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Is Trudeau standing up to Trump or ready to rebrand the TPP as the new NAFTA?

Globe and Mail writers Parliamentary reporter Steven Chase, Washington correspondent Adrian Morrow and Quebec business correspondent Nicolas Van Praet argue in today’s news that Prime Minister Justin Trudeau is standing up to U.S. President Donald Trump on the North American Free Trade Agreement (NAFTA).

The evidence doesn’t support that (Trudeau has not yet asserted that he would be prepared to walk away from the deal if U.S. demands are too onerous), but there may be new reasons to be concerned that Trump, Trudeau and Mexican president Enrique Pena Nieto could try to rebrand the Trans-Pacific Partnership as a ‘modernized’ NAFTA.

Ultrafiltered milk pricing

The Globe and Mail writers note, “U.S. Commerce Secretary Wilbur Ross and Jared Kushner, President Donald Trump’s son-in-law, pressed the Trudeau government behind closed doors last month to reverse a pricing decision on ultrafiltered milk that was pushing American dairy farmers out of the Canadian market. The pair wanted Ottawa to step in to placate the President, who had seized on the dispute to publicly blast Canada as a bad actor ‘taking advantage’ of the United States. But Canadian officials held firm, insisting they were not going to intervene in the dairy industry’s price-setting system and make concessions before the renegotiation of NAFTA had even started.”

Bombardier vs Boeing Super Hornets

Chase, Morrow and Van Praet  add, “The Boeing dispute began when the American company accused Canadian competitor Bombardier of illegally ‘dumping’ C Series jets in the United States because Bombardier has received subsidies from the federal and Quebec governments. The Department of Commerce opened an investigation, and could decide as early as July whether to slap tariffs on Bombardier. Rather than let the dispute play out in the U.S. system, Canada hit back, warning it would ‘review’ its plans to buy 18 fighter jets from Boeing, a contract that could be worth $12-billion between the cost of the planes and later maintenance.”

Thermal coal exports

And they note, “Trade lawyer Mark Warner [notes Trudeau’s] letter to B.C. Premier Christy Clark agreeing to consider her request to block U.S. thermal-coal exports from the province’s ports as retaliation for American duties on softwood lumber.” (That said, this stance was also likely related to Trudeau wanting Clark to win a provincial election and his letter to Clark only promised, “I have asked federal trade officials to further examine the request to inform our Government’s next steps.”)

Chapter 19

CBC Parliamentary Bureau reporter Janyce McGregor adds, “The Trump administration has mused about scrapping NAFTA’s Chapter 19, which provides the arbitration panels that Canada and Mexico can use to appeal U.S. duties like [the one Trump just imposed on softwood lumber]. …[Former trade negotiator Gordon] Ritchie [says] that American insistence on ending Chapter 19 — something Canada made concessions to get — could be a sticking point. ‘On what planet could Canada agree to eliminate our barriers against imports … only to have the Americans agree to do the same, but with the right to, anytime they feel like it, slap on phony countervailing duties?'”

That all said, Chase, Morrow and Van Praet conclude, “At the same time, Ottawa will attempt to move the talks toward an update of NAFTA that would preserve the existing agreement but enhance it to make it more like the Trans-Pacific Partnership, the 12-country pact that Canada and Mexico agreed to but Mr. Trump pulled out of during his first week in office. That deal covered the digital economy, which NAFTA does not, and included stronger labour and environmental provisions.”

McGregor also notes the issues raised in U.S. Trade Representative Robert Lighthizer’s letter to Congress include “digital trade, intellectual property protections, and labour and environmental standards – [which] already appeared in the TPP all three countries negotiated in 2015. TPP language could be recycled, if everyone’s politically savvy enough not to emphasize where it’s from. (Trump and many in Congress still portray the TPP as a bad deal that the U.S. was right to bail on.)”

While some of this may be framed in the media as a “hardening strategy” on the part of the Trudeau government, it is also the case that: it would be premature to reverse pricing on ultrafiltered milk; it might appear very weak if Trudeau hadn’t raised his government buying $12 billion of jet fighters from the U.S.; Trudeau hasn’t followed up on banning thermal coal exports; and Trudeau’s cabinet has reportedly discussed a billion-dollar compensation package for the Canadian industry (and could suggest a permanent tribunal to replace Chapter 19’s ad hoc panel).

Most worrisome is the idea that Trump, Trudeau and Nieto might all be agreeable to a stealth rebranding of the TPP as a ‘modernized’ NAFTA.

While news reports suggest the three governments are in daily contact about NAFTA, the formal talks are expected to begin on August 16. The Council of Canadians will continue to follow the pre-talks and the actual negotiations, provide updates and analysis, and intervene in timely ways.