NAFTA Talks Now: A Question of Timing

By: Laura Steiner

America is a different country after the 2016 election.  It has signalled its willingness to withdraw from the world; a partially implemented Muslim ban, a departure from the Paris climate change agreement.  A mused about revocation of protected status for Haitians who sought the country’s protection following an earthquake.

Domestically the country is a mess.  Failed attempts at advancing the legislative agenda in Congress and the Senate as witnessed by the healthcare bill, and legislation on Russian sanctions.  The consistent rumblings against members of his own cabinet, and  a President that can undo any progress with a single tweet.  It’s all a recipe for an unstable America.

This is the environment Canada, and Mexico find themselves in as negotiations begin on refurbishing the North American Free Trade Agreement (NAFTA).   Canada needs this agreement.  $2 billion/ day worth of trade, and services go back and forth across our  border.  Canadian provinces provide the majority of trade for 35 American states.  It’s vital to our economy to have it in place.

Talks haven’t started, and there are already problems.  Trump persists in his quest for a wall between the U.S. and Mexico.  Mexican President Pena Nieto cancelled a trip to Washington over it earlier this year. In a leaked transcript Trump told the Mexican President Pena Nieto he was unconcerned about it.  Do not worry about Canada, do not even think about them.”  It’s the diplomatic equivalent to a pat on the head.

What about buying American?  And that extends to government infrastructure such as bridges, and roads.  Canada wants to model this on the recently completed trade agreement with the E.U. where some European companies allowed to bid on contracts.  Americans may think they have nothing to worry about.  The reality is Canada, and Mexico are concerned.

Dispute resolution is another fight on the horizon. Trade disputes such as softwood lumber currently find themselves before a panel which issues a decision.  The US wants to change it so that these arguments are settled in the U.S. courts.  Canada is painting this as the proverbial line in the sand.  If a single country’s courts can make these decisions, then where’s the fairness?

There are improvements to be made on NAFTA.  But, with an ongoing investigation into potential Russian meddling in the 2016 elections is now the right time for it? There’s a risk that US administration that starts NAFTA talks, may not be the one that finishes it.

Life has changed in the last 25 years.  It’s only natural to tweak trade agreements to match that reality.  It’s a matter of timing.