For Canada it’s all about politics and face-saving. How to tell? Well, after Canadian Foreign Minister Chrystia Freeland went out of her way last night to tell the media she would not conduct negotiations in the press, Freeland runs back to the press to discuss the ongoing negotiations. She is signaling to a domestic audience…. nothing more.
Domestically Justin and Chrystia from Canada have seen complete collapse in support from the Canadian electorate. Canadians have little confidence that Chrystia and Justin are capable of negotiating a deal that will benefit their economy. Trudeau and Freeland rolled the political dice; played political games; and crapped out.
Mexico (Seade) and the U.S. (Lighthizer) have structured a strong trade agreement that benefits both countries and creates an actual manufacturing and commerce bloc. Canada has no option except acquiescence, if they want to avoid Lighthizer sending a 2205 notification to dissolve the Canadians from the U.S-Mexico deal.
In January 2018, when still attempting the political use of the negotiations, Freeland burned Lighthizer. The U.S. Trade Rep has not forgotten. Canada’s ability to enter the deal is now dependent on Lighthizer allowing them a way to save face. Robert Lighthizer, like Trump, really doesn’t care…. The U.S. is in an overwhelming winning position either say…. Hence, Freeland’s continual appearances in the media, she’s shook.
I am reminded how badly Chrystia Freeland screwed up the negotiations in January of 2018 when she demanded that Canada be allowed to arbitrarily set their own trade import standards with China… This was right after idiot Justin signed Canada on to the TPP trade agreement.
Any canucklehead could see that signing on to TPP and simultaneously demanding to set your own standards for manufacturing origination was a poison pill. It would make the NAFTA fatal flaw infinitely worse for the U.S….. any idiot could see that problem. That was the moment when Lighthizer gave up on Canada.
In order for Canada to accept or join, via 2202 modification, they would need to agree to the U.S-Mexico modification terms. For Canada they would have to:
- open their telecommunications and banking sector (eliminate non tariff barriers).
- eliminate soft-wood (lumber) and aeronautics subsidies.
- begin a process of lowering their assembly use of Chinese/Asian goods.
- accept the rules of origin for North American manufacturing.
- eliminate protectionist tariffs on dairy and farm products.
- accept the U.S-Mexico terms for arbitration and dispute resolution.
Trump and Lighthizer are holding all the cards. They don’t care if Canada doesn’t join; they would likely prefer to go into a one-on-one trade construct where the U.S. will apply auto tariffs on Canadian made vehicles.
The financial media are pushing optimism because Wall Street wants to protect prior Canadian investment, and the professionals know how badly Justin/Chrystia have been outmatched.
POTUS Trump is heading to Indiana today for a MAGA rally. Don’t anticipate any breaking information (of substance) until tomorrow morning when Lighthizer can debrief with President Trump.