Canada must take firm stance at NAFTA table

Take a firm stand at NAFTA table … No deal is better than a bad deal.

An editorial from the Hamilton Spectator.

An editorial from the Hamilton Spectator.

Take a firm stand at NAFTA table

No deal is better than a bad deal.

Let this be Canada’s guiding motto as it begins renegotiating the North American Free Trade Agreement in Washington on Wednesday, with the unpredictable, heavy-handed Donald Trump looming and tweeting in the background.

Canada’s economic future will be determined, for better or for worse, by how well Canada handles these delicate, complicated talks with our American and Mexican partners. Considering that three-quarters of Canada’s exports go south of the border, that NAFTA has enriched Canada since it was passed in 1994 and that countless Canadian businesses are inextricably intertwined with others in the U.S. and Mexico, let’s hope these talks work out for the better. But what if they don’t?

What if they go off the rails, slammed by the wrecking-ball of a president who once imperiously declared, “NAFTA is the worst trade deal maybe ever signed anywhere”? Canada needs to draw a line in the sand.

First, and most importantly, a renegotiated trade deal must offer a fair dispute solving mechanism such as the one that’s currently a cornerstone of NAFTA.

The U.S. has the most powerful economy on earth, and knows it. If Canada agrees to a new deal without an independent, binding mechanism for resolving NAFTA disagreements, this country will inevitably be bullied and bested by Americans guided only by self-interest.

Second, Canada must reject the U.S. insistence on writing “Buy American” policies into any new deal. Such provisions would limit the ability of Canadian and Mexican companies to bid on U.S. procurement contracts. Yet the Americans would be guaranteed access to similar projects in Canada and Mexico. That’s just not fair.

The government has signalled Canada will abandon negotiations if the dispute mechanism is gutted. They should stand firm on that.

To be sure, if these negotiations fail, Trump could rip up NAFTA, which would have devastating consequences for Mexico while creating huge uncertainty in Canada. But giving way on these two central issues would also damage the economies of Canada and Mexico over time.

While tough talks lie ahead, Prime Minister Justin Trudeau has done a superb job laying the groundwork, with months of lobbying state governments to show the enormous value of trade and how the three economies are so interconnected that disrupting these links would hurt everyone.

Canada may have to give something to keep the best of NAFTA. It might have to provide more access to our dairy market – but it should require the U.S. to rethink its own generous farm subsidies first. And Canada should team up with Mexico to counter the American power advantage.

We hope wise and level heads in Washington will heed the strong arguments for a new trade deal that’s fair to every partner. If not, Trudeau should stick to his guns and – if the Americans cross the line – walk away.

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