By: Laura Steiner
It’s January 21, 2017. The morning began as usual. The sun rose, the earth turns, all is right with the world. Our southern neighbours held their day-long peaceful transition where one man left the Presidency, while another took over.
Donald Trump awakened this morning to his first full day as President of the United States. He started working yesterday following his swearing-in signing executive orders, and appointing his cabinet. He also notified trading partners he would withdraw the United States from the Trans-Pacific Partnership (TPP), and notifying his North American Free Trade Agreement (NAFTA) partners he would seek to renegotiate.
A statement posted on the White House ‘s website reads in part: “President Trump is committed to renegotiating NAFTA. If our partners refuse a renegotiation that gives American workers a fair deal, then the President will give notice of the United States’ intent to withdraw from NAFTA.”
Everyone would lose on the NAFTA move. Bilateral trade (Canada-US) amounted to $881 billion by 2015, a more than 200% increase over 1993. Some American sources estimate $2 billion/day in goods and services travel across the border. Withdrawing from NAFTA could be a big economic mistake.
Whatever happens Canada will be okay. Trading agreements with the USA existed between Canada and the USA in some form since 1855. The Auto Pact, came in by 1965, and lasted for 20 years. In Canada-United States Free Trade Agreement (FTA) was signed in 1987. When Mexico joined the agreement, it became NAFTA. If the USA leaves NAFTA, the trading relationship reverts to the FTA.
Over the last decade our governments have attempted to diversify our trading partners. Former Prime Minister Stephen Harper negotiated the TPP, and an agreement with the European Union (E.U.) . It was signed by Prime Minister Justin Trudeau’s government. The Harper government also started work on a Canada-India free-trade agreement.
The Trudeau government continues looking to south Asian markets. One of the key moves in a recent cabinet shuffle is appointing John McCallum Ambassador to China. Among his responsibilities is exploring the possibilities of a free trade deal with China.
The other political move that readies us for renegotiating NAFTA is Chrystia Freeland as Foreign Affairs minister. She has been given the entire Canada-USA relations file, including trade. Freeland served previously at International Trade, and she threatened to leave the negotiating table before the Canada-Europe Trade Agreement (CETA) was signed. This sets the expectation that while Canada will talk, it could walk if a deal isn’t in the country’s best interests.
A potential USA departure from NAFTA would hurt Canada’s economy. Eventually, we’d be okay.