The Trudeau government has spent a lot of effort trying to to stay on the good side of Donald Trump, fearing that he will rip up NAFTA. But a recent study concludes that Canada has less to fear from Trump than some believe. Tom Walkom writes:
Written by economist Pierre Laliberté and research fellow Scott Sinclair, the study — entitled “What is the NAFTA advantage?” — says that even without the pact, trade barriers between Canada and the U.S. would be relatively minor.That’s because both countries adhere to rules set by the World Trade Organization that mandate minimal tariffs between member states.Without NAFTA, 41 per cent of Canadian exports to the U.S. would still face no tariffs at all.The remaining 59 per cent would face, on average, extremely modest tariffs. The authors calculate that the value of these extra tariffs would total roughly $4 billion a year — a relatively small amount when compared to annual exports of roughly $279 billion.The authors also point out that Canada’s main aim in negotiating a deal with the U.S. — which was to obtain an exemption from that country’s often arbitrary trade laws — never materialized. The eternally recurring softwood lumber dispute is a testament to that.
That's not to say that walking away from NAFTA would not have costs:
The study doesn’t try to pretend that ending NAFTA would be costless. Some industries, such as agriculture, would be hit hard. Others, such as petroleum, would be barely affected.
But it does demonstrate that, for the most part, Canada’s economy could purr on quite contentedly without the pact.
That, in turn, means two things. First, Ottawa can safely walk out of the NAFTA talks if Trump’s demands are too outrageous. Second, Canada’s government need not twist its foreign and defence policies out of shape just to candy up to him.
During the past week, Trump the Bully has been on full blown display. His latest doctored video of him beating up on CNN is yet another example of his boarishness. But it also reminds us that Trump is no Einstein.