Canada should target 'Buy American' to counter Trump’s NAFTA goals: trade expert
Published Monday, July 17, 2017 10:13PM EDT
Last Updated Tuesday, July 18, 2017 11:18AM EDT
The Trump administration’s opening salvo in the long-awaited renegotiation of the North American Free Trade Agreement calls on Canada to drop its guard on a number of protected industries including telecom, financial services, and agriculture.
The proposals came on a day when the U.S. president promised to shield the U.S. manufacturing base from foreign influence, touted the superiority of American goods, and pledged to stop other countries from “draining our wealth,” in a speech to kick off “Made in America” week.
In its newly released 16-page list of goals ahead of the start of the trilateral trade talks, the U.S. administration said it wants to grow its exports and “reclaim American prosperity” through “the elimination of unfair subsidies, market-distorting practices by state-owned enterprises, and burdensome restrictions of intellectual property.”
These priorities should come as “zero surprise,” according to one international trade expert.
Ian Lee, a professor at Carleton University’s Sprott School of Business, told CTV News Channel that Trump is essentially saying his “Buy American” policy will stand while Canada and Mexico offer concessions to the U.S.
“In other words, we want you to open up . . . but by the way, we want to continue to protect,” he said.
Lee said he hopes the negotiations, which are set to begin as early as mid-August, will see both sides ratchet down their protectionist policies, rather than bargain over who gets to keep which industries isolated from the other.
It’s a move he believes will ultimately play out in Canada’s favour.
“I hope we have the courage to say, ‘We are going to open up Canada, but by the way, you Americans are going to have to get rid of that pernicious Buy American (policy),’” he said. “Then NAFTA will be win, win, win.”
The Trump administration has held Canada’s feet to the fire in recent months over key trade files, imposing steep duties on softwood lumber exports, railing against Canada’s supply managed dairy system, and threatening to impose a border adjustment tax.
All of this on top of the president’s sweeping proclamations about the importance of buying American to safeguard U.S. manufacturing jobs and drive economic growth in his country.
Lee is curious as to which bargaining chips U.S. negotiators will be willing to part with in order to see a deal get done. He expects the tone in the trilateral talks will be set by the Americans. If they concede something, he says, the Canadians will quickly follow suit.
“It really depends on what the Americans are willing to offer up to the Canadians and the Mexicans. Will they give up on “Buy American,” or really water it down? I think this prime minister has the leadership, and the vision, and the understanding to recognize he is going to have to give up some of the protections in Canada if we want the Americans to give up some their protections that are hurting us,” he said.
Lee has long advocated for the loosening of Canadian guards against U.S. businesses setting up shop in Canada. He remains confident that next iteration of NAFTA will ultimately benefit the Canadian economy, so long as it breaks down the current barriers between the two nations.
“I don’t see this as a depressing time. I see this as a huge opportunity facing Canada,” he said. “I think that we have leverage simply because they see us as a good neighbour. We saw it with NAFTA in 1993. I think we can pull off a good deal for us and the U.S. in these negotiations.”