Reality check: Canada has ‘no appetite to scrap trade,’ despite NAFTA poll

by Marie-Danielle Smith (feat. Colin Robertson)

National Post
June 28, 2016

OTTAWA — With Brexit and growing U.S. protectionism as a backdrop, Prime Minister Justin Trudeau, standing next to Mexican President Enrique Pena Nieto, warned Tuesday that “turning inwards” will come “at the cost of economic growth.”

But as headlines indicated this week, only one in four Canadians thinks the North American Free Trade Agreement (NAFTA) is good for the country, according to the Angus Reid Institute.

It’s a “stunning rejection” of the “free-trade agenda,” the Council of Canadians proclaimed Tuesday. But others question whether policymakers and politicians have managed to communicate the benefits of integration.

How do we really feel?

NAFTA came into effect in 1994, replacing the 1987 Canada-U.S. free-trade agreement.

About 10 years on, a 2003 Ipsos Reid survey found 70 per cent of Canadians supported the deal.

But 22 years later, half of Canadians were neutral or unsure. A quarter think it’s bad, but another quarter think it’s good.

There is no appetite to scrap trade. Canada … has morphed into a pro-trade country.

Though 34 per cent said the deal should be “renegotiated,” 24 per cent said it should be “strengthened and expanded.” More people would leave it as it is (11 per cent) than would kill it (nine per cent).

Nearly a quarter don’t know how they feel. Roughly the same proportion were found in U.K. polls to be unsure about leaving the European Union, three months before last week’s referendum.

“There is no appetite to scrap trade,” said pollster Shachi Kurl. “Canada … has morphed into a pro-trade country.” Polls last year found 57 per cent of Canadians saw international trade as the No. 1 foreign policy priority.

Laura Dawson, director of the Wilson Center’s Canada Institute, said NAFTA is a “bad brand,” but people still support exports and foreign investment.

But what has NAFTA actually done?

Canada and Mexico both do far more trade with the U.S. than with each other.

The U.S. sees a modest, but positive, impact from NAFTA, most think-tanks agree. Some debate whether the deal has stymied Mexico’s growth. Canada is generally seen as a winner.

A special report from BMO Capital Markets last week shows Canada’s total trade within NAFTA went from $239 billion in 1994 to $567 billion in 2015. Concurrently, unemployment went from 10.4 per cent to 6.9 per cent.

The Council of Canadians blames NAFTA for the loss of about half a million jobs. But the U.S.-based Council on Foreign Relations estimates job gains in Canada at 4.7 million since NAFTA’s entrance.

Free trade is an easy but unfair target when job losses hit, explained Colin Robertson, vice-president of the Canadian Global Affairs Institute.

Manufacturing-heavy Ontario and British Columbia were indeed the only provinces to show more negative than positive reactions to NAFTA in the recent poll, Kurl noted.

In 2014, the Canada-based Centre for International Governance Innovation concluded that although NAFTA could be “significantly improved,” it exceeded trade and investment expectations.

What does the future look like?

Enter Donald Trump. The presumptive Republican presidential candidate called NAFTA “the worst trade deal in the history of this country” Tuesday, promising either to withdraw or renegotiate it.

A recent Bloomberg poll found 44 per cent of Americans see the deal as bad for their economy.

Casting another shadow, TransCanada Corp. launched a $15-billion lawsuit against the U.S. government under NAFTA rules Friday for rejecting the Keystone XL pipeline.

Though Dawson said Canada would still be among trade allies under a Trump presidency, renegotiating NAFTA could open Pandora’s box — and “a lot of things go flying out.”

Still, she said, Trudeau, Pena Nieto and outgoing U.S. President Barack Obama will take pains Wednesday to quell fears and assert existing trade relationships are “not going anywhere.”