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article imageOp-Ed: Canadian authorities think that Trump may pull the plug on NAFTA

By Ken Hanly     Jan 11, 2018 in Politics
Ottawa - Chrystia Freeland, Canada's Foreign Minister told reporters today that the United States must be taken seriously when it warns that it might walk away from NAFTA.
Two Canadian government sources said on Wednesday that Canada is convinced Trump will soon announce that the U.S. intends to pull out of NAFTA. The comments may have resulted in lower values for Canadian and Mexican currencies as well as driving down stock prices.
Canadian complaints to WTO may be the last straw for Trump
Trump has often described NAFTA as a terrible deal for the U.S. even though it gives favorable access to Canada's natural resources and to cheap Mexican labor. However, Trump's populist America First policy would try to reformulate the agreement to meet what he thinks are the interests of the U.S. rather than of U.S.-based global corporations. Many of these policies are not acceptable to Mexico or Canada.
As a recent, Digital Journal article reports, Canada is filing a complaint with the World Trade Organization(WTO) against the U.S. claiming its imposition of duties and other penalties against exporting nations constitute violations of international trade law.
U.S. trade representative Robert Lighthizer said: “Canada’s claims are unfounded and could only lower U.S. confidence that Canada is committed to mutually beneficial trade.”
This move may make the next round of negotiations on NAFTA even more difficult assuming Trump does not announce he is pulling out before they happen.
Factfile on NAFTA. US President Donald Trump has denounced NAFTA as a "disaster" and the w...
Factfile on NAFTA. US President Donald Trump has denounced NAFTA as a "disaster" and the worst agreement ever signed by the United States, blaming it for a $64 billion trade gap with Mexico and loss of countless jobs
Upcoming negotiations on NAFTA in Montreal
The sixth round of talks are to run from Jan. 23-28 in Montreal and there is only one more round to take place after that.
Freeland claims that Canada had come up with some creative ideas to deal with some of the challenges facing negotiators but did not say what these were. Freeland also said it was “absolutely possible to have a positive outcome” at the Montreal talks if all three sides showed good will. Translated that means if they all agree to meet the main demands of global corporations.
Even if Trump were to give the required six months notice to withdraw from NAFTA he is not required to act on the notice. He could very well face strong opposition in the US Congress where both Republicans and Democrats will be under pressure from U.S.-based global corporations who want a trade deal in their interests.
An announcement to withdraw could be both a negotiating tactic and a sop to Trump's populist base that could help boost his slumping popularity ratings.
The NAFTA proportionality clause
Reports about the negotiations in the press rarely mention this provision and the government has not shown that it has the least intention of changing it. However, it is unique among trade deals in that it prevents the Canadian government from considering the needs of Canadians before those of the other two partners. We cannot put the energy needs of Canadians to access our energy resources before those of the US or Mexico. In practice, this means mostly the U.S.
Proportional sharing requires NAFTA members to make available the current share of energy exports to other member countries even when facing energy shortages at home.
Richard Heinberg, a California energy expert said that proportionality is unique in all of the world's trade treaties. Heinberg said: "Canada has every reason to repudiate the proportionality clause, and to do so unilaterally and immediately."
This is just one of the reasons why Canada should be walking away from the talks. However the Liberal government represents the interests of global corporations at the talks and is not about to abandon them if it sees any way for a successful completion of negotiations.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
More about Canada US relations, international trade laws, Nafta
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