Newspaper article The Canadian Press

Trade Experts Agree Canada Has Plenty of Leverage in NAFTA Negotiations

Newspaper article The Canadian Press

Trade Experts Agree Canada Has Plenty of Leverage in NAFTA Negotiations

Article excerpt

Canada not at U.S. mercy in NAFTA talks

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OTTAWA - With NAFTA negotiations set to begin Wednesday, it's tempting to think of Canada as the proverbial 90-pound weakling about to get a faceful of sand kicked up by the body-building, muscle-flexing behemoth who lives next door.

The United States, after all, is a huge, self-sufficient market that doesn't really need free trade with Canada and Mexico to thrive economically.

Canada, by contrast, is a tiny market heavily dependent on trade, especially with the U.S., for its economic well-being.

Hence, conventional wisdom suggests, Canada needs the North American Free Trade Agreement more than the U.S. needs it. And that puts Canada at the U.S.'s mercy when it comes to the renegotiation.

Then again, maybe not.

Indeed, some trade experts say Canada has a lot more leverage going into the talks than anyone, including U.S. President Donald Trump, may think. And they're predicting more of a David and Goliath scenario, where the little guy with the sling shot could best the giant -- or at least walk away unscathed.

"Trump has this sort of old-fashioned theory of negotiations, which is that the big guy always wins. It's not the way it works," says Ted Alden, senior fellow at the U.S. Council on Foreign Relations.

As Canadian officials never tire of reminding Americans, Canada is the largest export market for two-thirds of U.S. states and is, by far, the country's biggest customer, buying more American goods and services than China, Britain and Japan combined.

"So there are a lot of powerful interests, from companies to governors to mayors, who are going to be annoyed, to say the least, if access to the Canadian market gets curtailed in a significant way," says Alden.

Theoretically, Mexico, which is the real target in Trump's cross-hairs, is even more vulnerable than Canada. It's the exodus of American manufacturing jobs south of the American border that prompted Trump in the first place to threaten to tear up what he's called the worst trade deal in U.S. history.

But Alden points out that the scale of American agricultural exports to Mexico is "enormous." Hence, there would be an angry backlash among members of Congress and legislators all across the country who would be "up in arms" if tariffs on American agricultural products were to revert to pre-NAFTA levels.

"So I think the negotiation is not as one-sided as the Trump administration hopes it will be," Alden concludes. "I think both Canada and Mexico actually have a fair bit of leverage."

Privately, Canadian officials are counting on the potential for a backlash to ultimately prevent Trump from doing anything rash, like unilaterally ripping up NAFTA. And that could give Canada the confidence to stand its ground at the bargaining table and assert, if necessary, that no deal is better than a bad deal. …

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