NAFTA Talks: End of round four, end of high hopes for Canada-US relations

The expectation that Justin Trudeau would re-establish a positive relationship with the White House officially fizzled this week. Jeremy Kinsman asks if Canada has been playing its cards right and how it might proceed.

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October 19, 2017
NAFTA talk Oct 17
Canadian Foreign Affairs Minister Chrystia Freeland, US Trade Rep Robert Lighthizer and Mexican Secretary of Economy Ildefonso Guajardo Villarreal make statements to the media after a NAFTA trilateral ministerial press event in Washington, U.S., October 17, 2017. REUTERS/Yuri Gripas

North America is not the same today.

The October 17 press conference of the region’s three chief negotiators, at the conclusion of round four of NAFTA negotiations in Washington, showed no progress.

Nothing demonstrable has been achieved in these negotiations, though Canadian Foreign Minister Chrystia Freeland, grasping at straws, praised the fact there was agreement to extend the talks into 2018 after a needed cooling-off break of a couple of months.

But it's not a happy week. We learned the US side did not come to listen. But we didn't learn what their purpose is. It isn't really a negotiation. They have tabled demands that they know are unacceptable. The US Special Trade Representative, Robert Lighthizer, harshly criticized Canada and Mexico for "resistance to change," that he construed to be based on seeking to preserve "one-sided benefits." What are these "benefits?" Lighthizer sums them up under the "surpluses" enjoyed in trade with the US.

This assertion reeks of the fact-free Trump era. Canada has no "surplus" in trade with the US, in manufactures or in services. 

But facts have no standing in Trump-world. This is the nightmare we feared. That the US under Donald Trump would be fiercely self-involved ("America first, always America first"), we expected. That they were not interested in "win-win-win," we feared. (Vice President Mike Pence said they were, but what does he know?) But that US negotiating professionals would dismiss facts as being of no consequence is a stunner.

More stunning still was the tone of hostility and derision, in Lighthizer's raspy, pompous, voice as he read from a text, never looking up. This was a US we have never seen. Perhaps the Cubans have, maybe some other states designated as unworthy of professional courtesy, but not Canada, not in public.

Freeland aptly described theirs as a "winner-take-all mindset," demonstrating a purpose that "seeks to undermine NAFTA rather than modernize it." She saw the US proposals as turning "back the clock on 23 years of predictability, openness, and collaboration."

Obviously, the plan a few short years ago that Prime Minister Justin Trudeau would re-establish a very positive relationship with the Obama White House, that could re-energize and strengthen the North American community to our shared competitive benefit, is gone with the wind, or gone with the weird and destabilizing US election.

Once Trump was elected, we knew it would be stressful. Some like Gary Doer counselled deep breaths: Trump would "normalize."  This was a fantasy. 

The top Canadian political team rightly thought it mandatory to connect to the Trump inner team and establish the principle of mutual benefit. They cultivated the arch-nationalist Steve Bannon, then White House chief strategist, and played to the influence of cool generational counterparts in the family, especially Ivanka Trump, co-sponsoring events on the shared counter-brand of gender equity.

Trudeau, who can be as nice as anyone on the planet, turned his niceness on Trump, who acknowledged that "everyone loves Justin," no doubt channelling the verdict of his cherished daughter.

But when it came to the moment for frank talk about the future of NAFTA, Trump told him, "We'll see what happens." That's a favourite Trump line that precedes a firing; Flynn, Scaramucci, Bannon, etc. — it's not a benign or even neutral position.

The fact is that Trump doesn't want NAFTA. He wants a "win" at home. He doesn't have any worth mentioning. Since he can't get anything done, he aims as a presumed man of action to get things un-done — Obamacare, environmental regulations, the Iran deal, Cuban detente, help for "the dreamers," UNESCO... break now, maybe fix later. It's reckless stuff.

'We could be negotiating for years. Meanwhile, Trump could tell his base he did his part to trash the treaty.'

No question, the US positions in this false NAFTA negotiation are White-House packaged and probably meant to be prelude to an exit. Or else, it's the old negotiating tactic of abusing the other side so that they become more accommodating. (I write this from the cabin of an Air Canada Airbus. Two and a half hours ago on the West Coast we had to get off because of a dodgy fuel pump. Passengers were anxious about connections and very touchy. Now we're back on, ready to go. Everyone's deliriously joyous and relieved. All is forgiven. It's a version of the Stockholm syndrome.)

Maybe Trump doesn't know what he wants. "We'll see what happens." It may be he'd be happy to propose withdrawal to Congress and leave it to them to decide. The negotiating track inevitably leads to Congress, where Canadians must be mobilizing with a vengeance support for the benefits of NAFTA. But a congressional reprieve for NAFTA will come with conditions. We could be negotiating for years. Meanwhile, Trump could tell his ardent know-nothing base he did his part to trash the treaty and its alleged deference to foreigners.

In assiduously courting Trump, Canada's prime minister has abstained from commenting on anything Trump says or does. When Trump threatened in his UN speech to "totally destroy" North Korea — which drew the opprobrium of other allied leaders — Trudeau stayed mum. "It's not my job to opine" on the statements of the US leader, he said, "especially during the NAFTA negotiations."

This somewhat mortifying self-discipline has been tightly adhered to by government officials and ministers. No offhand remarks have been heard from Ottawa about "that moron," to honour a trivial memory from back in the Chretien-Bush days. (Who knew we would so miss George W. Bush?)

But one wonders, really wonders, what Trudeau does say to Trump. Does he say that it's not OK to play your neighbour this way? That the Boeing attempt to destroy Bombardier is not acceptable? Does he say it in a way that Trump gets? Does Trump know his capital of trust is depleted? Does he care?

Trump has actually sort of backhanded the Canadian relationship into the possibility of doing a "bilateral deal" later, avowing he doesn't like "multilateral deals."

Actually, we have a prior bilateral agreement — the Canada-US Free Trade Agreement — that had never been rescinded, though it contains provisions, like the dispute settlement mechanism under Article 19 of NAFTA, that Trump (or his nationalist staffers) doesn't like because it provides for neutral courts, not US courts.

Canada must not throw Mexico under the bus. Whatever happens, Canada has to strengthen ties with Mexico. That too is a matter of trust.

Most of all we have to knuckle down and reduce our vulnerability to our xenophobic neighbour. It won't get better until the US gets a more normal president when we can recover a sense of North America's potential.

The end of NAFTA as we know it will mean a hit to the Canadian economy. Studies estimate 2.5 percent. But tariffs aren't going to be what they were in the 1980s. 

Canada-US trade is 42 percent of our GDP. We need stronger Asian partnerships. We need to grow the content of our relations with the EU. But we also need more robust manufacturing and digital industry at home. David Emerson called this moment an opportunity and a wake-up call.

I believe our officials are clear-headed and scoping out all the options. But strong leadership is required. I'd still like to know what Trudeau's actually saying to Trump. I bet it could be stronger.