We Survived Trump's Intimidation, But Let’s Not Call It A Win For Canada
Anyone trying to tell you the new trade deal with Mexico and the United States — the new USMCA — is a win for Canada is just wrong.
And it's not because Chrystia Freeland hurt Trump's feelings. Or Justin Trudeau just messed this up — or whatever other personal insults and empty attacks the Conservatives deploy as cover-up for the horrendous policies they promote.
And it's not because Trump is a master of the game who bamboozled our negotiators with his inconsistent statements, obscure comments and annoying tweets. Of all the nonsense that's been served up during the NAFTA talks, perhaps the worst is the implication that our negotiators are amateurs who get rattled by the Trump spectacle. It's just the media and official opposition that does that.
Canada made concessions because we need access to the 327-million person American market far more than they need access to our 36-million consumers. We made concessions because there's not much we make that they can't also create at about the same cost. Yes, we have comparative advantages in places, but not so great the American economy is desperate and dependent on them.
Without a doubt the Liberals will be back-patting and thankful to have these talks done. But there are some ugly truths. It is true Canada got no improvements and took concessions on their bargaining objectives — on pharma, supply management, Investor-State Dispute System (ISDS) and B.C. wine placement. It probably also true our negotiators came out of this about as well as could be hoped. Those truths needn't be contradictory.
When a mugger pulls a knife, making concessions about your cellphone, wallet and car keys is about the best you can hope for. But don't call it a win.
"The biggest worry shouldn't be what priority our political leaders gave to negotiators — it's that Trump's strategy worked."
Our concessions aren't insignificant. When, in the TPP talks, the Harper Conservatives gave the US and others the same concession on supply management that Trudeau has now (it seems) given, the Canadian government offered $4.3 billion in compensation to farmers (that concession went away when Trump was elected and withdrew the U.S. from TPP). The impact on drug prices from the extension of copyright monopoly will have an impact on drug benefit plans, public and private. These are not small matters.
It did seem questionable that negotiators were given direction to protect the ISDS. When you're negotiating with the mugger and say you won't give up your ring, it'd better be your wedding ring — a mugger with an ounce of humanity might understand that and settle for your watch.
But ISDS is the chapter that allows investors to sue governments, and it's been heavily used against Canada. Many have raised the concern that ISDS might allow Big Pharma to sue Canada for setting up a national public drug plan for all. Trump wanted to delete the ISDS section. The new agreement will eliminate ISDS, but over time. There can be concerns about what was spent elsewhere to try to maintain ISDS.
But the biggest worry shouldn't be what priority our political leaders gave to negotiators — it's that Trump's strategy worked. His bargaining team achieved some of their improvement objectives. Ours never even had any. Trump gave us a one-two punch with steel and aluminum and Canada was playing defence the whole time.
And that means Canadians need a hard, hard think about how we make sure the U.S. won't be back — under a Democrat or Republican — to take another bite out of us after they've digested this one. We've seen this on softwood lumber for years. It is a very unpleasant thought. But this is where we are at.
There is always talk about the need for trade diversification — no one will disagree. But as our failed talks with India and China prove, talk is easy. Any politician who says they have the winning formula for opening Indian or Chinese markets probably has other swampland to sell.
The neo-liberal idea of free trade agreements has now been turned on its head. Whether it's the politicians and businesses in America, India, China or Russia, there is a new calculus.
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Improving international trading rules based on the World Trade Organization has become secondary to the negotiation of trade zones. And now, the idea that trade zones should be based on maximized comparative advantage and reduced tariffs has been overthrown. Now the overt idea is the dominant trading zone member sets the rules for self-benefit. Don't like it? — there's the WTO door, see how that works out.
Where Canada fits in this circumstance can be summed up in one word: unhappily.
Those who want to skip through today and call it a win aren't doing a service to Canadians. Nor are any who engage in the sophomoric personalized commentary that substitutes for actual analysis. There can be legitimate differences of opinion about what should have been our negotiating objectives — ISDS, for one. But given the bargaining objectives the negotiators had, this probably was best possible deal. But it wasn't a win. Time for some honest reflection.
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