Tuesday, November 15, 2016

Obeisance to Prickly Power

"Canada is now in a weaker position and all this has done is create more uncertainty. Why is the prime minister jumping the gun to open up NAFTA [North American Free Trade Agreement] with the Americans?"
Rona Ambrose, interim Conservative [Parliamentary opposition] leader

"Naive would be a polite term. There is no reason for us to be leading with our chin on this. We are not the target and so should keep our powder dry until at least we know more precisely what is planned by an administration that has not yet taken office."
"We should do our homework quietly, talk to potential allies quietly, discuss privately with the new team but not panic."
"In a rush to seem relevant, we risk becoming a dog in someone else's fight."
Derek Burney, former PM Mulroney's chief of staff, Canada-U.S. Free Trade Agreement negotiator

Chris Wattie/Reuters

There are hundreds of thousands of Americans who have employment thanks to the implementation of the North American Free Trade Agreement that links the three countries on the continent in trade and production. So well linked in fact, that it is sometimes not possible to delink the integration of production, shared between the trade partners. The trade pact has had the effect of increasing business between all three countries, Mexico, Canada and the United States.

Granted, the U.S. has lost manufacturing jobs and they will never return. Some have gone to Mexico as manufacturers reach out to cheaper manufacturing opportunities thanks mostly to lower wages in Mexico. But far more manufacturing jobs have been lost to China in the United States as elsewhere throughout the industrialized world, where cheaper-to-produce products are demanded by populations in Europe and North America, giving China the upper hand in lower production costs and the allure of international trade.

In the wake of the surprise election results that transformed the expectations of the world into one of incredulous acceptance on November 8 when Donald Trump was the successful candidate in the American presidential election campaign, the man's various, often surprising announcements of intentions to be carried out from the Oval Office are disturbing nations across the globe in anticipation of changes they cannot yet quite fathom, but which are hovering on the near horizon.

For Canada, as for Mexico, one of the foremost disturbing campaign pledges was the renegotiation of NAFTA, which Mr. Trump believes does not sufficiently advantage the United States. That the man knows little of the trade agreement and its results is beside the point. What is the point is that through executive order alone he will have the capability of voiding the agreement as it presently stands, to demand a renegotiation process that will satisfy his insistence that the U.S. be awarded the lion's share of any agreement.

In particular he seems to nurse an especial grievance against Mexico. Not only on the trade and production side, but most certainly on the immigration side; which is to say specifically, the presence of millions of illegal immigrants from Mexico living and working in the United States. He has claimed it to be his intention to effect a mass deportation, classifying Mexicans as 'thieves' and 'rapists', in his inimitable wretched language of massive offensiveness.

Canada's Liberal prime minister, comfortable with the presidency of Barack Obama, despite that this president went out of his way to single-handedly stop a Canadian oil pipeline meant to ship Canadian oil from Alberta to the American west coast refineries despite that the State Department itself had given the enterprise more than once a clearance to proceed, is now faced with the prospect of a new American president whose position is far more adversarial, or so Prime Minister Justin Trudeau anticipates.

He has taken the abjectly craven avenue of prostrating himself and the country's interests before the contemptuous diplomacy of the president-elect, to offer to take part humbly in an enterprise that does not yet present itself as a reality-in-waiting. Canada and the United States last year did a trade exchange that slightly benefited Canada more than the U.S. to the total value of $760 billion-worth of goods. Exports to Canada from the U.S., on the other hand, since the implementation of NAFTA, have doubled.

That cannot be too hard for a new American administration to accept. There is, of course, the fact that Canada is far more trade-dependent than the United States with its huge population base and for which trade is an accessory to its GDP, not the issue of primary importance that it is for Canada. But the U.S. needn't fret about the situation, they have a trade partner who is more than willing to abase himself as a preliminary to undertaking a re-negotiation of a deal that Congress always assured would benefit America more than it would Canada.
"[Re-opening the deal] would be a disaster."
"In the 23 years since the creation of NAFTA there has been a remarkable process of rational economic integration among member countries, allowing them to benefit from their relative comparative advantages and resource endowments."
"A sudden breakup of such symbiotic relationship would inflict pain on all countries involved."
Jorge Mariscal,  analyst, investment giant UBS Wealth Management

Donald Trump, Bill and Hillary Clinton and Melania Trump at the Trumps’ wedding reception, in January 2005. Credit Maring Photography/Getty Image

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