Trump vs NAFTA and a virtuous circle

Donald Trump

There is an excellent article in the Globe and Mail by former diplomat Colin Robertson, now a vice-president and fellow at the Canadian Global Affairs Institute headlined: “Trump wants to overhaul NAFTA? Bring it on.”

Mr Robertson begins by noting that “The gains we made from NAFTA (1993), spectacular during its first decade, have mostly plateaued. The Trans Pacific Partnership agreement would have updated our continental accord but now that Mr. Trump has shelved it, re-opening NAFTA makes sense … [and] … For Canada, a North American economic pact is vital. The U.S., our biggest trading partner since the Second World War, currently accounts for about 75 per cent of our trade. Our trade with Mexico has grown sixfold since NAFTA.

ugc02_001a_664290For Canada,” Colin Robertson explains, “our main objective in re-opening NAFTA should be the freer movement of people, goods and investment within North America. Last year more than $700-billion in goods flowed across our southern frontier and more than 150 million people crossed our shared border by land, air and water … [but] … As with any negotiation, to get we have to be prepared to give. Let’s be bold. Let’s put our costly dairy supply-management, a perennial U.S. target, on the table in return for better procurement access, including shipbuilding.” (Shades of Maxime Bernier!)

Mr Robertson notes that, “Despite recent efforts at regulatory reform, our supply chains still suffer from the “tyranny of small differences.” Regulatory reform could benefit from a Trump re-boot … [and] … The provinces, who were not in the room for the NAFTA negotiation, should be full partners in the coming sessions because many of the necessary improvements fall under their jurisdiction. The premiers should reach out to their governor counterparts with specific proposals around reciprocity for procurement, especially given Mr. Trump’s promised “Big Build” program.

He has some very specific recommendations about the movement of people and about not letting President elect Trump play “divide and conquer,” which, Mr Robertson, suggests was in integral part of his business tactics and will be a hallmark of his political tactics, too.

I agree, broadly and generally, with all of Mr Robertson’s points, although, if it comes to that we might have to cut Mexico adrift and “sauve qui peut.” We must secure our North American base in order to sally forth with some confidence into free(er) trade deals with Europe (the CETA), the United Kingdom, China, India and others in Asia (potentially by uniting the FTAAP and RCEP), Africa and Latin America and the Caribbean.

slide1At the risk of repeating myself: history shows, pretty clearly, that free(er) trade brings peace which leads to greater prosperity for most people which reinforces the desire for peace and so on … a virtuous circle.

In my opinion, if Prime Minister Justin Trudeau, or the next Conservative leader is really interested in restoring Canada to a leading position in real, practical, long term peacekeeping then (s)he will abandon the United Nations and, instead, turn BernierMaxime_CPCCanada into a free trade powerhouse by dropping our remaining protectionist measures, as Maxime Bernier and Colin Robertson both advocate, and making deals with all comers. And it is important to remember that “deals” involve two sides and both sides must gain something which means that both sides probably “give” something, too, and that produces short term “losers” and it is politically important to try to “soften” the transition for those who are bound to lose in the short term. But, in the mid to long term most losses are “covered” by gains in new products and services and the utilitarian goal of “the greatest good for the greatest number” is achieved … most of the time.

One of the things Colin Robertson mentioned was shipbuilding and it leads me to consider that one of the things we want to renew if or when we must renegotiate NAFTA is the Defence development sharing agreement between Canada and the United States of America. The stated objective of the existing I(since 1963) agreement are:

  1. To assist in maintaining the Defense Production Sharing Program at a high level by making it possible for Canadian firms to perform research and development work undertaken to meet the requirements of U.S. armed forces.
  2. To utilize better the industrial scientific and technical resources of the United States and Canada in the interest of mutual defense.
  3. To make possible the standardization and interchangeability of a larger amount of the equipments necessary for the defense of United States and Canada.

The Defence Production Sharing Program is, too often, hamstrung by US (and Canadian) protectionist measures and it needs to be brought more fully into the area of bilateral free usd-350trade. I am not suggesting that the Pentagon would ever let, say, a significant shipbuilding contract to a Canadian yard but it must be possible for Canadian shipyards and factories and service providers to bid on US defence contracts on at least a “near equal” basis and vice-versa, of course.  This, free(er) trade in defence materiel and services is one area where we, North Americans, can learn from the Europeans. I am not suggesting that Canada should abandon the idea of having a national defence industrial base but, rather, that we should have a base that fits, neatly, into a larger continental base that is, somehow, connected to other allied defence production systems.

bridge-playersSo, broadly, when (if) President elect Trump says he wants to renegotiate NAFTA we should, indeed, say “bring it on!” But we should go into negotiations with our eyes wide open, prepared to surrender some “losers,” as good bridge players do, in order to finesse some winners for ourselves.

6 thoughts on “Trump vs NAFTA and a virtuous circle”

  1. I know it’s small potatoes, but look at our dairy supply management. We are again importing butter, this year +4 million pounds due to the Christmas shortage. Some mgt.

  2. NAFTA is a terrible trade deal. I researched job production before and after which led me to interesting results. NAFTA was implemented by Bill Clinton on 94. It declined job growth significantly since companies were basically leaving to foreign countries and abandoning America’s economy. Thanks to the Clinton’s and their agenda, the country has been defeated for the last 8 years. All we can hope for is that Donald really helps and leads us back in the race.

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