So, Trump has been renegotiating NAFTA. Not necessarily a bad thing. He’s cut a deal with Mexico, says he’ll sign it without Canada.
Canada has three main sticking points.
It wants to keep the Chapter 19 dispute resolution system so that the US can’t unilaterally impose dumping and anti-subsidy penalties. This is a big deal, because the US is prone to do this stuff due to domestic pressure from industries, and with no check, it will do them more often. Not that Chapter 19 is that great; when the US loses Chapter 19 rulings it tends to just ignore them and impose duties anyway, as it did in the 2000s on lumber. Still, even a delay is good, and that delay has likely stopped a lot of tariffs over the years.
Other hurdles include intellectual property rights, such as the U.S.-Mexico ten-year data exclusivity for biologic drug makers and extensions of copyright protections to 75 years from 50, all higher thresholds than Canada has previously supported.
Yeah, that’s just fucking awful. No thank you. 50 years is already way too much and who wants even higher drug prices in Canada. (US pharma, yeah.)
Finally there is the Canadian milk production system, which is horribly protective and freezes American milk out of Canada. But, well, our standards are higher for milk production, and as such, no, I don’t want change.
If Trump doesn’t get this, he promised auto tariffs, which will hit Southern Ontario hard.
I’m going to say that Canada shouldn’t give in on these issues. It’s not clear that Trump has the votes in the Senate to pass his bilateral Mexico-US deal, and even if NAFTA is lost, well, whatever. Being subject to American tariffs at the whim of any sitting President is not acceptable, nor are higher drug prices and shitty milk.
Canada gave up our world-leading aviation industry in the 50s, in essence, for the right to be part of the US automobile industry. It was a shitty deal then, because it made us dependent, and we are seeing that dependency now.
We’ll see how this plays out. I don’t know if Freeland and Trudeau have the guts to walk away and there certainly would be a cost. But Trump is not certain to be forever, and anything we give up now we are unlikely to get back in the near future.
There was a possible NAFTA renegotiation which would have been a win for all three countries, dealing with issues such as the right of private investors to sue governments for doing perfectly reasonable things like banning anti-cancer additives in oil, but that’s not the renegotiation Trump has chosen to do.
As such, I hope Trudeau holds the line.
Also, there are ways for Canada to retaliate. They are counter-intuitive, but real. I would start by slapping a huge export-tax on all wood products, and watch the US housing industry fall to its knees and the US economy tremble. That would involve some pain at home, but frankly, we can tax a little higher and subsidize those who lose, it’s not a big deal.
Trump’s the sort of person who only respects hardball. Play it, or crawl on your belly.
The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.
XFR
I’ll just note that the TPP would have brought all these horrors and more, and saddled an enormous chunk of Asia with them too, which would very likely have resulted in an appalling number of deaths due to lack of affordable AIDS drugs in the poorer TPP countries.
I’m sure Trudork would have rammed it through Parliament many moons ago, smiling beatifically and idiotically all the way, had you-know-who got in in 2016.
There really is a great deal to be said for the “less effective evil” strategy.
Ian Welsh
Trump’s lack of solid ideology shows in things like this.
drumlin woodchuckles
Mr. Trump is practicing his usual arts of personal psycho-dominance in service to the goal of extorting things from targets. In this case he is hoping that Trudeau is naturally psycho-submissive and dominatable. If Trudeau IS psycho-submissive and dominatable, then he will be too Stockholm-Syndromatised to be able to get in touch with the sources of his country’s strength to resist, refuse and reject.
I have already heard on the news that various important Congresspeople say they will not ratify a MUSTA ( Mexico United States Trade Agreement) without Canada right there co-equally in it. If they really mean that, then Trudeau can resist, refuse and reject in that polite Canadian way until Canada is included into a New NAFTA 2.0 on terms fair to Canada. ( And we know that if Congress actually means something for reasons beneficial to Congress, that Congress can block Trump’s moves.
