On NAFTA, Canada and Mexico can work together

Not only does Canada do big business with Mexico, but any NAFTA re-negotiations may outlast Trump — two good reasons the two countries need to work together now more than ever.

By: /
February 21, 2017
Mexico and Canada
Mexico's President Enrique Pena Nieto speaks during a news conference with Canada's Prime Minister Justin Trudeau in Ottawa, June 28, 2016. REUTERS/Chris Wattie

While United States President Donald Trump reassured Canadian Prime Minister Justin Trudeau last week in Washington that the U.S. has “a very outstanding trade relationship with Canada” and mentioned he viewed their meeting as an opportunity to "build even more bridges" of commerce, his remarks made no attempt to reassure its other North American partner — Mexican President Enrique Peña Nieto.

"[The state of Canada’s manufacturing sector is] a much less severe situation than what’s taking place on the southern border,” remarked Trump in a joint press conference on Feb. 13. “On the southern border, for many, many years the transaction was not fair to the United States."

The three heads of state, often referred to as the “three amigos,” have had their shares of ups and downs (not long ago Peña Nieto refused to attend a summit in Canada while a visa restriction imposed under former Prime Minister Stephen Harper remained in place). But this past June, with Barack Obama still in the White House, the three happily shook hands in Ottawa.

Today’s dynamic could not paint a more different picture, with Peña Nieto so far the foreign leader that has fared worst under a Trump presidency.

Back in late August, a half-baked attempt at bilateral dialogue by inviting then-candidate Trump to visit Mexico completely backfired on Peña Nieto and he was strongly criticized for acquiescing to the inflammatory Republican candidate. 

Furthermore, the pre-emptive visit with Trump seems to have done little to change the president’s stance on Mexico. Since taking office, Trump’s insistence on Mexico footing the bill for a border wall has quickly devolved into threats of a trade war between deeply intertwined partners. (Mexico is the U.S.’s third largest trading partner, while more than three quarters of Mexican trade involves its northern neighbour.)

In late January, Peña Nieto hastily cancelled a scheduled official visit to the White House after Trump tweeted his continued intent to somehow force Mexico to pay for the wall. As Peña Nieto and Trump went at it on Twitter, Mexico’s Foreign Minister Luis Videgaray was in the States trying to appease nervous business leaders, who he fears would pull investments out of Mexico due to Trump’s protectionist views.

Where does the Canadian government stand on the issue? 

Talk of differential treatment

So far, Canadian officials have been quietly building rapport with the Trump administration in order to protect Canada’s trade relationship with its southern neighbour, while maintaining a prudent amount of distance when it comes to Mexico.

Trudeau has signalled that Canada is open to renegotiating NAFTA, a sentiment echoed by David McNaughton, the Canadian ambassador to the U.S.

During Trudeau’s visit last week to DC, Trump confirmed that Canada’s trade interests with the U.S. only require “minor tweaks.” On issues that differ between the two countries, such as refugees and immigration policies, Trudeau managed to avoid criticism of Trump. When pressed by a question regarding the two countries’ divergent approaches to Syrian refugees, Trudeau said that “the last thing Canadians expect is for me to come down and lecture another country on how they choose to govern.”

The public silence on Mexico has been strategic. MacNaughton told reporters in January that Canada’s goal is to avoid being “collateral damage” in Trump’s revamping of trade agreements.

But in Mexico, there has been talk over the preferential and remarkably different treatment Trump has reserved for Canada. Some Mexican analysts and media have pointed to the amicable tone Trump has for the Canadian prime minister, and have contrasted it with the combative one the U.S.commander-in-chief reserves for Mexico. The hashtag #puentesnomuros (#bridgesnotwalls) started trending in Mexico after Trump alluded to wanting to build bridges with Canada. Mexicans are worried they are going to be left out in the cold as the U.S. and Canada move forward with bilateral relations.

Such sentiments may make meetings this week in Canada between the Mexican foreign minister, Videgaray, Mexican Minister of Economy Idelfonso Guajardo and Canadian Foreign Minister Chrystia Freeland if not tense, certainly important. (All three were expected speakers at an event organized by the Canadian Council for the Americas in Toronto on Tuesday.)

In an interview over with the weekend with The Globe and Mail, Guajardo called for a unified Canadian-Mexican front regarding NAFTA and came out strongly arguing there are issues in the agreement that cannot be negotiated bilaterally. 

Time for Canada and Mexico to team up

In spite of the inevitable challenges that will arise from Trump’s professed wish to re-negotiate NAFTA, Canada’s relationship with Mexico need not sour. Under the current Liberal government, Canada has pursued a strategy of rapprochement with Mexico, most notably with the revoking of the visa requirement for Mexican visitors, a long-term sticking point in bilateral relations. In a call on Jan. 31 between Peña Nieto and Trudeau, both leaders reassured each other of their shared goals for an economically competitive North America region — Canada and Mexico are each other’s third largest trade partners and Canadian direct investment in Mexico reached over $14.8 billion in 2015.

Behind the scenes, Canada and Mexico can work together to curb the damage that Trump’s “policy tweets” might inflict. Canada and Mexico are each within the other's list of top five trading partners and if they are able to work together, negotiators from Mexico and Canada will be able to put a strong case on the table.

Another possibility is that Canada and Mexico may be able to keep NAFTA renegotiations on low heat until the Trump administration is out of office, through election or otherwise. It will take years and a small army of lawyers to navigate the minutia of three different government bureaucracies and renegotiate complex trade rules. Bureaucrats on all fronts might be well advised to be particularly adamant about minuscule, highly technical issues for the next four years.

Beyond trade, Canadian officials must do everything in their power to assure our Mexican allies that we stand firmly behind them; if not publicly, at least through back channels. Now more than ever, the Canada-Mexico relationship is essential for the stability of the Western hemisphere. Both nations need to continue their collaboration on regional issues like the environment, security and drug trafficking and energy policy. And in the absence of U.S. leadership in the region, middle powers like Canada and Mexico need to fill that void and stand up for international liberal ideals.

All this said, another curve ball could come by way of the 2018 Mexican elections. Peña Nieto’s dismal approval ratings, massive distrust in Mexican government institutions and Trump’s sabre-rattling may bring political change to the nation. Andrés Manuel López Obrador, a populist leader with strong views against NAFTA and against the privatization of the Mexican energy market, is seen as the early front-runner. Lopez’s fierce and unabashed responses to Trump have won the former Mexico City mayor a strong following. Lopez came extremely close to the presidential palace in 2006, missing out by one percentage point.

Granted, it is still premature to make predictions on the coming Mexican election and how the results will impact North American relations. However, as evidenced by Trump’s rise to power, it is never too early to prepare for a deepening crisis. The possible election of López Obrador would be the final nail on any semblance of a united North America. But in the meantime, over the next two years, Canada can and should do its best to work with Mexico.