Tuesday, September 05, 2017

Not Getting All Shook Up

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.

Image: newsblaze.com



Lorne said...

From what I read this morning, Owen, things are not going well in the talks. Trump may get his wish to tear up the deal, but I suspect that Congress will be very reluctant to abrogate it, given that so many states apparently benefit from it as it is.

Owen Gray said...

There is abundant evidence that, on the international stage, Trump knows how to make enemies, Lorne. But in Congress -- and his own party -- it's more of the same. He's simply a mean old man yelling at kids to get off his lawn.

The Mound of Sound said...

I know that many democracies require treaties to be ratified in national legislatures but it's unclear whether a president has the right to repeal a ratified treaty. The argument came up in the Goldwater v. Carter case but was dismissed by the Supreme Court without deciding the empowerment or jurisdictional issue. The courts also refused to intervene when George W. Bush withdrew the U.S. from the ABM treaty again leaving the empowerment issue undecided. The USSC seems to prefer to treat the revocation or repeal of a ratified treaty as a political, not a constitutional question and, as such, beyond the purview of the court.

thwap said...

The FTA and the NAFTA were corporate rights agreements, not trade agreements. They did not magically transform into sources of Canadian prosperity just because Trump opposes them.

Steve said...

Can I be non PC for a moment. Mexico allegedly is a narco state. Mexico allegedly has met a standard just above slave labour. Lets let Mexico solve it problems without us propping up the ruling allegedly Medieval class.

Owen Gray said...

Like Stephen Harper, Mound, Trump seems to regularly run afoul of the courts. The U.S. Supreme Court might give him a pass. Then the issue would be litigated by the Republican Party -- whose integrity has vanished.

Owen Gray said...

I get the impression that the Mexicans plan to stand up for themselves, Steve. They appear to have lost all patience with Trump.

Owen Gray said...

I agree, thwap. The FTA and NAFTA made North America safe for capital. There was no regard for labour. We can do better.

Steve said...

The new NAFTA will contain all the toxic TPP rules about investment and intellectual property and we will be fucked again. Take that to the bank.

Owen Gray said...

We'll see, Steve. It's beginning to look like the principals will walk away.