Goodbye NAFTA? Canada Donald Trump Justin Trudeau Free Trade

Goodbye NAFTA?

President Trump has called NAFTA (the North American Free Trade Agreement) “one of the worst deals ever made of any kind, signed by anybody.” On the White House website, one of the priority issues for the Trump administration is confirmed to be “Trade Deals Working For All Americans.” The commitment of the Trump administration is “to put American workers and businesses first when it comes to trade.” By means of “tough and fair agreements,” the Trump administration intends to use international trade to “grow our economy, return millions of jobs to America’s shores, and revitalize our nation’s suffering communities.”

To this purpose President Trump, as his first actions on trade, withdrew America from the Trans Pacific Partnership (TPP) by executive order and indicated his intention to renegotiate or withdraw from NAFTA “at the appropriate time.” In response Canada’s Prime Minister Justin Trudeau set aside several days in January for a cabinet retreat in which to focus on a Canadian strategy for dealing with the Trump administration.

NAFTA was originally negotiated by the administrations of George H.W. Bush in the U.S., Brian Mulroney in Canada, and Carlos Salinas in Mexico, resulting in their provisional signature of the original agreement in 1992. After legislative ratification, NAFTA came into effect (with additional side-agreements on labor and environmental issues) on January 1, 1994, at which time President Bush had been succeeded by Bill Clinton, and Prime Minister Mulroney by Jean Chrétien.

The intention with NAFTA was to increase trade and investment and facilitate labor movement between the U.S., Canada, and Mexico. From a Canadian perspective, this intention has largely been realized. Since the implementation of NAFTA, trade between the U.S. and Canada has roughly tripled in value: American exports to Canada were worth $100 billion in 1993 and $312 billion in 2014, while Canadian exports to America were $110 billion in 1993 and $346 billion in 2014. American investment in Canada grew from $70 billion in 1993 to $368 billion in 2013. It is estimated that as many as 40,000 Canadians may be working in the U.S. on visas allowed in NAFTA’s terms.

Given that America is (by far) Canada’s top trading partner, the prospective renegotiation of NAFTA (or negotiation of a new bilateral trade agreement between the two countries) is now by necessity Canada’s top foreign affairs priority. It is no surprise, then, that we are seeing the emergence of what Evan Solomon calls Trudeau 2.0: “a trade pragmatist trying hard to figure out what kind of internationalist he can be in a new world order, a world where he is hardlining Russia, courting China, and trying to make a deal with the most unpredictable leader the free world has ever seen.”

The most significant response so far by Prime Minister Trudeau to the new unpredictability in Canada’s relationship with America has been the appointment of Chrystia Freeland as Minister of Foreign Affairs, replacing Stéphane Dion. In her previous cabinet position as Minister of International Trade, Ms. Freeland salvaged CETA, the 2016 Canada-European Union Comprehensive Economic and Trade Agreement. A former journalist, she is known for her critique of global economic inequality and tough stance on Russia (so much so that Vladimir Putin’s government has banned her from entering the country). It is going to be fascinating to watch Minister Freeland try to integrate her thoroughgoing commitment to international trade and her responsibility to defend Canadian interests.

It is not impossible that Canada, if it deftly handles negotiations with its new unpredictable trade partner to the south, might benefit from America’s intended reorganization of its international relationships, at least in the short term. Jim Tankersley has argued that America may well experience a “Trump boom” during the next few years. President Trump’s emissary to Prime Minister Trudeau during the Canadian cabinet retreat, Stephen Schwarzman (a “long-time friend” of Minister Freeland), has said that the Trump administration has an “unusually positive view” of Canada, and that Canada should “not be enormously worried” about the American plan to renegotiate NAFTA. And an executive order by President Trump has given the go-ahead for the construction of the Keystone Pipeline, a decision welcomed by Canada. An American boom, advantageous terms of trade between Canada and America, and the necessary infrastructure to conduct that trade—these all augur well, for now, for the True North strong and free.

The real challenge for Prime Minister Trudeau and Minister Freeland in this time of clamor, spectacle, and volatile unpredictability may, however, be less a matter of securing short term advantageous conditions for Canadian trade with America, and more a matter of “the routine work of foreign policy and maintenance of the international system,” with a view to the long term. The security and prosperity of Canada is inextricably interwoven with that of America. But Canada cannot prosper for long if America beggars its other neighbors.

Gideon Strauss is a Senior Fellow of the Center for Public Justice and Associate Professor in Worldview Studies at the Institute for Christian Studies.

Photo Credit: Canadian Pacific Train passing through Yoho National Park in British Columbia, Canada. By Alessandro, via Flickr.

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