So, it begins. President Donald Trump is now on record saying he wants to “speed up” the renegotiation of the North American Free Trade Agreement. Foreign Affairs Minister Chrystia Freeland, who will lead Canada’s engagement with the Trump administration, insisted on February 2 that it would be incorrect to say the clock has started. Freeland, a former journalist who would have been used to obfuscation in her old job, has become rather good at it in her new life as a cabinet minister. Don’t be fooled: it’s real; NAFTA is about to be overhauled.
Are the economic interests of Canada and Mexico really so different? Both are middle powers that depend on access to international markets because their populations are either too small (Canada) or too poor (Mexico) to consume all the goods and services they are capable of producing. Economic gravity pulls most of what they sell into the United States. But the post-War commitment to more-the-merrier trade agreements has created a system in which smaller countries can trade under rules that aren’t entirely skewed in favour of the two or three biggest players.
Much of what Trump has proposed to do on trade would violate the terms agreed at the World Trade Organization, but it is possible the new president may not care. Suing the U.S. at the WTO would take years, and Trump, who has called the Geneva-based trade watchdog a “disaster,” could follow through on his threat to quit it. “He may believe (possibly correctly) that the next day, trade ministers will be lining up in Washington to negotiate bilateral FTAs, ready to accept U.S. terms, thus handing him another victory,” Oonah Fitzgerald, director of the international law program at the Centre for International Governance Innovation (CIGI), and Hector Torres, a member of the International Monetary Fund’s executive board, wrote in an op-ed on January 30. (Disclosure: I am a senior fellow at CIGI.)
Clearly, it would be a mistake for Canada to go out of its way to pick a fight with the White House. But Trudeau also is making a mistake by failing to contain talk that Canada’s interests are best served by becoming Trump’s patsy. Mexicans are “perplexed by some of the recent calls in Canada for ‘dumping’ Mexico from NAFTA and negotiating a bilateral deal with Washington,” Andrés Rozental, a former Mexican deputy foreign minister, wrote in the Globe and Mail on January 27. “This is both short-sighted and a mistake. If NAFTA is torn apart, Canadian investment and trade with Mexico will be adversely affected, as will the overall relationship.”
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