Canadian Manufacturing

Canada, Mexico discussed post-Trump NAFTA playbook

by Alexander Panetta, The Canadian Press   

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Sources say Trump will signal his intent to change NAFTA on his first day in office, while Canada has been hoping for years to modernize several of the trade pact's terms

WASHINGTON—Canada and Mexico reached out to each other while preparing similar public messages last week about being willing to engage U.S. president-elect Donald Trump in discussing amendments to the North American Free Trade Agreement (NAFTA).

Sources say the two governments spoke by phone before Canada made its sudden announcement about NAFTA the day after the U.S. election—comments later followed by a similar statement from Mexico.

Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto also spoke later in the week, after representatives of their respective governments kept each other abreast of their intentions.

“I had a nice conversation a number of days ago with President Pena Nieto,” Trudeau confirmed during a Nov. 16 news conference. “Our citizens expect us to work constructively together to advance our interests and that’s exactly what we’re going to do.”


The day after Trump’s election stunner, the Canadian government said it was ready to talk trade. U.S. ambassador David MacNaughton said every agreement can be improved, so Canada is ready to come to the table with ideas. He even suggested a possible change: adding softwood lumber to the agreement, so that the countries don’t continue re-litigating the issue every few years.

Softwood is on the list of things Trump might want adjusted in NAFTA, according to a purported transition memo obtained by CNN.

Other issues on the list include currency manipulation, country-of-origin labelling and environmental and safety standards, the memo reportedly says. It also says that on Day 1 of his presidency, according to CNN, Trump will inform Canada and Mexico of his intention to change NAFTA or have it cancelled.

The day after Canada’s announcement, Mexico’s foreign minister said her government was also ready to sit down and discuss NAFTA, its merits, and possible ways to modernize it, without renegotiating it entirely.

The snap announcement caught some off-guard. Interim Conservative leader Rona Ambrose suggested that with a self-styled killer negotiator as commander-in-chief, Canada had weakened its leverage by rushing to the table.

“Wow. That is some tough negotiating,” Ambrose said sarcastically Wednesday, speaking to the Tory caucus. She alluded to Trump’s reputation for taking a merciless, no-holds-barred approach to business deals.

“When it came to defending NAFTA, the most important trade agreement in Canada’s history, before even being asked, Prime Minister Trudeau offered to open up and renegotiate NAFTA.”

But Canadian officials—speaking on condition of anonymity because of the sensitive nature of the situation—said the move was carefully considered.

First, it removes some of the drama from an early conversation. One official pointed out that NAFTA has been adjusted multiple times over the years with little suspense, tension, or even any public attention.

Canada has been hoping for years to modernize NAFTA’s visa rules—considered out-of-date and cumbersome by companies that operate in both countries. NAFTA allows easy access to visas for a list of professions, but that list is more than two decades old and barely references jobs related to the digital economy.

“The idea that we would say, ‘No, we’re not going to talk’ is unrealistic,” one official said. “We’re always looking to improve agreements… (We’re always asking): ‘How do you make trade work for regular people?”’

He said Canada wanted to avoid an unnecessary first fight _ why antagonize, he said, the most important foreign partner without even sitting down to consider improvements that might benefit workers?

All three panellists at a recent Canada-U.S. event at Johns Hopkins University said it was wise to get out early.

”The right thing to do is exactly what the prime minister has done _ that is to initiate discussion, to engage, right at the beginning,” said Charles Doran, director of Canadian studies at the school.

”It’s very important for Canada to get started with that conversation early. I think that was very smart.”

Dan Restrepo, a former adviser to President Barack Obama, said it’s important for Canada to maintain productive ties with the next president, even if it doesn’t yet know what Trump wants.

”I think both governments have been wise in saying that they are open to (talking NAFTA),“ said Restrepo, the former principal adviser to Obama for Canada, Latin America and the Caribbean. ”I think there is value in sitting down and even seeing what that conversation looks like.”

He offered Canada three pieces of advice in dealing with Trump: “Engaging, engaging, engaging.”

Canada can exercise more international clout if it works constructively with Trump, added Christopher Sands of the university’s Center for Canadian Studies.

“Every negotiator knows the good-cop, bad-cop strategy,” he said. “I think there’s a lot of room for Canada to play that role _ carefully.”


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