by Thomas Walkom
There are reports that an agreement-in-principle is near in the fraught negotiations over the North American Free Trade Agreement.
If so, we may finally get some idea of how much Canada and Mexico are willing to surrender in order to keep their privileged access to the U.S. market.
The reports were first published by Bloomberg News which, citing unnamed sources, said the U.S. wants to reach a preliminary agreement with Canada and Mexico by mid-April.
Crucial details would be hammered out later.
Still, an agreement in principle should provide a good approximation of the concessions each party is prepared to make.
The U.S. position is that it should make no concessions at all. President Donald Trump insists that NAFTA is biased in favour of Canada and Mexico and has threatened to tear up the agreement unless that alleged imbalance is rectified.
To that end, Washington started with maximalist demands, including one that would require all NAFTA-certified autos sold in the U.S. to have 50 per cent American content.
Its strategy then was to retreat from patently outrageous demands, such as the 50 per cent content rule, to those that were merely high-handed.
Along the way, Trump reveled in mau-mauing Canada and Mexico.
He threatened to impose onerous tariffs on steel and aluminum from the two countries unless a NAFTA deal acceptable to the Americans was reached by May 1.
More recently he linked NAFTA to his perennial demand that Mexico pay for a wall along America’s southern border.
Throughout, Prime Minister Justin Trudeau has optimistically insisted that Canada seeks a solution in which all three countries win.
In actual fact, Canada will be lucky to minimize its losses.
After having restructured its entire economy to become an integral part of the U.S. market, Canada has little appetite to walk away from even a diminished NAFTA.
I fear that the Liberal governmentís brave talk about no deal being better than a bad deal is just that – talk.
Why are the Americans suddenly in a rush to get NAFTA done? There are the well-known reasons – the upcoming Mexican presidential election, the looming U.S. Congressional midterm elections.
Even an agreement in principle would have to reach the U.S. Congress by the end of May in order to be dealt with before the November mid-terms.
There are also practical reasons for getting NAFTA out of the way so Trumpís White House can concentrate on its trade war with China.
But Trump also needs a victory. He has called NAFTA the worst trade pact ever. He needs a deal that, to his supporters at least, plausibly seems better.
He must show that he has bested Canada and Mexico.
Some of Trump’s demands may prove useful to Canadians. The Americans are said to be floating a
proposal that would require auto companies to pay their Mexican workers higher wages. Properly done, a move such as this could stem the flow of auto jobs from Canada and the U.S. to Mexico.
Others, such as his plan to bias government procurement in favour of U.S. companies, are blatantly detrimental to Canada.
There is a precedent for all of this. In January, the U.S. and South Korea began renegotiating a free trade deal that Trump claimed was unfair to the Americans. Last month, they reached an agreement in principle that gave the U.S. virtually everything it had demanded.
In return, South Korea was granted a permanent exemption from Trumpís steel and aluminum tariffs –
tariffs that never should have been imposed in the first place.
Thomas Walkom appears Monday, Wednesday and Friday.
Copyright 2018-Torstar Syndication Services