Canada's trade insiders say they are preparing for the worst when it comes to the fate of NAFTA, with one top adviser saying it’s only a matter of time before U.S. President Donald Trump pulls out of the North American Free Trade Agreement.
“The consensus felt like it’s not if, it’s when he’s going to pull the plug,” Rona Ambrose, the former Conservative interim leader and member of Canada’s NAFTA advisory council, told CTV's Question Period.
Ambrose’s comments come as the latest round of talks between Canada, Mexico and the United States get underway in Montreal on Sunday. The talks are set to wrap up on Jan. 29.
“I really believe Canada is doing everything that we can do,” Ambrose added. “I think we just need to ramp up all those measures even more in the next week or so,” she said.
Foreign Affairs Minister Chrystia Freeland, who is Canada’s lead on the file, told Question Period host Evan Solomon that Canada is “absolutely” preparing for a Plan B.
“When it comes to what the U.S. may or may not do, our approach is to hope for the best and prepare for the worst,” she said.
“And it is no secret -- in fact, it is absolutely a matter of public record, that the U.S., including the president, has said quite clearly that they have thought about invoking Article 2205, which would set the clock ticking on the six-month withdrawal notice. And I think that it is only sensible and prudent for us to take the president at his word. So we are absolutely prepared for every eventuality.”
But Freeland remains hopeful NAFTA will survive.
“We also approach these negotiations ... with a spirit of good will and positive intent and we’re going to be working hard to get to a positive result,” she said.
Canada’s backup plan?
Last week, Canada’s International Trade Minister Francois-Philippe Champagne said that there was no clear “plan B” if the trilateral deal gets torn up.
Frank McKenna, the former premier of New Brunswick and a top Liberal, now says that he sees an “embryonic plan B taking place now.”
McKenna said that includes diversifying markets through continued pursuit of an 11-country Trans-Pacific Partnership, a trade mission to India, “overtures with China,” as well as “something like accelerated depreciation for business investment.”
“But it’s really difficult to put a concrete plan B out there when your primary mission is to achieve plan A,” McKenna said.
Progressive chapter problem?
Freeland is denying reports that Canada’s insistence on so-called “progressive” chapters -- on labour standards, gender equality, the environment and Indigenous rights -- has been a sticking point for the U.S.
“I’m really proud that, in Montreal, for the first time ... we’re going to have a table devoted to discussing the Indigenous chapter,” Freeland said.
“Having said that, these progressive elements have in no way been the sticking point in these negotiations,” she added.
Freeland said “the key sticking points” are “unconventional U.S. proposals: things like Chapter 19, the sunset clause, rules of origin.”
Chapter 19 is the agreement’s dispute resolution mechanism. Rules of origin refer to provisions on how much foreign content, such as autoparts, can be included in a product without tariffs.
Assembly of First Nations National Chief Perry Bellegarde told Question Period that NAFTA must to be updated to reflect the changing legal landscape around First Nations rights, and it would benefit the U.S. to recognize that.
“They’re going to lose out if NAFTA is dead as well,” he said. “This is good for the economy on both sides.”
Meanwhile Jean Charest, former premier of Quebec, said that he understands what the government is trying to do with the progressive chapters, but called for a “rethink.”
“The point they’re trying to make is that trade is about prosperity and prosperity isn’t just about numbers,” he said. “It’s about social justice. It’s about the environment. It’s about gender equality. It’s about a broader set of issues.”
“Is this the best way to do it?” he added. “By putting them or advancing them on the table of these trade agreements? I’m not sure.”
Ambrose, meanwhile, said she doesn’t believe the progressive chapters are actually a sticking point, but rather something the Americans will point to in order to paint Canada as uncooperative.
“They’re positioning themselves so they’ll be able to pull out,” Ambrose said. “That’s where I think this is going.”