For example, when Trump first started barking about firing Sessions, Majority Leader McConnell of the Senate immediately announced that the Senate would not even hold hearings on anyone Trump might suggest to take Sessions’s place. That’s because Sessions is an ex-Senator who gave up a lot to leave the Senate and the Senators take care of their own. If Congress-in-general feels the same way about Canada that the Senate in particular feels about Sessions, then Congress will indeed prevent Trump from achieving his MUSTA without Canada. Unless Trudeau signals that he accepts MUSTA without Canada. In which case, Congress will give up and walk away from efforts to include Canada).
How about the Canadian people themselves? Are they prepared to endure dropping standards of living as the price of Sovereign Economic Freedom if the TrumpAdmin decides to try Greece-ifying or Cuba-fying Canada? If they are, that would be another source of strength for Trudeau to tap into if he has inner strength matching their national cultural-behavioral strength.
Jeff Wegerson
Now that the trans-Arctic shipping lanes are opening up Canada could pull a Turkey and switch to Russia as a major trading partner.
Ian Welsh
Russia’s not really able to take up the slack, their economy just isn’t large enough. The main thing is that the US northern states will be really hurt by anything done to Canada, plus Canada has ways it can hurt the US even more, to convince business leaders to lean on Congress/Trump.
Synoia
That would be the Disney (Mickey Mouse) copyright extension.
Stirling Newberry
Trump has until Friday. Canada can wait.
Hugh
Greetings to our enemies to the North. The US and Canadian economies are largely integrated. It is hard to see how they can become unintegrated. Trump is the vicious wreck of someone who started out as a truly vile person. I don’t know how real all this NAFTA stuff is. Investigations, indictments, and convictions are swirling ever more closely around Trump and his family. He seems to be flailing, throwing grenades right and left, anything to take attention away from the noose tightening around him and the rest of his corrupt, grifting cabal.
Ten Bears
You’ve nailed it Ian, call out the bully’s bluff, call out its bullshit.
Yes, it. Less than sufficiently evolved, less than human.
Some Guy
Seems like a situation where stalling is called for.
Some countries have a majority where people don’t cave to bullies, some have a majority where they do. The places that do end up worse off for the most part (see Greece vs Iceland, for example). Nietzsche talked about this as the difference in master (willing to requite) vs. slave morality. I guess this will be a good test for Canada.
Tom
There shouldn’t be Intellectual Properties at all, it hinders development. First mover advantage gives developers 5 years before others copy their development and put out their own. In that time a developer should be working on the next thing, not milking a cash cow for less and less milk.
Daniel A Lynch
Re: lumber. NAFTA hurt the American timber industry big time. There is no shortage of lumber and the U.S. currently exports a fair amount of lumber and other timber products to Asia. If the supply of lumber from Canada is shut off, yes, that would raise lumber prices in the U.S. — and make the U.S. timber industry very happy.
Lumber is a small part of the cost of housing. So no, Canada’s lumber is not a big weapon.
Nonetheless I agree with Ian’s main point that Canada should look out for Canada, even if that results in short term pain. I believe that nations should strive for self sufficiency — make their own stuff, print their own currency, and control their own economy. Maybe self sufficiency isn’t practical for a small island nation, but large countries like Canada have no excuse not to be self sufficient.
Larster
If Trudeau wants to be considered as a statesman, he will not agree by Friday. I am sure that many countries would like to stiff Trump and who knows, the first might be the tipping point. Trump appears to be acting more erratic lately, which is another reason to stall. As far as depending on the Senate, look no further than Lindsey Graham, for an example of a spineless toady.
Wyoming
Re: Lumber. Daniel is right about the US lumber industry stepping in and providing the lumber at a higher price.
But it is incorrect to think this cost rise is meaningless. For an average house the Trump tariff on Canadian lumber from Jan added about $9000 to the price of a house. So given Ian’s suggestion we would see a significantly higher amount than that when the dust settled. When the housing industry is hanging by a thread under the pressure of rising mortgage rates, stagnant wages, high personal debt and such, the adding in of an additional significant material cost increase would hurt sales.
