When it comes to NAFTA negotiations, we need to stand united

by John Ivison (feat. Sarah Goldfeder)

National Post
July 19, 2017

Another day, another Conservative MP telling a right-wing American cable channel how Justin Trudeau is in bed with al-Qaida for agreeing to compensate Omar Khadr.

Pierre Poilievre told Newsmax Now, which is piped into 40 million U.S. homes, that Trudeau’s decision rewarded a “confessed terrorist and known supporter — past supporter at least — and member of al-Qaida.”

On Aug. 16, the Canadian government will sit down with the Trump administration and re-negotiate NAFTA, a deal that will have a significant impact on economic growth and job creation in Canada for a generation to come.

In that regard, the interventions by Poilievre and his colleagues are not helpful and decidedly not in the national interest. It’s hard to see how they are even in the Conservative party’s interest, given their limited impact on voting intentions.

Donald Trump likes Trudeau. “Everybody loves him — he’s doing a spectacular job,” the president told reporters at the G20.

But, while those feelings are warm, they are changeable — and nothing appears to shape Trump’s opinions more than conservative cable networks.

Trudeau took a shot at Conservative MPs Michelle Rempel and Peter Kent, who have attacked the Khadr settlement in U.S. media.

“Up until recently we have been working collaboratively – different voices but the same theme to present a common front,” he said Wednesday in Quebec City.

On such a pivotal topic, the Conservatives would be well advised to follow the lead of Winston Churchill, who said he always made it a rule not to criticize the government while overseas. “I make up for lost time when I come home,” he said.

The importance of a successful NAFTA re-negotiation is clear in a new survey of the country’s manufacturers by the Canadian Manufacturers and Exporters group, released Wednesday.

The report says re-negotiation implies a deal more tilted toward U.S. interests, suggesting that risks outweigh opportunities.

“The prospect of reduced access to the U.S. market could unravel all that Canada has gained … In that context, many believe that simply maintaining their current level of access to the U.S. market would be a significant negotiating win,” it concludes.

Quite how well Canada has done from NAFTA is apparent from the growth and trade statistics. Between 1993 to 2001, Canadian GDP grew by an average of 3.6 per cent a year, driven by an annual increase in exports of just over 7.7 per cent.

Since 2001, growth has slowed to an average of 1.9 per cent, as exports have become a drag on growth instead of a driver of it.

If trade were to slow further still, it would have a potentially crippling impact on prosperity in this country.

The report issued Monday by the United States Trade Representative’s office outlines the White House’s negotiating goals and suggests the Canadian side is going to have to make some tough decisions.

The CME survey asked its members to rank their priorities in the upcoming negotiations.

Perhaps not surprisingly, the manufacturing companies were happy to throw Canada’s supply management system under the bus, with more than 43 per cent of the 493 companies that responded considering its preservation a low or very low priority.

The manufacturers were also prepared to loosen existing restrictions on foreign investments in areas like financial services, telecommunications and domestic air travel.

However, manufacturers were adamant that the current dispute resolution system be preserved, rather than companies being faced with the prospect of having to traipse through the U.S. justice system to seek redress.

The problem for Canada is the Americans want all of these things – expanded access for agricultural exports, increased investment opportunities in protected industries and the elimination of the Chapter 19 dispute settlement mechanism.

They are also seeking to enshrine Buy American requirements on federally funded state projects to shut out Canadian and Mexican firms and to raise the threshold at which international shipments are exempt from customs duties to $800 from $20 and on and on.

As former U.S. diplomat Sarah Goldfeder wrote in Policy Options Magazine this week, the list of goals is “more than a tweak of NAFTA, but less than a do-over.”

She pointed out that none of the goals is a surprise to the Canadian side, and, as a statement of intent, it is by definition, one-sided.

But the list is instructive in that it highlights the pejorative regard in which the Trump administration holds trade deals. This is the stuff that got him elected – the international system is rigged, workers have been betrayed and the era of economic surrender is over.

Trump’s business history suggests he will start aggressively and get progressively more extreme. As he detailed in “The Art of the Deal,” he bought a $30-million jet for just $8 million, after making an initial “ridiculously low” $5-million offer.

The Canadian strategy has to be to speak with one voice and point out the economic risks to the U.S. in the event that NAFTA were unwound.

Instead of taking partisan shots south of the 49th parallel, Conservatives should be repeating the mantra that Canada is the top foreign market for 35 U.S. states. Then they should make up for lost time on the Khadr file when they get home.