Canadians prepare for a different NAFTA

Canadians prepare for a different NAFTA

Canada needs to take a clear-eyed review on its NAFTA strategy.

As NAFTA talks turn frigid, congressional report backs Canada’s view of trade deficits. A senior Canadian official said The Toronto Star newspaper is a reminder that Congress will have a major say in the future of the deal.

The Trudeau government is taking a measure of comfort in a new report by the U.S. Congress that casts doubt on one of U.S. President Donald Trump’s priorities for renegotiating the North American Free Trade Agreement.

The Congressional Research Service says in a report issued last week that there is no clear path for Trump to reduce the U.S. trade deficit with Mexico, one of his major complaints and an overarching priority for revamping a pact he has repeatedly threatened to tear up.

“It is understandable why Mexico prefers three-way talks –to benefit from Canadian support in countering unacceptable U.S. demands while at the same time deflecting American attention toward a second punching bag–. It is less obvious why it is in Canada’s national interest to maintain solidarity with our Mexican partners on three-way negotiations”, wrote Andrei Sulzenko, a former trade negotiator and is currently an executive fellow at the School of Public Policy, University of Calgary.

The Congressional report emerged just as the fourth round of NAFTA talks was ending in Washington, exposing for all to see the massive gap between the negotiating parties on most of the major issues, including dairy, autos, the pact’s enforcement mechanisms and a controversial U.S. request for a five-year sunset clause.

A senior Canadian official, speaking on condition of anonymity because of the sensitivity of the talks as reported by The Toronto Star, said the report is an affirmation of everything the government has done to lobby Congress on the merits of the deal and its open trade flows between the two countries.

It would make sense for Canada to take the initiative at the resumption of negotiations and propose the parsing of issues into three bilateral groupings: U.S.-Mexico; Canada-U.S.; and Canada-Mexico (the latter for the sake of symmetry rather than immediate importance).

Such an approach would not necessarily pre-empt an eventual three-way umbrella agreement, but it would provide a clearer path to the more likely successful negotiation of a new bilateral arrangement between Canada and the United States.

“In this scenario, what about the U.S.-Mexico bilateral discussions? Each party will no doubt vigorously defend its interests. Canada should not get in the crossfire between them. That is not in our national interest”, concluded Sulzenko.


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