It will only take a bit more stacking on of impediments to the growth of the economy for it to tip. Trump is playing with fire. One of these straws is going to be ‘the’ one.
bruce wilder
We really need to start thinking beyond the ideological pieties of free trade to what kind of world we want to build and live in. In 1944, amid the rubble of runaway protectionism and severe imbalances in the financial flows among developed countries, it was relatively easy to see the advantages to be had from a system that would open the door to specialization and larger-scale trade in a carefully managed and stabilized international financial system — it was to this scheme, further elaborated in the decades after WWII, when the debacle of the Great Depression was still a lesson learned for the adult generation, that hoary liberal slogans of “free trade” with a history of their own dating back at least to Turgot in the 18th century were attached. Only specialists had some sense of how the stable working of the system depended on the economic dominance of the U.S., leveraging American hegemony for (benign?) purposes.
That post-war economic dominance of the U.S. eroded very gradually and was transmuted gradually into a matter of financial centrality and multinational brand management. From the 1980s on, industrial capacity and capability in the U.S. was cannibalized in service of financialized “free trade” and the U.S. financial system itself run onto the rocks of a global “savings glut” (so-called).
The erstwhile popular Party in U.S. politics refused to govern, even as things got so bad that life expectancy was declining, while the party of business and majority cultural dominance became ever more angry and radical in its attempt to hold onto its electoral base while serving only the needs of the plutocrats.
Canada is only a few paces behind its southern neighbor in this march of progress. (irony alert!)
I would not hold my breath waiting for Justin Trudeau to do the right, or even the clever thing. At best, he may try to discover a neoliberal thing to do that will be praised by the media.
That Trump is engaged in taking apart the corrupted system of free trade is sensible in principle (even if it is impossible to believe Trump himself understands any of it) and there’s no sense at all in joining the Resistance on this or any other issue.
ponderer
NAFTA hurt the USA populace big time. Though it did usher in Trump and save us from a nuclear winter. I consider it a wash. Trade deals don’t help a countries citizens, they help its multinational conglomerates and other grifters. They pick winners and losers (timber in US versus timber in Canada). Same with IP protections, always included in such deals. For a citizen or a worker there isn’t much benefit, which is probably why we have so little input into them.
It always comes down to the same issue. Does your government represent you? is someone accountable? If you can’t say yes to both those then the policy of the day doesn’t matter too much. It might as well be “reality” TV.
A1
You appear over your head in this one Ian. Trudeau botched this in numerous ways. First delegating this to an incompetent minister like Freedland. Typically the Canada US trade is handled by the Prime Minister themselves, not an underling.
Second, when we had a chance like South Korea to ink a deal, we lectured the Yanks on LGTBQ rights. At that time Trudeau thought that Trump would be impeached and he was playing for time.
Third, when Trump was not impeached Trudeau was still playing for time for the Midterms. This is a colossal mistake and mis-reading Trump is playing to the Midterms. You would take the gamble that Canada has time because of the incoming blue wave. What if there is no blue wave or only a small one?
Forth, Canadian Diary is terrible and a gift to Quebec. Ontario BC and Alberta get screwed in their allocation and we get second quality products. Funny that people like Butts are running around beaking off about targeting republicans in Kansas when Trump has given Trudeau a terrible political choice of Quebec Diary Farmers or Ontario Auto workers. Ian, you obviously do not understand the inter provincial dynamics of Canadian trade and should pass on further comments as this is not your forte.
Fifth, given the choice in 4 can you really say the Trump team are moronic bullies?
Personally I think we will get a deal but I worry that we have the D team and hope we don’t get screwed.
someofparts
https://angrybearblog.com/2018/08/marrying-nafta-and-the-tpp-the-us-mexico-free-trade-agreement.html
Hugh
How does one mis-read Trump? How does one read Trump? There is no strategy with Trump, no policy. He just does shit. How do you negotiate with that? True, he tends to beat up on friends, sucks up to Putin and dictators in general, does what is good for the rich and stiffs everyone else, and throws lots of red meat to his base, because he needs adulation even if it is from people he personally despises.
Peter
Shutting down Canada’s lumber exports to the US is a great idea, it could take some of the air out of our housing bubble and force Trump to open more of our forests to logging creating more jobs. Why stop there when they could shut down their dilbit exports to the US forcing our fracking industry to increase their production creating even more jobs. The Permian Basin is projected to produce more oil than Iran and this would speed up the drilling. Canada could change their motto to Lean And Green and and pursue a self sufficent future much like North Korea.
