Pearls and Irritations

NAFTA came into force on January 1 1994. It replaced the Canada-United States Free Trade Agreement. NAFTA’s basic premise was to ignore the international borders and reduce or eliminate tariffs for much of the trade between Canada, the United States and Mexico. For the most part, it has been beneficial to the North American economies and the average citizen,  but harmful to a small minority of workers in industries exposed to trade competition.

Donald Trump, during his presidential campaign, promised to “repeal NAFTA”. After phone calls from Canada and Mexico’s leaders, Trump said he was looking to “tweak NAFTA”.

In the days leading up to the “tweak list”, Canada’s Justin Trudeau went to Providence, Rhode Island to spend time with America’s governors, of both political stripes, at the National Governors Association twice-yearly gathering. This follows months of stepped-up contact between American governors and Canadian political and business leaders.

At their Rhode Island meeting, the governors made it clear they were going around Donald Trump with their own diplomatic missions. Most American governors tend to avoid international discussions and issues, sticking close to home-grown problems – balancing budgets and the levers used to operate state governments. If they went overseas it was mostly to sell products made in their states.

So when Justin Trudeau showed up in Rhode Island earlier this month he was the first foreign leader to address the governors. In the audience were representatives from other countries, including China, Japan, Mexico and Vietnam.

Prime Minister Trudeau took the line of the friendship between the United States and Canada, highlighting shared goals on climate and national security, and urging the governors not to support what he termed “a race to the bottom” in the form of trade protectionism.

Trudeau also congratulated the governors for pursuing economic prosperity with a “pragmatic approach that crosses party lines”.

Phil Scott, the Republican governor of Vermont – which shares a border with New Brunswick and Quebec – told the Rhode Island meeting Canada “needed some reassurance that we were there fighting on their behalf and on our behalf as well. We wanted to make sure that we communicated that and gave them, the Canadians, reassurance that we’re there for them”. Another governor said “what I try to tell everybody is, ‘forget the federal government. Come directly to the states’.”

Days after Prime Minister Trudeau’s Rhode Island visit, the 17-page list of changes the Trump administration wants to see made to NAFTA, were released.

Despite President Trump’s earlier rhetoric, the changes aren’t all that earth-shattering and sound more like the “tweaks” Trump talked about. There’s a sense that the changes are more of an update – the Agreement is approaching its quarter century – and the digital age is rapidly making many areas of the Agreement seem out-of-date.

Many of the proposed changes look like provisions of the Trans-Pacific Partnership, to which Canada, the United States and Mexico have already agreed.

Some of those provisions include new support for digital trade, stepped up environmental and labour clauses, and fast-track border measures that would allow for greater use of new technologies and data storing.

But there are a couple of tough nuts to crack: softwood lumber imports from Canada to the US and dairy issues. Talks between NAFTA officials are expected to get underway in August.

One unexpected issue surfaced late in the NAFTA pre-game: Omar Khadr. The former Canadian teenager who was paid $C10.5-million by the Canadian government.

Prime Minister Trudeau attacked the Conservative opposition party for its advertisements in the United States ahead of the NAFTA talks highlighting the Khadr payment.

Speaking in Atlantic Canada, Trudeau said he understood if people were frustrated by the settlement, but that the decision was taken to save the country money and to defend the basic rights and freedoms of all Canadians.

“Omar Khadr was going to show up in court … with a note from the Supreme Court [of Canada] with his name on it saying that his rights had been violated. There is no question we were going to lose this case because governments of different stripes violated his fundamental rights and freedoms,” said Trudeau.

Referring to the US commercials, the Prime Minister said: “when I deal with the United States, I leave the domestic squabbles at home. Other parties don’t seem to have that rule, but I think it’s one Canadians appreciate”.

Senior members of Trudeau’s Liberal Party have accused the Conservative Party of fanning anti-Trudeau sentiment in the US ads ahead of the NAFTA negotiations.

Louis Cooper is an Australian-born veteran television executive who lives in Canada

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