Trump wants to overhaul NAFTA? Bring it on
The Globe and Mail
December 7, 2016
President-elect Trump wants to “renegotiate” NAFTA. Bring it on.
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.
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.
For Canada, 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.
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.
Last week’s Auditor General’s report on the Beyond-the-Border Action Plan – the latest in a series of initiatives aimed at improving border access – identified shortcomings that should be Canadian priorities with U.S. negotiators. The Entry/Exit and trusted traveller programs, including customs self-assessment and the Single Window initiative, are all behind schedule. Some of this is our responsibility but we also need to see more openness to change from the U.S.
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.
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.
The North American advantage is our people and a new trade accord should include:
- Bringing the list of professions eligible for fast-track cross-border access into the digital age. The skilled trades workers who are enabling North American energy independence also need to move back and forth with ease.
- Speeding up the re-qualification system for professionals needed on the job now.
Mr. Trump wants a better deal for American workers.
Main Street America never appreciated the value of NAFTA in part because U.S. leaders did a lousy job in explaining – and sharing – the value of continental trade while failing to adequately help those left behind through global competition and technological changes.
We did it better in Canada but an overhaul of the NAFTA accord on Labour Cooperation is in the interests of all three countries. Why not make a joint commitment to adjustment assistance and retraining as a basic right for workers?
Mr. Trump’s promise to build a wall and to increase deportations to Mexico has led some to wonder whether we’d be better to go it alone with the U.S. leaving Mexico to fend for itself. Divide and conquer is integral to Mr. Trump’s Art of the Deal. Working with Mexico will avoid that trap.
Mexico is now our third largest trading partner. We have major investments in Mexico and, with a middle class of 44 million people, Mexico is a market that will only increase. By 2050, Mexico is expected to rank fifth in global economic weight.
Mr. Trump wants another look at country-of-origin-labelling (COOL), a protectionist measure that curtailed our meat exports. Working closely with Mexico, our joint efforts resulted in Congress repealing COOL last December.
On COOL and those many issues where Canada and Mexico share common cause – including trade, climate and energy – we need to continue working together. On the border and security, we will diverge at times, reflecting our own interests but we should work in tandem. Our shared and overriding principle with Mexico should be no surprises and constant communication at all levels.
Re-opening a deal that is past its best-before date is an opportunity that all three nations should embrace. It’s time to bring NAFTA into the digital age.
A former diplomat, Colin Robertson is vice-president and fellow at the Canadian Global Affairs Institute.