Trade Discussion – Canada: “No Deal Better than Bad Deal”…


Foreign Minister Chrystia from Canada is in Washington DC today meeting with U.S. Trade Representative Robert Lighthizer.  There are conflicting reports as to the possibility of a trade deal being reached.  Canada is heavily relying on internal pressure from the U.S. Chamber of Commerce lobbying group to sway/leverage the negotiation in their favor.

From the Canadian negotiation position every syllable and syntax is viewed through the prism of politics.  From comments amid all the Canadian participants and interests, they view President Trump as the only adversarial U.S. entity in the bilateral discussion. As a consequence of this outlook, all Canadian leverage efforts are targeted toward political opposition of President Trump; with assistance from a U.S. congress that has been purchased by Wall Street lobbyists to align with Canada against U.S. interests.

Peel all the layers away and ultimately this is the political position from which Canada is negotiating.  All-in-All, the most likely outcome is NO DEAL.

In order for Canada to accept or join, via a NAFTA 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). Justin Trudeau calls these “cultural industries” and has refused any discussion on this matter.
  • 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.  This is another issue where Justin Trudeau has expressed an unwillingness to negotiate.
  • Accept the U.S-Mexico terms for arbitration and dispute resolution.

If Canada complied with the U.S-Mexico terms, they would likely be exempted from U.S. Steel and Aluminum tariffs, and would not face auto tariffs.  However, Canada views any steel, aluminum and auto tariffs as invalid and unlawful.

WASHINGTON/OTTAWA (Reuters) – Canadian Prime Minister Justin Trudeau said on Wednesday he wanted to see flexibility from the United States if the two sides are to reach a deal on renewing NAFTA, which Washington insists must be finished by the end of the month.

Ottawa is pushing back against increasing pressure by the administration of U.S. President Donald Trump and its allies to make the concessions they say are needed for the trilateral North American Free Trade Agreement.

“We’re interested in what could be a good deal for Canada but we’re going to need to see a certain amount of movement in order to get there and that’s certainly what we’re hoping for,” Trudeau told reporters in Ottawa.

[…] Trump has already wrapped up a side deal with Mexico and is threatening to exclude Canada if necessary. Canadian officials say they do not believe the U.S. Congress would agree to turn NAFTA into a bilateral treaty.

An influential Canadian private sector union leader, in Washington for consultations with Freeland’s team, on Wednesday played down the chances of an imminent agreement.

“Do I believe there will be a deal this week? I don’t think so,” Unifor boss Jerry Dias told reporters, saying the United States would need to move on some major files.

Trump and Trudeau spoke by telephone late on Tuesday and discussed NAFTA, the Canadian prime minister’s office said in a brief statement.

The Republican chairman of the U.S. House of Representatives Ways and Means Committee, Kevin Brady, told CNBC on Wednesday that “Canada needs to really step up here this week” to meet the Oct. 1 deadline set by Washington.

But U.S. Chamber of Commerce President Thomas Donohue said it would be extremely complicated, if not impossible, for the administration to pull off a Mexico-only agreement.

“If Canada doesn’t come into the deal there is no deal,” Donohue told a media breakfast in Washington.  The Chamber, the most influential U.S. business lobby, wants NAFTA to be renegotiated as a tri-lateral agreement.  (read more)

WATCH:

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Again, the calendar to the mid-term elections looms over the perspective of Canada.  They, along with various trade affiliates, multinational corporate interests, Wall Street and political allies, are hoping for Republican losses in congress so their congressional democrat allies will finally stop Trump.

There are trillions at stake…

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