NAFTA

Origins, purpose, and impact of Trudeau - Trump meeting

March 2, 2017

Politics make strange bedfellows is a saying that has been around a long time and no more was this evident than the recent meeting with Trudeau and Trump in Washington. You could not have two more diametrically opposite ideologues meeting to discuss the future of Canada-US relations.

You have to hand it to our Prime Minister Justin Trudeau and his dealings with Donald Trump. He wowed the new President with flattery and style much like he did the Canadian voter in the last federal election in his first ever meeting. Love him or hate Trudeau appears to have scored a major victory for Canada in his first meeting with Trump with regards to cross border trade.

Trudeau adeptly avoided contentious issues like immigration and climate change and focused on business.
Donald Trump’s rhetoric that he is going to rip up NAFTA have been holding back stock prices of Canadian energy companies and exporters like Magna (auto parts) since the election and while there is no certainty that this will stick it appears a major hurdle has been handled with adept diplomacy.
NAFTA was negotiated by the Mulroney government in the early 1990’s and ratified on January 1, 1994 by the Chretien government.

The objective of NAFTA was to eliminate barriers to trade and investment between the U.S., Canada and Mexico. Many economic analyses indicate that the agreement has delivered a small net positive for the United States, a large net positive for Mexico and had an insignificant impact on Canada.
I guess what they mean when they say it has had an insignificant impact on Canada they must be referring to the fact that the good slightly outweighs the bad. The good is open borders to the US and even better with a cheap Loonie, and the cheaper the better as Bank of Canada Governor Poloz mentioned a month ago. The bad is the loss of major industrial jobs such as the auto sector to Mexico due to lower wages.

Looking forward, Canada will be working to avoid the imposition of a 20% border tax, a measure that if passed would inflict immense damage to the export trade of Canada.

This is where substance over style will need to be prevalent and we in Canada need to hope that the Canadian negotiating team stick to business and not disrupt the goodwill that has been established for the sake of our economy.