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Canada and the NAFTA negotiations, irony among stakeholders

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Cars. Photo: Dennis Gruending

Those old enough to recall it will remember that the 1988 federal election in Canada turned into an epic battle over a proposed Free Trade Agreement (FTA) with the United States. The ruling Conservatives and corporate Canada campaigned for it, saying that it would provide untrammeled access to the vast American market and provide a new era of jobs and prosperity for Canadians. Without the deal, they said, this country would become a stagnant economic backwater.

Canada as 51st state

The Liberal and New Democratic parties, as well as labour and most civil society groups, were opposed. They said that the FTA was less about trade and tariffs than it was about giving new powers to corporations while tying the hands of governments to act in the best interests of their citizens. They warned that if we signed the agreement we risked becoming a 51st state and losing our sovereignty, not to mention our distinctive cultural industries and cherished social programs, such as Medicare.

FTA becomes NAFTA

A majority of Canadians voted for two parties who opposed the deal but they split the vote, so Brian Mulroney and his Conservatives won the election. By 1994, the FTA was superseded by the North American Free Trade Agreement (NAFTA), which was extended to include Mexico as well as the U.S. and Canada. By then, there was an aura of inevitability about trade liberalization and about globalization in general. We were led to believe this was the unfolding of some immutable economic law and that there really was no alternative.

Trump disses the deal

But that changed in 2016 when Donald Trump became a candidate for the U.S. presidency. He said that NAFTA was "the worst trade deal ever made" on behalf of the U.S., and that if elected, he would tear up the deal.

Trump's claim is that NAFTA has led to the hemorrhaging of good American jobs, to Mexico in particular where wages are lower. He promised to bring those jobs back to the U.S. It is less clear what Trump's quarrel is with Canada, a country that has also lost tens of thousands of industrial jobs to Mexico and other law wage destinations in recent decades. Nor did he acknowledge that much of the job loss has been due to automation driven by new technologies.

Acrimonious talks

In any event, Trump won the election and has indeed demanded that NAFTA be opened for renegotiation. Trade officials from the three countries are in midst of tough and acrimonious talks. The Americans are demanding, for example, that automobiles produced in any of the three countries contain at least 50 per cent American content in materials such as steel or aluminum, if vehicles are to qualify for duty free trade in the U.S. The industry has become highly integrated under NAFTA, and company as well as union officials say meeting Trump's demands would cause a major disruption.

Delicious irony

The NAFTA renegotiations have revealed a rather delicious irony among Canadians. Business leaders and financial journalists who touted the deal so ardently in years past are now saying that Canada could get by quite nicely without it. David Emerson, a former finance minister and corporate leader, says the demise of NAFTA could even have a "silver lining" because it would prod Canada to diversify its trading relationships toward countries such as China and India.

For their part, labour and civil society activists who once opposed the deal vociferously are now cheering for an updated NAFTA which would include a better deal for workers, women, Indigenous peoples and the environment. Jerry Dias, the president of Unifor, Canada's largest union, is an advisor to the Liberal government's negotiating team. "NAFTA is not a fair deal," Dias says, and he wants it to be improved.

The NAFTA deal never delivered on the inflated promises of its promoters, but despite the dire warnings of its opponents the sky did not fall either. Canada still has medicare and the CBC.

Today, however, Canadians would be better off to walk away from NAFTA than to be bullied into making bad trade and investment concessions.

A somewhat shorter version of this post appeared with the United Church Observer on November 23, 2017. 

Image: Dennis Gruending

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