The dog days of summer and trade negotiations aren't usually found in the same sentence. The NAFTA negotiations start today in Washington.
Canadian Prime Minister Justin Trudeau is bringing in the originator of the U.S.-Canada Free Trade Agreement and NAFTA from the Canadian side in former Prime Minister Brian Mulroney. Trudeau is also bringing in recent interim Conservative leader Rona Ambrose.
Trudeau should also bring in some NDP support as well since NDP supporters are more likely to be on the bad end of free trade in North America.
Canada is a lot more aware of the potential concerns of NAFTA than the U.S. team. For all the cries about softwood lumber and dairy, neither fell under NAFTA.
This isn't trying to discount Commerce Secretary Wilbur Ross and U.S. trade representative Robert Lighthizer. They are relatively new to the game and don't understand Canada's background. The Canadian coalition knows more about the United States than the U.S. delegation knows about Canada.
Donald Trump thinks his reputation is about making amazing business deals. The more likely Trump is to get involved, the better off Canada will be.
Canada isn't going to give up on Chapter 19, the provision to set arbitration. The U.S. position is that the country should be able to do what it wants without accountability. Canada will stay steady on Chapter 19.
Foreign Affairs Minister Chrystia Freeland announced Canada's list on Monday: Chapter 19 is on the list as well as new standards on labour, environment, gender rights, and Indigenous rights. Canada wants freer movement of workers across the border (more on that later); to go after the Buy American rules (U.S. wants to boost those rules); and to protect cultural industries (publishing, broadcasting); and Canada's dairy and poultry supply-management system.
Canada also wants reform to Chapter 11, where companies sue governments. Freeland said she wants reforms so that "governments have an unassailable right to regulate in the public interest."
The U.S. is also looking to make sure countries don't manipulate their exchange rate to gain an advantage on trade. What's funny about that is Canada does benefit when its dollar is weak. Since January 20, the U.S. dollar has grown much weaker, which is why the Canadian dollar has been gaining strength on the U.S. dollar.
If NAFTA does get significantly torn apart, Canada and Mexico should fight harder for food sovereignty. The United States has been dumping subsidized corn and corn products (think high-fructose corn syrup) on Canada and Mexico.
The Three Amigos concept, which would theoretically bring up trade issues, doesn't look to be a consideration while Trump is around. Discussion among the three leaders would have been helpful in real trade negotiation.
The first round of negotiation will run through August 20. There will be quite a few sessions so look for little to nothing to come out of this initial session.
Between the insecurity of the Donald Trump situation and Mexico's July 2018 presidential election, don't look for a whole lot to come out of these NAFTA negotiations.
Canada has options outside NAFTA. The country has a new trade agreement with the European Union. As much as there may be a Trans Pacific Partnership (TPP), Canada is involved in those negotiations as well.
NAFTA negotiations, as a general concept, could force Canada to open up some areas that would benefit Canadians. Canada's de minimis rate is alarmingly low. If a Canadian goes and shops in the United States, anything over $20 are subject to duties at the border. In Mexico, the mark is $300. In the United States, the line is set at $800.
We hear anecdotally that Canadians do cross with more quite often without paying duties. But the legal limit can be invoked at any point. The U.S. team wants that raised to $800.
The U.S. wants to sell more U.S. wine in Canada. For example, in British Columbia, you can only buy BC wine in BC liquor stores.
The Senate was in a rush to get away for what is left of the summer. NAFTA talks start on August 16. And so the United States finally has an ambassador to Canada.
Kelly Knight Craft was approved by an unanimous voice vote of the whole Senate and faced little in questioning about Canada at all in her confirmation hearing. She will be the first woman in the position of U.S. ambassador to Canada.
Sen. Bob Menendez (D-NJ) asked the ambassador nominees for Singapore and Italy whether they spoke the languages in those countries. Does Knight Craft parlez-vous Francaise? Je ne sais pas.
Knight Craft was asked about basketball twice, Russian election-meddling, and NATO. She was eventually asked about promoting U.S. exports to Canada, and mentioned softwood lumber, dairy, and poultry.
Knight Craft did mention the idea of promoting shared environment goals "from coast to coast to coast, as the Canadians say." Looks like she got some help for the script.
Those in the Senate should be aware that Knight Craft will serve as ambassador, not just trade representative on NAFTA. Nothing on border security, marijuana legislation, or the auto industry.
How much does Knight Craft know about Canada? And how much will she want to learn?
We've ranted a bit about the lack of knowledge of U.S. ambassadors to Canada in the last 16 years. David Jacobson and Bruce Heyman did seem more curious about Canada once they were north of the 49th parallel. Late starts and a large learning curve about Canada don't help the relationship. If Knight Craft is mostly there to pound home Donald Trump talking points on NAFTA changes, this will make the Jacobson and Heyman eras far more productive by comparison.
The standard for Knight Craft will be Paul Cellucci and David Wilkins from 2001-2009, a low bar indeed.
We long for the era of Gordon Giffin and his knowledge of Canada. We will be hungry for that for many years to come.
We appreciate that Canada has worker flow on its NAFTA 2.0 list. Canadians who want to work in the United States have a difficult time but still a bit easier than an American to work in Canada. When the U.S.-Canada Free Trade Agreement and NAFTA were created, the European Union did not exist as a shining beacon of what can happen when talent flows across borders. The United States should be in favor of this in part for being one of 2 countries that require citizens to file tax returns regardless of where people live or make their money.
We did ask this question of the soon-to-be-leaving Governor General David Johnston. He was very much in favor of this idea.
If progress is made of this front, we would be a lot happier with NAFTA 2.0.
photo credit: Justin Tang/Canadian Press