Recently, Bennett Jones LLP and Global Public Affairs hosted a panel in Toronto that looked closely at the status of the NAFTA negotiations, potential outcomes and steps businesses can take to prepare. I was joined by Martin Moen, Canada’s Deputy Chief NAFTA Negotiator from Global Affairs Canada, and Jason Langrish, Senior Advisor, International Trade & Energy from Global Public Affairs. Tom Clark, Chairman, Public Affairs & Communications of Global Public Affairs—and Canadian media icon—moderated the event.
Key Takeaways
The panel's key takeaways were:
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NAFTA’s greatest benefits include tariff elimination, North American supply chain integration and the temporary entry provisions that allow business people to move more freely between the countries.
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The U.S. business community is finally engaged in selling the benefits of NAFTA as are Congressional Republicans, particularly in the Senate. As Americans understand what they have to lose from a U.S. withdrawal, and the Trump administration recognizes the political risks, the prospects for a negotiated agreement are improving…somewhat.
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Canada will not walk away from the negotiating table. (This despite what some people thought they heard our Prime Minister say last week; what he actually said was that Canada would walk away from NAFTA rather than accept a bad deal, not that Canada would abandon its efforts to get a good one.) If the Trump administration decides to pull the U.S. out of NAFTA, it will have to deal with the backlash from its farm, auto and other sectors that will suffer.
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The TPP-11 agreement gives Canada and Mexico additional leverage with the United States and will modernize the architecture for Canada-Mexico trade, with or without the NAFTA. Along with the Canada-EU CETA, it also is a positive trade diversification tool. However, the reality is that the United States will remain Canada’s largest trading partner by far for the foreseeable future.
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Canadian businesses need to engage in scenario risk planning. The considerations will be different for every company. The 'what-ifs' range from the status quo, to various NAFTA 2.0 outcomes, to no NAFTA or Canada-U.S. Free Trade Agreement and North American trade conducted under World Trade Organization rules.
