Donald Trump keeps threatening to tear up NAFTA. Tom Walkom writes that there's no need to panic. In fact, Trump may be doing us a favour:
We know that Canada and the U.S. are already at daggers drawn over a provision in the current deal that gives each member state a limited right to challenge one another’s trade practices before an independent tribunal.Trump wants the provision scrapped altogether while Prime Minister Justin Trudeau has said he won’t sign a deal without it.The two countries also disagree vigorously over U.S. Buy America policies as well as Trump’s insistence that manufactured goods sold in the U.S. contain a specific amount of U.S. content.Mexico’s government, which also is at loggerheads with Trump, is already working on alternative plans for trade diversification should the NAFTA talks fail. Trudeau would be wise to do the same.
The recent spike in gas prices has reminded Canadians just how closely the Canadian economy is linked to the American economy. When things get rough in Houston, the bad news is felt in Napanee. It would be wise to diversify:
Indeed, some diversification has already begun. The recently negotiated trade deal between Canada and the European Union, while fatally flawed in its details, is at least the right idea. So is the long-simmering but never-acted-upon plan to negotiate a trade agreement with Japan.Canada has already signed a foreign investment pact with China and started work on a comprehensive trade deal. The foreign investment pact is lopsided in China’s favour. With luck, Ottawa will do better on any trade deal.
And, truth be told, we didn't do so badly before we put so many of our eggs in the NAFTA basket:
Canada traded quite handily with the U.S. before signing a formal free trade agreement with that country. It could do so again.A recent study done for the Canadian Centre for Policy Alternatives points out that even without NAFTA or its predecessor, the Canada-U.S. Free Trade Agreement of 1989, most Canadian exports to the U.S. would face either zero or moderate tariffs.There are other nations eager to buy the goods and services Canada produces. Canadian governments have tried before to make the country’s economy less reliant on the U.S. Pierre Trudeau’ so-called Third Option, including his brief dalliance with economic nationalism, was an expression of this idea.
Trump takes pleasuring in rattling those he perceives as his enemies -- and he sees everyone as his enemy. We shouldn't get all shook up.