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The NAFTA replacement isn’t perfect , but it’s good enough. Ottawa should pass it

Colin Robertson The Globe and Mail February 24, 2020


The United States-Mexico-Canada Agreement is not perfect. It is freer trade, not free trade, but Parliament needs to pass it and get on with making it work. Trade agreements are like riding a bicycle: Keep cycling and when you hit bumps make adjustments. But keep cycling.

Consider where we started. U.S. President Donald Trump damned it as the “worst trade deal ever.” For U.S. Secretary of Commerce Wilbur Ross, it was for Mexico and Canada to give and the United States to get.

The Trump administration thought it had us over a barrel because of Mexico and Canada’s dependence on the U.S. market. While we each buy about 18 per cent of U.S. exports, the U.S. takes 75 per cent of Canada’s exports (and it’s even higher for Mexico).

Despite these challenges, we did well. We kept dispute settlement, drowned investor-state and preserved our sacred cows (supply management and the cultural exemption). Labour and the environment are integral parts of the agreement, intellectual property is updated, and digital trade is recognized. The unjust steel and aluminum tariffs are gone. The auto pact has become managed trade, but as with softwood lumber, we will cope.

While Mr. Trump would never acknowledge it, the new deal drew much of what is old from the previous North American free-trade agreement and much of what is new from the Trans-Pacific Partnership, another of his bugbears.

Thanks to Speaker of the House Nancy Pelosi and congressional Democrats, a clause was removed from the agreement that would have extended protection (and costs) for biologic drug companies. This could lead to cheaper drug prices. Labour and environmental enforcement provisions are strengthened. The strong bipartisan congressional support for the deal may just exorcise the phobia around trade that dogged NAFTA. When surveyed, Americans generally endorse free trade over tariffs.

USMCA joins the transatlantic and transpacific agreements in giving us preferred access to those economies most committed to freer trade. These deals span the Harper and Trudeau governments. It’s a tribute to their leadership as well as those of our premiers and legislators, business and labour. Despite our current distemper, the trade deals prove that our leaders can make common cause on issues of national importance.

Trade generates two-thirds of Canada’s GDP. It makes us the 12th-largest export economy in the world. Now we need to consolidate our gains.

First, there is unfinished business when it comes to regulation and infrastructure.

Initiatives launched by the Harper and Obama governments around regulatory co-operation and Beyond the Border action plans are buried within our bureaucracies. Progress requires political oversight: legislative hearings to identify the roadblocks and keeping governments’ nose to the grindstone.

Getting our goods to market means improvements to our ports, pipelines and grids, rail and roads. This requires close collaboration between all levels of government. U.S. Democrats and the Trump administration have agreed to a US$2-trillion infrastructure plan (although there is no agreement on how to pay for it). Since there is no procurement provision in the new trade agreement, Canada needs to link into this initiative. To get best value for our citizens, premiers and governors need to work out the kind of reciprocity deal that the U.S. and Canada achieved in 2010.

Second, the all-Canada effort reminding Americans that our trade partnership is mutually beneficial must become a permanent campaign. American protectionism is older than the republic. It will continue no matter who is president.

While we can’t vote or make donations to campaigns, we can illustrate by district and by state the jobs created by Canadian trade and investment.

If we think we know everything about the U.S., we are wrong. How many serious centres for the study of U.S. issues do we have here in Canada? How many Canada research chairs focus on the United States and our trade? Not nearly enough.

Trade diversification is necessary for Canada, but when it comes to trade and security, it will always be the U.S. and then the rest. Canada’s influence in the world is measured to a large extent by our understanding of our southern neighbour.

By using our knowledge and relationships with Americans, we can leverage influence in Washington and state capitals. This also makes us a more desirable partner to the rest of the world. They expect and look to Canada for advice on how to handle our complicated, often challenging, neighbour.

Given the circumstances, USMCA is a good deal for Canada. Not perfect, but it secures access to our largest market. Parliament needs to move on its implementation and make the investments that will realize its potential.