Free Trade at 30: Renewing NAFTA at 25

From the Editor / L. Ian MacDonald

Welcome to our special issue marking 30 years since the negotiation of the Canada-U.S. Free Trade Agreement, and 25 years since a trilateral deal was struck to include Mexico, producing the NAFTA.

We begin with a Q&A with Brian Mulroney, the architect of the Canada-U.S. FTA in 1987 and NAFTA in 1992. We met at the former prime minister’s Montreal law office as the NAFTA talks were underway in August. Mulroney has been advising Prime Minister Justin Trudeau, Foreign Affairs Minister Chrystia Freeland and senior Canadian officials on NAFTA, and he’s been impressed by their focus and management of the file, particularly the relationship with mercurial U.S. President Donald Trump.

In a Verbatim, we offer Prime Minister Trudeau’s speech to the U.S. National Governors Association in mid-July, in which he reminded them that Canada is the largest customer of two-thirds of American states, and that “Canada buys more from the U.S. than China, Japan and the UK combined.”

Pollster Frank Graves provides insights into the generally positive state of public opinion and mood of Canadians about NAFTA and free trade going into the talks. And the new Conservative Leader, Andrew Scheer, offers the Official Opposition’s perspective on the trade negotiations.

President Trump has made reducing America’s trade deficit his number one priority in the NAFTA talks. BMO Capital Markets deputy chief economist Michael Gregory crunches the numbers of U.S. trade statistics and concludes that Trump’s issue isn’t so much with Mexico, despite a $64 billion merchandise trade deficit in 2016, but with China, with whom the U.S. has deficit of nearly $350 billion.

In a letter from Washington, former Canadian diplomat Paul Frazer wonders about the potential impact of Trump tweeting on the talks. “Presidential tweets,” he notes, “can put every aspect of the NAFTA negotiation to the test of public scrutiny.” Carleton University’s Meredith Lilly looks at the politics and timelines for getting a new deal done, notably the Mexican elections next July, and the U.S. mid-terms next November. Ensight Canada’s John Delacourt, former director of communications for the Liberal Research Bureau, looks at how Team Canada has prepared for the talks.

Veteran foreign affairs hand Jeremy Kinsman has been dealing with the Americans for decades, and reminds us of the checks and balances in the U.S. system. “The division of powers means that American negotiators aren’t free agents,” he writes. “They need to answer to Congress as well as to the president.” Earnscliffe’s Sarah Goldfeder, a former adviser to two U.S. ambassadors to Ottawa, writes about pressures from Congress and the obligations under “fast track”, the president’s trade promotion authority. Her Earnscliffe colleague Paul Moen considers trade remedies beyond the dispute settlement panels under Chapter 19 of the NAFTA.

Veteran NDP strategist Robin Sears, on the losing side of the free trade election of 1988, looks back 30 years later and notes that his party’s constituencies today are participants in the NAFTA renewal process.

Tom d’Aquino has followed trade policy discussions for decades and is an optimist on the NAFTA talks, for which he writes that Canada is very well prepared. Canadian Chamber of Commerce President Perrin Beatty shares the views of the business community, while CN Chief Marketing Officer Jean-Jacques Ruest writes that railways are the transportation hub of NAFTA.

In an excerpt from his new memoir, My Peerless Story, Alvin Cramer Segal shares the inside story of how the Canadian apparel industry, and particularly Peerless Clothing, became big winners under the Canada-U.S. FTA and, later, the NAFTA. Finally, columnist Don Newman offers his take on Donald Trump and the NAFTA talks.

In Canada and the World, philanthropist and former investment banker Donald K. Johnson writes that the fall fiscal update offers the Trudeau government and Finance Minister Bill Morneau “a golden opportunity” to “tweak the rules for charitable donations” by exempting the sale of private companies and real estate from the capital gains tax if the proceeds are donated to a registered charity.

Veteran Liberal strategist Tom Axworthy looks at populist developments such as Trumpism and Brexit and worries that the politics of resentment threatens the politics of inclusion.

Finally, David Mitchell looks at the new minority NDP government in B.C. and assesses its prospects for survival, which are looking up following the resignation of former Liberal Leader Christy Clark, who has also relinquished her seat, giving Premier John Horgan more breathing room in the legislature.