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Canada and Mexico must stand together amid trade threats

by Colin Robertson

The Globe and Mail
January 16, 2017

If Canadians are wary about the incoming Donald Trump administration, think about the Mexicans. For them, Mr. Trump presents a clear and present danger.

His threats have moved beyond promises to deport “two … it could even be three million” and to build a “Great Wall” across the entire land border that “will be paid back by Mexico.”

Threatening to impose a 35-per-cent border tax, president-elect Trump has cajoled American, Japanese and German companies to abandon their investment plans in Mexico. The peso has plummeted to its lowest levels ever against the U.S. dollar.

To prepare for a President Trump, President Enrique Pena Nieto recently appointed a new Foreign Minister, Luis Videgaray, and yet another new ambassador to the U.S. (the third in nine months). In speeches to Mexico’s diplomatic corps last week, both Mr. Nieto and Mr. Videgary said that in any negotiations with the U.S., the entire bilateral relationship would be on the table, and that Mexico will not pay for the wall.

For Canadians to feel smug or secure would be a mistake. We may not yet be a direct target, but we are within Mr. Trump’s range of vision.

Inevitably, we would become collateral damage, especially when it comes to protectionist border measures. A survey last month of Trump supporters revealed that 73 per cent expect either a better deal or withdrawal from NAFTA within the first 100 days of the Trump presidency.

Mr. Trump promises more enforcement capacity to secure U.S. borders and, at last week’s Senate Homeland Security confirmation hearing for secretary-designate Gen. John Kelly, both Democrats and Republicans told him not to ignore the northern border and pressed for more security. Eight of its 15 members come from northern border states.

Nor would Canada be exempt from any new border tax, said Mr. Trump’s press secretary last week. The National Bank of Canada has estimated a 10-per-cent border levy would cause Canadian exports to slump 9 per cent within a year.

Canada and Mexico need to make common cause in the face of Trumpian excess. A visit to Mexico, before the summer, by Prime Minister Justin Trudeau would visibly underline our enduring partnership at a time when Mexicans are feeling vulnerable and alone.

While our borders are different and our responses will reflect our particular circumstances, we need to stay close, especially in any NAFTA discussion with Washington.

An active advocacy campaign – a joint effort led by our consuls, suppliers and their customers – needs to inform Americans, especially those living in the 31 states won by Mr. Trump, that their first or second markets are either Canada or Mexico.

Studies conducted for the Canadian Embassy and by the Wilson Center estimate that our commerce accounts for over 14 million American jobs. Underlining our integrated continental market is the fact that 40 per cent of the finished goods that Americans buy from Mexico, and 20 per cent of what they buy from Canada, is “made in the U.S.A.”

Linda Hasenfratz, CEO of Linamar, got it right when she warned there is “too much emotion and not enough fact” out there. Ms. Hasenfratz, who also chairs the Business Council of Canada, argues that adding cost and inefficiency would undercut our global competitiveness. The ultimate cost will be borne by the consumer.

We should look at expanding Canada-Mexico trade in produce – their tomatoes and vegetables for our beef and pork. There are major Canadian investments in Mexico – producing trains, planes and automobiles – as well as banking and mining operations. We need an active investment outreach to encourage Mexican firms to follow the lead of Grupo Bimbo, the world’s leading baker, that owns Canada Bread.

Then there are the people-to-people ties. With the visa lifted we can and need to encourage more Mexican tourism and study in Canada.

Any renegotiation of NAFTA should begin with including the improvements already negotiated through the Trans Pacific Partnership (TPP): preclearance of goods; increasing the number of professionals eligible for fast-track passage and temporary employment; and a trilateral approach to new infrastructure to enhance North American competitiveness.

If Mr. Trump repudiates NAFTA then we should keep it (U.S. withdrawal does not kill NAFTA like it does the TPP) and look for prospective new partners, including Britain, the Pacific Alliance (that includes Chile, Colombia and Peru) and to new partners across the Pacific.

Canada may not be in the crosshairs in the same fashion as Mexico but we have no immunity from Trumpian threats. Canada and Mexico need to hang together or, surely, we will hang separately.

A former diplomat, Colin Robertson is vice-president and fellow at the Canadian Global Affairs Institute.


Showing 1 reaction

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  • Raul Gonzalez
    commented 2017-01-18 13:49:10 -0500
    It’s ironic that Canada initially looked down on Mexico’s entrance to NAFTA; but times have changed and a common cause between them is beneficial for both.
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