Robert Lighthizer, the U.S. Trade Representative, has said that trade between Canada and the U.S. should be balanced, which means the amount of goods flowing south into America should equal the amount of goods moving north into Canada.
Put another way, the country that exports more product is the winner and the country that imports more goods is the loser.
Brian Kuehl, executive director of Farmers for Free Trade, a U.S. lobby group, took direct aim at Lighthizer’s stance during a March 1 press conference in Mexico.
“We believe, very strongly, that trade is not a zero sum game,” Kuehl said, speaking to media in Mexico City, where representatives of Canada, the U.S. and Mexico are re-negotiating the terms of the North American Free Trade Agreement.
“We do not win when you lose…. We win when we work together…. When the United States, Mexico and Canada work together, as we have under NAFTA, we build a very strong trading bloc that benefits all of our countries.”
Lighthizer has been saying that trade between Canada-U.S. and Mexico-U.S. must be balanced since formal re-negotiations for NAFTA 2.0 began in August.
His stance has remained consistent because rebalancing trade is America’s primary objective for a new NAFTA. In July 2017, the Office of the U.S. Trade Representative released its goals for the NAFTA re-negotiations. One of the first lines in the document says: “Improve the U.S. trade balance and reduce the trade deficit (in goods) with the NAFTA countries.”
A long list of American business groups, including the U.S. Chamber of Commerce and most age industry organizations, have challenged the notion that trade is a zero sum game.
Farmers for Free Trade, a non-profit that has become one of the loudest voices in favour of NAFTA, invited several American and Canadian farmers to the press event in Mexico City to make the point that NAFTA has been mutually beneficial.
One of the producers was Keith Kuhl, who farms 6,500 acres just north of the U.S. border in Manitoba’s Red River Valley.
Kuhl and his family grow about 2,000 acres of potatoes and the remaining acres are dedicated to corn, canola and soybeans.
At the Mexico meeting, he said their commodity exports to the U.S., including speciality potatoes, are worth millions annually. If that flow is disrupted it has consequences on both sides of the border.
“As a specialized farm we have huge investment in equipment: tractors, sprayers, irrigation equipment … harvesting (equipment)…. For the most part, this equipment comes from the U.S.,” he said.
“If the border is closed or restricted by tariffs, I will not have the funds needed to invest in (the) equipment needed.”
Plus, if trade is restricted, Kuhl might have to buy his machinery from sources other than the U.S.
Kuehl of Farmers for Free Trade said it’s clear that all three countries have benefitted from unrestricted trade.
“These tariffs are very likely to accelerate a tit-for-tat approach on trade, putting U.S. agricultural exports in the crosshairs.” – Brian Kuehl, Executive Director for @FarmersForTrade.
— Farmers for Free Trade (@FarmersForTrade) March 2, 2018
“Farmers in Mexico, farmers in the United States and farmers in Canada all can agree that NAFTA have been very good for our countries,” said Kuehl,
Despite that message, President Donald Trump continues to say that NAFTA is “the worst trade deal in history” because only Mexico and Canada have benefitted from the agreement. On March 1 he took that rhetoric much farther, making an announcement that could effectively kill re-negotiations.
Trump said the U.S. would impose 25 percent tariff steel imports and a 10 percent tariff on imports of aluminum because, in his words, those industries are essential to U.S. national security.
Canada is the largest source of steel and aluminum going into the U.S.
Chrystia Freeland, minster of foreign affairs, condemned the tariffs as “absolutely unacceptable.”
“Canada is a safe and secure supplier of steel and aluminum for U.S. defence and security…. The United States has a $2 billion surplus in steel trade with Canada. Canada buys more American steel than any other country in the world, accounting for 50 percent of U.S. exports,” she said.
“We will always stand up for Canadian workers and Canadian businesses. Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers.”
Farmers for Free Trade also slammed Trump’s decision. Kuehl said it could hurt American producers.
“These tariffs are very likely to accelerate a tit-for-tat approach on trade, putting U.S. agricultural exports in the cross-hairs.”