If there is a silver lining to the cloud-covered attempts to salvage North America’s 24-year-old trade pact, it is in witnessing former Canadian political foes rallying together for the cause.
Former prime minister Stephen Harper is the latest Conservative to head off to Washington to lobby on behalf of efforts by Prime Minister Justin Trudeau’s Liberal government to negotiate an updated North American Free Trade Agreement. Harper joins Rona Ambrose, former interim Conservative leader and Brian Mulroney, former Progressive Conservative prime minister.
This rare bipartisanship illustrates the alarm Canadian business and political leaders share over U.S. President Donald Trump’s apparent contempt for NAFTA – an agreement many feel has not only opened trade borders but also increased the prosperity for all three member countries.
Trump, as we know, does not share that view, denouncing the agreement in August as “the worst trade deal ever made.” A further pronunciation this week both muddied the waters and yet hinted as Trump’s end-game. He told Forbes magazine: “NAFTA will have to be terminated if we’re going to make it good.”
Does he really think terminating the agreement will lead to a better one? Truly, he must believe he can bully Canada and Mexico into capitulation on major choke points such as these:
- A “sunset clause” that would automatically terminate the agreement in five years unless all sides support its continuance.
- A rule requiring a hefty portion of automobiles to be made in the U.S., not just in the three-country NAFTA zone.
- A so-called “buy American” rule in which Canadian and Mexican firms could not receive government contracts worth more than the government contracts secured by U.S. firms in the other two countries.
Combined with other reported demands, it becomes clear that Trump not only doesn’t expect – but also does not want – to reach a renewed NAFTA deal, unless it is essentially a gutted contract that favours the U.S. at all times. His reasoning appears to be that if he lets it die, then he can strike a new deal that gives his country all the wins.
The problem is that neither Canada nor Mexico is prepared to accept Trump’s U.S.-first terms. For its part, Mexico has been sending signals that is getting close to simply walking away from talks. And so might we. Much as the death of NAFTA would deeply wound our country’s economy, it would be in our long-term interest to pursue new world markets rather than submit to Trump’s bullying and blackmail.
Trudeau, to his credit, signalled that Canada is ready to pursue other options – even options that we don’t love. This week, his government revealed it would investigate buying surplus fighter jets from Australia rather than complete a contract to buy new fighters from Boeing. This came in response to the U.S. Commerce Department’s imposition of an outrageous tariff of 300 per cent on Bombardier for CSeries aircraft it is planning to sell to Delta. Delta Chief Executive Ed Bastian called the tariff “nonsensical” and said the carrier simply wouldn’t pay it.
The trade environment in North American hasn’t been this ugly in many years. It is unclear whether the combined diplomatic power of Harper, Ambrose and Mulroney can turn the tide, but it is heartwarming to see them willing to give it a try.
NAFTA’s death is not yet set in stone. Washington is an incredibly complex mechanism in which the president doesn’t always get his way. Witness his failure so far to kill Obamacare. Experts are at odds over whether the president could unilaterally kill NAFTA. Some believe that since Congress approved the first Free Trade Agreement in 1993, it would have to pass a law to rescind NAFTA. And Congress doesn’t see the trade world the way Trump does.
In the big picture, Trump’s mischief on trade agreements is just one more piece of wreckage to be added to his pile of disasters, from which Canada is suffering collateral damage. Yet we have seen that our politicians, like all Canadians, are willing to set aside ideological differences when the chips are down.
That bodes well for a country that for too long has found it easy to ride on the coattails of its big neighbour to the south. The ongoing Trump follies may force us to become a more independent country.
Veteran political commentator Doug Firby is president of Troy Media Digital Solutions and publisher of Troy Media.
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