Tuesday, July 25, 2017

Reviewing NAFTA

Assuming Donald Trump isn't forced to resign, or is impeached there is a major area of policy Canadians should begin thinking about because it's entirely possible things could move very quickly on this file: trade and NAFTA.

Though it may be difficult to remember now both Hillary Clinton and Donald Trump ran on platforms seeking to address shortcomings in the North American Free Trade Agreement. The politics of NAFTA are a bit difficult to parse. I will try to lay out the basics as I understand them.

NAFTA in many ways is associated with the collapse of the manufacturing sector in Canada and the United States. As a result critics among the left and workers say that NAFTA destroyed their jobs. While I'm certain consolidation harmed employment to a certain degree the NAFTA trade deal has also greatly expanded the volume of trade and economic activities between the three countries. As a piece of anecdotal evidence, about half the people in my family had work that directly or indirectly benefitted from the NAFTA trade agreement. The collapse in manufacturing has a great deal to deal with poor management by corporate players, changes in technology, increased competition from foreign competitors, and finally automation. In the case of many of the jobs people point out there is very little hope of them ever returning let alone in the numbers they once existed in. Factories do not employ thousands anymore, the often do not employee even hundreds.

In the United States I think it is fair to say that a significant component that drives criticism is the distrust or discomfort towards Mexico. Here criticism of NAFTA gets tangled up in feelings about immigration and migrant workers, which are entirely separate issues. I believe when Canadians think of NAFTA they generally think about the United States while the U.S. often thinks of Mexico and this shapes each nation's opinion.

I am far removed from a trade expert. From the limited media reporting I've read on this topic I have come to two basic conclusions: Canada's economy is dependent upon NAFTA, or a NAFTA-like, trade agreement and there are areas of the treaty that deserve revision after all this time. NAFTA is over twenty years old now. The world has changed substantially so perhaps it is time to modernize.

As odious as the current federal government of the United States we have no choice but to deal with it. Our economies are deeply intertwined. Any stress to that existing network will have a devastating impact on our economy. That doesn't mean we should bow to Donald Trump and his Commerce Secretary's dictates, which I fear is the road Trudeau is walking down. We should unite with Mexico on as many issues as we can and use our combined leverage to extract concessions from the United States.

There are a number of areas Canadians should be concerned about and anxious to defend. The first that comes to mind is water and healthcare. Water should not be treated as a tradable commodity under NAFTA. We should resist the imposition of American intellectual property laws, which strike me as deranged at times. Easing access for certain agricultural products, and dismantling supply management, could be a nice bonus out of these negotiations. Perhaps we could settle issues like softwood lumber once and for all within a revised NAFTA. Surely the telecommunications provisions could use a refresh given that the internet was in infancy when it was signed.

I'm sure the Canadian government has a list as long as my arm of issues they would like corrected in the treaty. Ultimately we need to see our leaders start to discuss this in a concerted way and why this matters. The last thing we can allow is some quick fixes to get pushed through without the public's informed consent. This critical aspect of the Canadian economy should not be allowed to be distorted by demagogues or abandoned without the understanding by Canadians for the consequences. 

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