27 Jul Trending in Business: NAFTA and Why it Matters to Canadians

By Grant T. Smith

Why did Washington choose last week to announce their “aggressive timeline for NAFTA talks”?

Personally, I think it has to do with a need for the White House to distract from the crisis of their own creation, but since I make it a policy to avoid dwelling on direct discussion of the antics in Washington, I will not but dip my toe in that pond.

It appears unavoidable, however, that we are going to spend a great deal of time pursuing new negotiations on the subject of NAFTA.

It makes me laugh because in the 1980s, I was a theatre producer and a university lecturer. I was consumed by the certainty that Prime Minister Mulroney’s folly would mean the destruction of our culture in Canada and the creation of a new state in the US. Hey, I was an idealist and I have always skewed left of centre. I am proud to know that I was wrong, as evidenced by my recent morning on the grounds of Parliament Hill in Ottawa on the 1st of July. I saw a sea of people and a proud culture.

Since negotiations are about to proceed in earnest, why should we be paying attention?  

1. Our primary trade partner is the USA.
2. The imbalance between the two economies is astronomical in scale.
3. The US is developing a protectionist stance, within the new government.

These talks, for the USA, are about gaining improved access to our market while restricting our ability to compete in theirs. They are fuelled by self-interest and the US will use their size, and our dependence, to try and gain advantage.

The current Canadian Government will face hurdles and delays and while they seem to be effectively lobbying the US government, they will need to be monitored and supported by an engaged public. If the entities do not find common ground or if we lose freedom of access to the US market, our economy will struggle. Much has been done, by several past Canadian governments, to develop new markets but none has the importance of the US – you should be interested because it will affect your future.

I will be following the NAFTA negotiations and will likely discuss it in the future, but for now, I am pleased to see that that teams are moving forward.

A critical issue that has been raised by the US is a desire to scrap the trade dispute resolution panels – NAFTA’s primary dispute settlement process. This poses a challenge for Canada as these panels are the main tool for smaller countries to have a voice when predatory practices are engaged in.

I also note that the US is interested in reducing access to the US market by allowing state and local government to implement “Buy American” policies. This flies in the face of the US desire to gain increased access to Canadian Government contracts.

This should be fun – keep your eyes open! Please feel free to send me your thoughts.