting aboriginal Canadians and opposition political parties to advise negotiators, and making Canada’s goals and red lines clear before talks began.
Re-negotiating a free trade agreement poses far less of a challenge than unpicking the UK’S four-decade long relationship with the EU.
Trump continues to threaten he will “terminate” Nafta, with the latest Twitter salvo timed to try disrupt the first round of talks and, by the president’s own admission, heap pressure on the junior partners in a bid to get more concessions. And the politics are less frought than between the UK and EU.
Still, if she secures a deal that saves Nafta, Freedland will have pulled off a triumph of meticulous preparation and perfectlyweighted influence. But it will be too late for the UK to learn from the mouse that roared.
Canada’s battle to save
Nafta is a lesson to a UK government under pressure, writes Paris
Gourtsoyannis