Peter Donolo has an interesting column in this morning's Globe and Mail. Donolo believes that the NAFTA negotiations are not about trade. They're about politics. The giveaway is that the Americans still haven't old us what they want. He writes:
What does that mean for the NAFTA talks? Don't hold your breath for negotiators to come up with trade solutions to a political problem. And if they do manage an agreement, count the seconds for a tweet from the President of the United States undercutting his own negotiating team. He's done it to his own White House staff, to his cabinet and to his party, time and again.The term "win-win," which is the essence of any successful negotiation, does not exist in Donald Trump's lexicon. His approach is better described as zero-sum; the only way you can show you have won is by crushing your opponent into dust.
The American decision to add a 220% tariff to Bombardier's C-Series jets should be understood in that context. The decision is not good news for Canada. And, meanwhile, Trump treats Mexico with utter contempt. That does not bode well for the future:
In less than a year, Mexico will hold presidential elections. Mr. Trump's relentless humiliation of that country has already sunk the hopes of the incumbent PRI and boosted the chances of leftist Andrés Manuel López Obrador. What would be the consequences of a NAFTA "loss" for Mexico? From the relative stability of recent decades, the Mexico-U.S. relationship could very quickly revert to earlier hostile, and even violent, patterns.
So fasten your seat belts. North America -- and, for that matter, the world -- is in for a lot more turbulence.
Image: newstimes.com
14 comments:
Owen, events today are simply history repeating themselves for the thousandth time. The rise of the far right in response to too many non citizens flooding countries and the far left to the results of wealth becoming too concentrated in too few hands. The best result for both Canada and Mexico is for Trump to kill nafta. The ability for countries to do what is best for themselves far outweighs any increase in economic growth. Short term both countries will suffer but as the softwood saga shows If a country has to buy something it hasn't"t enough of It is better to buy from a friend like Canada than a country you consider your enemy like Russia. amazing once that news got out how quickly they backed down.
90% of what we sell the U.S. is raw materials or basic products like food and lumber. 90% of what they sell us is manufactured goods. Long term there can only be one winner and we can always sell our stuff to some other country. Using strawberries as an example, most of Mexicos crop is sold in the states because the same workers only get a third of wages in Mexico as in the U.S. Most of the American crop is sold in Canada and we grow very few ourselves because we can't compete with all the berries dumped on our market. Without Nafta Both Mexico and ourselves would be smart to shut our borders to U.S. produced foods and trade with each other for what is not in season or does not make sense to grow ourselves. The U.S.would then be forced to cut their agriculture sector in half or go back a hundred years and produce food properly or find some country they haven"t pissed off lately to dump their excess into.
Maybe this could be the beginning of going back to trade as bartering what you have in excess for what you don't have. it worked for over 5000 years except times like Rome wiping out their own farmers by flooding the market with Egyptian wheat.
The only two things we have to remember is the true meaning of trade and the only enemy of any country or individual is the multinational corporations that wrote all modern trade agreements we suffer under today.
I wouldn't be surprised, bill, if Trump cancelled NAFTA for political, not trade, reasons. It would please his base and damage his country. But that's what Trump is all about. Pleasing his base is all that matters.
For Trump, the damage he does matters not a whit.
In international relations America has always chosen the my way and the highway. For those that feared tpta (the pacific thing) this treaty will make it look like the communist manifesto.
You don't have to tell British Columbians, endlessly battered by trade wars over softwood lumber, that this is pure political theatre. If Trump cancels NAFTA, let's cancel Norad and we can stop serving as America's foreign legion in wars that the US never manages to win or even end. The world is becoming America's Humpty Dumpty and that same world is getting fed up with it. America's allies in Asia and Europe know that the US is no longer their protector, often not even their friend. It has overplayed its hand and the man/baby president is doubling down.With the changes now setting in around the world I think Canada could use a more arms-length relationship with the US. If they want a better, closer relationship with us let them repair the injury and damage they've caused.
That assumes there will be a new treaty, Steve. Trump may just walk away. And Congress could leave the old deal in place.
Hell, Owen, if we play our cards right we might egg Trump into building another wall, a real wall, along our shared border.
Somehow, Mound, I get the impression that Trump might be open to that idea.
My impression, Mound, is that The Ugly American is straining and breaking alliances. We shouldn't work too hard to prevent his self destruction.
As far as I'm concerned, Trump can go ahead and tear up NAFTA - the projected economic cost to Canada is minimal. We may even come out ahead if you include the money Canada can be expected to fork out under the investor-state dispute settlement process. Despite spending at least US$2 billion on legal and arbitration fees, Canada loses about half the times it's sued. Worse, most of the time we're sued it's over attempts to protect the environment, and as a result of losing we now allow gasoline to contain MMT, a suspected neurotoxin. In fact, because of NAFTA's chapter 11, Canada has now been sued more times through investor-state dispute settlement than any other developed country in the world. The US, by comparison, has never lost an investor-state case. Canada's best alternative to whatever Trump is offering is to walk away.
Cap
I'm no economist, Cap. But my impression is that real economists on this side of the border are not quaking in fear when Trump threatens to withdraw from NAFTA.
The real question is Trudeau. Will he cancel the fighter planes or will he bend over backward to please Trump? Will he do anything to show some spine?
Norways Heritage fund just passed a Trillon dollars. It was modeled on the NEP, except Norway produces a fraction of oil that Canada does. That truth is hidden in plain sight. NAFTA same deal. It was a overall loser.
Good questions, Toby. It appears that Trump will take you to the cleaners -- if you give him an opportunity to do so.
Then perhaps NAFTA's death -- if that's what it comes to -- should not be mourned, Steve.
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