Life without NAFTA? Canada, U.S. ag sectors brace for worst

Is it time to start preparing for a post-NAFTA world?

Canadian, American and Mexican negotiators gathered in Mexico City for a fifth round of North American Free Trade Agreement talks earlier this month. They met without their political counterparts — a scenario observers had hoped would help depoliticize the ongoing negotiations, allowing for some substantive progress.

Instead, the stalemate — and its resulting trade uncertainty — continues.

The Americans continue to dig in their heels, staunchly defending their numerous non-starter asks. They’re demands that Canada and Mexico will never agree to in areas including dairy, dispute resolution, government procurement, rules of origin for automobiles and a five-year sunset clause on the entire trade deal.

Foreign Affairs Minister Chrystia Freeland used a news conference in Ottawa to repeat Canada’s insistence that any renegotiation of NAFTA must be fact-based.

“I think it’s important for us to be approaching these negotiations in the spirit of goodwill, a spirit of seeking win/win solutions and compromises and that is what we are doing,” Freeland told reporters.

“Having said that, I think our approach is to hope for the best and prepare for the worst, and Canada certainly is prepared for every eventuality.”

Every eventuality — including a U.S. withdrawal from NAFTA. It’s an outcome several provincial ministers, including Saskatchewan Agriculture Minister Lyle Stewart, have warned is a real possibility.

What Ottawa’s preparations look like remains anyone’s guess.

International Trade Minister Francois Philippe Champagne has said his mission is to diversify Canada’s trade portfolio and broaden its market access.

However, in an increasingly protectionist world, that’s easier said than done.

International trade rules prohibit countries from signing sector-specific trade agreements — forcing nations to negotiate overarching trade agreements that usually take several years to complete.

Longstanding trade issues and spats over such things as regulatory compliance show no signs of resolution, while others are escalating.

For example, a three-minister trade trip to India in mid-November failed to secure an extended fumigation exemption for Canadian pulses.

A surprise 50 percent tariff on pea imports, a major Canadian export to the region, also remains in place.

Ottawa has floated the idea of negotiating a bilateral trade agreement with India.

Still, a U.S. withdrawal from NAFTA would deliver a severe economic punch — one that will shock the North American economy regardless of how many alternative trade deals are signed.

Even the Americans are reportedly preparing for a possible NAFTA doomsday.

Earlier this month, U.S. Agriculture Secretary Sonny Perdue told Politico he and his staff at the U.S. Department of Agriculture are working on a contingency plan for farmers and ranchers should U.S. President Donald Trump’s administration pull the plug on NAFTA. He later pulled back his comments, saying he misspoke.

Whether he misspoke, or simply let the cat out of the bag too early, is unclear.

Perdue, a staunch supporter of free trade, is acutely aware of the economic blow a NAFTA withdrawal would deal to the agriculture sector.

Remember, he was the cabinet member who managed to walk back Trump from the NAFTA withdrawal cliff the first time.

At least 80 U.S. farm groups have publicly warned that the slightest sniff of a NAFTA withdrawal will send commodity markets crashing. In a letter to U.S. Commerce Secretary Wilbur Ross, they said a NAFTA withdrawal would cost the American agriculture and agri-food industry 50,000 jobs and deliver a $13 billion hit in gross domestic product for the farm sector alone.

North of the border, Agriculture Minister Lawrence MacAulay won’t say whether Ottawa is working on a contingency plan that’s agriculture-specific.

Meanwhile, Agriculture Canada insists Ottawa remains focused on ensuring NAFTA is successfully renegotiated. The department would not say whether a post-NAFTA contingency plan for Canadian farmers, ranchers and processors is in the works.

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Comments

  • Harold

    Life without NAFTA means life with a New Free Trade Agreement; Is everyone’s minds stuck on glue?
    Is a brand new Free Trade Agreement the worst that could happen? Is everybody’s mind stuck on five Capitol letters of the alphabet?

  • Brooklyn Braun

    Canada needs to keep pushing to keep NAFTA! Our trade agreement allows Canada and US to work together in so many markets whether that be automotive or agriculture! It allows both countries to have move options within industries and will hurt many other industries if we get rid of it! Tariffs could be put on agriculture markets for exports for Canadian which could greatly hurt farmers. These may seem like little things but Canada and the USA having one of the biggest trading agreements in the world the decision to get ride of NAFTA could be a negative decision for the whole economy.

    • Harold

      You believe that trade is impossible with the USA unless the letters NAFTA appear on the document? North America – the NA in NAFTA – has something to do with trade between the two countries? Does the title ensure good trade or does the entire wording contained therein ensure good trade. Have you read it or did somebody else? You are pushing a document that you have never read which is the same thing as signing that document that you have never read, except in title only, and assume the rest is good. The Courts are full of blind faith cases and NAFTA is another blind faith. Have Canadians read it or do they just assume it?
      USA and Canada free trade agreement – USCFTA – oh look – the letters changed – we must be hurting – and our product not moving. A trilateral trade agreement is not the only trade instrument that is available to us. There is such a thing as a bilateral trade agreement and it is used across this country every day and has full cause, effect, and force. The expiry of a contract is a release from the “imprisonment” of that contract and in that release you gain an opportunity (not a negative) to renegotiate for better conditions before being voluntarily “imprisoned” by a new contract. The failures of the former agreement you will seek to correct; that is an opportunity. Products have a life of their own and they have to move and no one has the luxury of ignoring it any more that a farmer can ignore his crop and not move them. The crop is not the farmer’s life – the movement of the crop is. No movement – no farm life. Trade has a life of its own and it does not sit Idle, not even for Trump. If there is a trade to Canada he cannot ignore it no matter what our media BS says. Trump is forced to our bargaining table and we are forced to his; product demands it by its own life. That life – creates the economy, and if you kill that life – you kill the economy. We are suffering in an Illusion if Canadians believe that NAFTA has not harmed Canada and that NAFTA has delivered to us as promised. The words “free trade” do not guarantee that free trade had been granted; the words in the document do – and the words do not guarantee that trade has been free. Lets look at the word “free”; Is your “free” cell phone really free? Why is it theft if you just grab one free and walk out of the store? Would it have something to do with the fine print that you didn’t read? NAFTA has no fine print? Who created the NAFTA agreement? Was it our politicians (lol) was it American politicians (lol) was it Mexican politicians (lol) or was it the corporate globalist Elite who pointed and said – just sign here and your “cell phone” is free? Do you know what the Investor State connected to the NAFTA agreement is? Trump does. Is there a reason why the Canadian and Mexican government (lol) are confounded and Trump is not? What would a empire building billionaire who owns his own prestigious Law Firm know off the top of his head that our Agriculture Minister doesn’t or wouldn’t know? I am not a Trump supporter – I am a Canadian – but I am not stupid enough to ignore who the opponents actually are or what Canada has actually lost. I was one of the people sitting and listening to all of the promises before the NAFTA agreement was ever signed. Thereafter I saw all of our top producing Canadian owned company’s leave Canada or turn bankrupt, or sell to foreign investors. It became obvious to me that the NAFTA agreement was not a trade agreement; it was a foreign investor Canadian takeover agreement and the tool was trade. Under the secrecy of this agreement we were trading more away than just our products. The free trade was not given to the people of Canada or the USA or Mexico – it was given to the foreign investors who they themselves created the NAFTA contract. I would like to see Canadians asking the Agriculture Minister some real questions instead of them listening to the minister’s and Media’s relentless pouting.

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