U.S. under pressure to sign with Canada

Who’s calling whose NAFTA bluff?

Has U.S. President Donald Trump forced Canada to buckle to his bluster and bravado, or have supporters of Canada and preserving the pact forced Trump to give up most of his ambitions and accept tinkering rather than revolution?

“It is not a forgone conclusion that Congress will accept a bilateral deal,” Antonio Ortiz Mena, a Mexican economist and former official with the Mexican embassy in Washington, said Aug. 29 about Trump’s claims he could end the North American Free Trade Agreement and replace much of it with a U.S.-Mexico bilateral deal.

The true status of U.S.-Mexico trade proposals and U.S.-Canada agreements will not likely be clear for weeks.

U.S. trade analyst and former diplomat Earl Anthony Wayne noted that there is huge pressure to have Canada inside a renewed NAFTA, rather than have the U.S. and Mexico make a much smaller deal.

“There’s a lot pressing towards an agreement here,” Wayne said during a Wilson Centre session analyzing the impact of the Aug. 27 U.S.-Mexico deal.

“I’m still optimistic that a lot of forces are going to press everybody to come together and get to a trilateral agreement.”

Trump blustered during the U.S.-Mexico deal’s announcement that Canada could be left behind if it didn’t bend to his demands, especially about access to Canada’s dairy market.

He threatened to impose 25 percent tariffs on cars imported from Canada.

Canadian officials, including Foreign Affairs Minister Chrystia Freeland, rushed to Washington to try to conclude a new NAFTA agreement by Aug. 31, which is when Trump wanted to be able to notify Congress he was putting forward a deal for it to approve.

However, analysts and experts quickly began pointing out the weak hand Trump was playing:

  • Congress had only given him authority to revise NAFTA, not scrap it and make a new deal with Mexico.
  • Trump wants a victory to proclaim, and wants it before the fall congressional elections.
  • Mexico’s outgoing conservative president doesn’t have long left in power, and the incoming leftist president won’t be as keen to approve a new trade deal.

On top of that is the political pressure coming from dozens of U.S. governors whose states’ main trading partner is Canada and the lobbying of dozens of industries and major companies that do not want NAFTA disrupted.

“It’s only better than the old agreement if it’s trilateral at a minimum because certainly a U.S.-Mexico trade agreement with the provisions that were laid out (Aug. 27) by the governments is just not as good as the trilateral deal we have right now,” said Christopher Wilson, deputy director of the Mexico Centre at the Wilson Centre.

While some have portrayed Mexico’s deal with the U.S. as a betrayal of Canada, the Mexican president and trade minister in their announcement with Trump repeatedly talked about wanting Canada to be part of the deal.

Mena echoed their view.

“I don’t think it would be a good idea to have a bilateral agreement,” he said in a Bloomberg radio interview.

“A trilateral agreement is much more significant from an economic perspective.”

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