There’s a reason why our prime minister suddenly sounds emboldened about the North American Free Trade Agreement (NAFTA). And it has little to do with whatever progress was made at the bargaining table in the recently concluded round of NAFTA negotiations in Montreal.
“I don’t think the [U.S.] president is going to be cancelling it,” a very cocky prime minister said in a CBC Radio interview days after the Montreal round ended.
Also emboldened was Chrystia Freeland, Trudeau’s minister of foreign affairs, as she closed off the round with U.S. Trade Representative Robert Lighthizer. If the U.S. didn’t like Canada hauling it to the World Trade Organization (WTO), then lay off our softwood lumber, she said.
The difference in attitude might be attributable to Lighthizer’s closing remarks.
Although Lighthizer made his usual complaint about negotiations not going fast enough, most of his remarks were aimed at Canada’s official complaint to the WTO about U.S. trade practices. And the usually arrogant trade representative sounded a bit worried. He should be.
Canada, in its December filing with the WTO, launched a wide-ranging trade dispute against the U.S., challenging Washington, D.C.’s serial use of anti-dumping and anti-subsidy duties – both U.S. trade remedies of choice.
In fact, Canada was giving notice it was making a case on behalf of the rest of the world. Canada’s complaint cited almost 200 examples of U.S. trade actions, almost all of them concerning other trading partners, such as China, India, Brazil and the European Union.
The 32-page complaint took aim at technical details of the U.S. trade rule book, ranging from the U.S. treatment of export controls to the use of retroactive duties and split decisions by the six- member U.S. International Trade Commission (ITC).
The ITC recently quashed 300% duties proposed by the U.S. Commerce Department against Bombardier Inc.’s C-Series passenger jet. The ITC ruling is a major setback for the Trump administration’s protectionist agenda.
Aside from inviting other trading partners to join in the fun, the purpose of Canada’s WTO complaint is to threaten the Americans’ use of anti-dumping and anti-subsidy duties. At least, this is what you could infer from Lighthizer’s remarks.
Calling the complaint a “massive attack” on U.S. trade remedies, he said that if the WTO allowed Canada’s claim, Canada’s exports would suffer. Goods from China would flood into the U.S. and hurt Canada’s ability to export to the U.S., according to Lighthizer’s “You’ll get hurt, too” argument.
Is this a sign the U.S. is more concerned with the WTO complaint than with remaking NAFTA? Possibly. Or a signal the Americans are willing to ease up on their NAFTA demands if Canada backs off on the WTO?
Certainly, the WTO action is a signal from Canada that it’s willing to escalate the trade war with the U.S. to another front. And, yes, there is a trade war between the two countries going on now.
There have been 11 U.S. complaints against imports from Canada, from aircraft to welding pipe, since 2015, vs just two in the previous decade.
On the same day the Montreal NAFTA round ended, remarks in Washington, D.C., by Brian Mulroney that championed NAFTA were well received by U.S. senators – another sign the Trump administration will have a tough time getting needed congressional approval to exit NAFTA.
Lack of congressional support, Canada’s WTO retaliation and the ITC’s rejection of trade actions against Bombardier are signs that U.S. President Donald Trump’s “America First” campaign is not going as the White House expected.
Trump, in his recent State of the Union address, used the usual boilerplate language about the U.S. expecting fair trade deals, but made no mention of NAFTA. Hence, Canada’s sudden boldness.
“The era of economic surrender is totally over,” Trudeau said in his CBC interview. “From now on, we expect trading relationships to be fair and, very important, reciprocal.”
In the event Trump does give notice of leaving NAFTA, Trudeau’s cockiness continues: “Not only do we have a Plan B, we have a Plan C and D and E and F.”
Any shift in the U.S.’s attention toward the WTO and away from NAFTA will be a sign that Canada’s new boldness is working.