Good for the government

In an interesting report in the Globe and Mail, Steven Chase, Adrian Morrow and Greg Keenan write that “The Canadian government is taking the United States to the world’s trade court in a wide-ranging complaint that accuses Washington of flouting the rules of global commerce … [they explain that] … This comes as expectations grow in Ottawa that President Donald Trump will soon announce the United States intends to pull out of the North American free-trade agreement … [and] … Canadian government officials say they believe it’s increasingly possible Mr. Trump will start the process of withdrawing from NAFTA. Even if Mr. Trump triggers the withdrawal process, Canada will continue to take part in talks to overhaul the trade deal, sources with knowledge of the renegotiation said.”

This is a good, smart move … exactly what I hope we can always expect from the senior ‘mandarins‘ in Ottawa.

Ottawa,” they go on to explain “does not want to be blamed for the collapse of the deal – or give Mr. Trump a pretext for pulling the plug – so it will show up to the table every day no matter how deadlocked the talks become, the sources said.” That’s good, smart negotiating tactics: stick with it, “play the game” until the very end … until the US is, very clearly, 100% to blame for the demise of NAFTA. Minister Freeland is quoted, in another article in the Globe and Mail, as saying that “Canada is hoping for the best but preparing for the worst ahead of the next round of negotiations to renew the North American free-trade agreement.” “Ms. Freeland said.” the article states, that “the Americans have always made it clear that one option would be for the U.S. to invoke article 2205 of NAFTA, which allows any of the three member countries to provide a six-month notice of withdrawal from the deal. Providing that formal notice does not oblige the country to actually withdraw from the deal and there is significant debate about whether U.S. President Donald Trump could pull the U.S. from the pact without support from Congress, where members are generally supportive of NAFTA.

One hopes that that there is a massive and well funded publicity campaign in the wings which will tell American legislators at the local, state and national levels, that their government, their president, not Canada, will be to blame for lost American jobs.

The first article adds that “The new complaint Canada has filed with the World Trade Organization is an unfriendly gesture between two countries that are each other’s biggest trading partner and it appears intent on making the case that the United States has diverged from the rules-based international order that has been built up over successive multilateral trade deals … [and] … The Canadian government is accusing the United States of breaking WTO rules in the way it prosecutes foreign countries for allegedly dumping or subsidizing exports bound for the United States … [and, further] … The complaint is substantial in magnitude. It lists nearly 180 cases stretching back 20 years and covering not just the U.S. treatment of Canadian companies, but also its handling of imports from dozens of countries ranging from China to South Africa to Argentina.” Good and good, again, and even better. If (when) President Trump withdraws from both NAFTA and the underlying Canada-USA Free Trade Agreement then Canada and the USA will revert to trading under WTO rules and I suspect that Canada has very strong cases and may be able to demand stiff penalties.

I think this also sends a message to Canada’s (and America’s) other trading partners: Canada wants to trade, fairly and freely, within a rules based system and we expect all trading partners, even the greatest and most powerful, to abide by those rules. One hopes that others will take not and, perhaps, in their dealings with Donald Trump’s America, follow suit.

Can President rump withdraw from the WTO, too? Yes, theoretically, I suppose … but such an act might be political suicide for one of the world’s greatest ever trading nations.

The article notes that “U.S. Trade Representative Robert Lighthizer called the move “an ill-advised attack” on the American system for monitoring foreign trade.” That strikes me as being a weak response … likely because Mr Lighthizer, who is a very smart fellow, knows he’s backing a losing horse.

So good for the Government of Canada! And, yes, that includes me congratulating Prime Minister Trudeau, Foreign Minister Freeland and Trade Minister Champagne as well as the officials in the Privy Council Office and various ministries. This is a good move.

 

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