NAFTA was designed to help Mexico, but now it’s hurting Canada, argues journalist
Canada should recognize Mexico as a “toxic” trading partner, and pull out of NAFTA in favour of a bilateral trade agreement with the U.S., says Diane Francis, editor at large with the National Post.
“Canada should look after Canada,” Francis told The Current’s Anna Maria Tremonti. “We have nothing to be sorry about.”
The U.S. announced Thursday that Canada, Mexico and the E.U. would be subject to tariffs of 25 per cent on imported steel and 10 per cent on aluminum. Ottawa responded with a promise of dollar-for-dollar tariffs on a variety of goods.
Industry insiders said the U.S. tariffs are intended as leverage over NAFTA negotiations, which stalled last month. In a tweet earlier today, U.S. President Donald Trump condemned Canadian “trade barriers.”
Farmers have not been doing well for 15 years. Mexico, Canada, China and others have treated them unfairly. By the time I finish trade talks, that will change. Big trade barriers against U.S. farmers, and other businesses, will finally be broken. Massive trade deficits no longer!
Francis told Tremonti that signing the trade deal with Mexico in 1994 “was a bootstrapping exercise to help the neighbour to the south get better living standards, higher wages and get their act together.”
But more than two decades later, Francis said that Mexico is worse off now than it was back then.
Those low wages are bad for Mexican workers, Francis said, but low costs also draw investors south, hurting Canada’s industrial base.
By contrast, Francis points to the strong, “harmonious” trading relationship between Canada and the U.S.
“Bilaterally, we have so few irritants between each other,” she said.
She argued that adding Mexico to the mix and trying to “cling to a trilateral agreement” isn’t in Canada’s best interest.
Mexico is a ‘hidden success story’
Turning away from Mexico would be a strategic blunder, according to Colin Robertson, a former Canadian diplomat who helped to negotiate the Canada-U.S. Free Trade Agreement in the late ’80s, and then later NAFTA.
“[It] would put us at a disadvantage with both the United States and any effort we wanted to have to expand trading ties, especially within the Americas,” he told Tremonti.
“I think there’d be a certain temptation on the part of Latinos: If we were to throw Mexico under the bus, then they would think, ‘How reliable is this further gringo to the north?'”
Mexico has been a “hidden success story” of NAFTA, he said, with improvements in the democratic process and a growing middle class.
“When we went into the North American Free Trade Agreement it was about number 13 or 14 in the list of our trading partners,” said Robertson, who is now vice-president and fellow at the Canadian Global Affairs Institute.
“It’s now our third largest trading partner, we’ve got big investments in mining and banking and manufacturing.”
Robertson pointed to the country-of-origin labelling dispute over meat products in the late 2000s as an example of Canada and Mexico working together to win a dispute with the U.S.
“[Donald Trump’s book] The Art of the Deal is all about divide and conquer,” Robertson said, “and it would make no sense for us to separate from Mexico when together we have a much better chance of getting a good agreement.”
The elephant and the mouse
Seeing Mexico as an ally against the U.S. is a mistake, Francis argued, because Mexico and Canada represent only 7 per cent of the three countries’ combined GDP.
Comparing the U.S. and Canadian economies is like comparing an elephant and a mouse, she added — referencing Pierre Trudeau’s famous analogy from 1969.
“Now we’re aligned with another mouse, who’s toxic, and is actually kind of toxic to us.”
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Ending the deal and pursuing separate agreements is the solution, she believes.
“I really think that we need to reorient ourselves, and get in the same space to a certain extent, as the Americans are, vis-a-vis Mexico,” she said.
Listen to the full conversation near the top of this page.
This segment was produced by The Current’s Idella Sturino and Pacinthe Mattar.