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C.D. Howe Institute says Trump’s NAFTA demands include four “bombshells”

Lawrence L. Herman, a senior fellow at the right-wing C.D. Howe Institute think-tank, says US President Donald Trump’s NAFTA demands include, “at least four major bombshells, signalling an extremely aggressive stance by the Americans, making it difficult for Canada to accept the document as a basis for negotiations.”

Herman highlights:

1- “The first – not unexpected – is the U.S. objective to eliminate the binational panel system in Chapter 19 of the NAFTA, the system that was first painfully negotiated in the bilateral Canada-U.S. free-trade agreement in the 1980s and later replicated in the NAFTA. Canada made many compromises as part of the FTA talks to get the binational panel system accepted by the U.S. side. For the Americans to now seek its removal is a major assault on a fundamental Canadian interest and could effectively scuttle the talks.”

2- “The second attack – also part of the negotiated deal under the FTA/NAFTA – is the U.S. objective to remove all restrictions on ‘Buy America’ preferences at the state and municipal level, including on all federally funded programs for a huge array of local projects. What the U.S. is seeking here effectively is a wholesale carve-out of preferential programs that run up against some of the key principles of open trade and GATT-based non-discrimination. Talk about trade distortion, these Buy America preferences will allow it in spades.”

3- “The third salvo is the U.S. objective of removing the right of Canada (and Mexico) to be excluded from U.S. safeguard actions against imported goods. Safeguards are global import restrictions that apply when U.S. industries are being injured by an unexpected flood of imports that are neither dumped nor subsidized. Under the NAFTA, Canada and Mexico are exempted from such actions unless their exports “contribute importantly” to the injury caused to U.S. producers. The U.S. wants that out.”

4- “The fourth bombshell is the objective to reduce or eliminate barriers to U.S. investments ‘in all sectors’ in the NAFTA countries. This is an aggressive demand and suggests the U.S. wants an end to Canada’s restrictions on American investments in such things as telecommunications, health care, education and cultural industries.”

Herman adds, “The [Canadian] government will have the opportunity to set out its own set of objectives for the talks and Canada can be equally aggressive in making clear to the Americans where its fundamental NAFTA interests lie.”

While newspaper articles have made it clear there is no requirement in law to make those objectives public, the Council of Canadians argues that the Trudeau government should do so in the interests of transparency and accountability. During the 2015 federal election, Trudeau stated this about the Conservative government’s approach to Trans-Pacific Partnership talks: “The Harper Conservatives have failed to be transparent through the entirety of the negotiations – especially in regards to what Canada is conceding in order to be accepted into this partnership.”

Earlier this year, Canadian Centre for Policy Alternatives senior research fellow Scott Sinclair wrote, “If an ‘America First’ NAFTA would be worse for Canada than the multilateral alternative, we can and should walk away from the table. …If NAFTA were to come apart, …WTO-bound tariff rates would then apply. This would be disruptive, but not catastrophic. Under that scenario, Canadian exporters could face an additional US$3.5-5 billion in customs duties, equivalent to the value of 1.25 to 1.8 per cent of current exports. That’s a speed bump, for sure, but would not bring trade to a screeching halt.”

Arguably, Trump has in fact put forward an ‘America First’ set of negotiating objectives.

The talks could begin as early as August 16, possibly in Detroit or Pittsburgh, with some speculation that they could be concluded by early next year just prior to the Mexican general election.

The public deserves better than to be left guessing as to how the Trudeau government will be approaching these talks. Send your comments now!