Hugh
BTW according to data from the BEA (the people who also calculate things like the GDP), in 2017, the US exported $341 billion (seasonally adjusted) to Canada in goods AND services and imported $338 billion for a trade surplus of $2.76 billion.
Hugh
I should also point out that the comparable figures for 2017 for Mexico are $276 billion in US exports of goods and services and $345 billion in imports for a balance of trade deficit of $68.7 billion. So trade surplus with Canada, much bigger trade deficit with Mexico. So who is Trump, or rather his lackies, going after? Canada, of course. Makes no f*cking sense, but understand that and you understand Trump and the Trump Presidency.
Ten Bears
pursue a self sufficent (sic) future much like North Korea.
Rolling on the floor laughing my rosy red ass off.
Mandos
Canada is a country whose largest province elected Doug Ford because suburban commuters were annoyed that the city slickers also wanted reasonable transport…
Webstir
Ha! Sterling Newberry, you crack me up 🙂
I was going to say:
Just stall Canada …
Grimgrin
That province had seen Hydro bills double in 10 years; people living outside the big cities are having to choose between food and electricity; and the previous Premier said “Sorry, not sorry” of her actions in office during a televised debate.
http://www.cbc.ca/player/play/1242945091698
Seriously, there was talk that she was trying to throw the election after that.
Simple truth is this: You fuck up too much, and too badly? You’re going to take a kicking, no matter how pure your motives, how sure you are you are in the right, or, and this is key, how bad your opponent is.
Right now Trudeau has a choice. He can fuck up really really bad by trying to fight a trade war on the assumption that Canada, a country for which exports comprise 30% of GDP, 75% of which go to the US can cause more pain to the US than the US, a country for which exports comprise 12% of GDP, 16% of which go to Canada, can cause to Canada.
Or he can do what he can to salvage a deal, and when the next review (which IIRC is in the US-Mexico deal) comes up hope that someone who doesn’t think like Trump is in the Whitehouse.
If he manages to get tariffs slapped on auto parts because he can’t do a deal? Ontario will be another Alberta, and the Conservatives will be right back in power.
Webstir
Peter,
As a rabid environmentalist I hate to say it, but they could magnify those effects by just hitting the gas on their timber harvest. This would drop world lumber prices, further hurting the U.S. timber exports. Canada has the timber, and has essentially been doing this to the U.S. already for years, only buffered by a trade agreement outside NAFTA which sunset in 2015. Agreement was never reached with Obama leaving Canada free to trade with the U.S. Upon Trump arrival, the duties began to be slapped on again and the timber trade dispute is already in full swing again — totally apart from any NAFTA negotiations.
Peter
@Web
I don’t know enough about the world export timber market to judge what benefit Canada would gain by lowering lumber prices. I do know that much of US lumber exports to Asia are soft and hardwood log exports not finished lumber which is much more profitable and creates more jobs at the mills.
Ten Bears
There are no sawmills left in the Northwest. That’s why we export raw logs to Asia.
Speaking as a Fourth Generation Oregon Logger.
Out of idle curiosity, any of you ever set a choker, packed a skoocum, tooted a turn?
Stirling Newberry
It is Saturday, and Trump wants Canada out before the lower house turns back into a dunkin.
Peter
I know that the rabid enviros did cause some Oregon mills to shut down just as they did here in NM. Oregonforests.org states that Oregon still dominates the production of softwood lumber and plywood in the US. They must be using Romulan cloaking devices to hide the mills from the rabid enviros.
XFR
This is just ridiculous. Shouldn’t we be glad when the right-wing actually wants more public transit?
Just why are subways such an anathema anyway? LRTs aren’t really cheaper in general, just more limited–the “light” simply refers to the capacity of the cars. Toronto City Council demanding that the Eglinton line be LRT, under the bogus pretext the Province might not fund a subway (they had outright confirmed that they would), was a travesty that could limit midtown Toronto’s potential for decades to come. (Yes, the LRT is longer but there was no good reason why the underground section couldn’t be subway proper and the suburban section LRT.)
As far as I can tell, the tacit idea is that LRTs help discourage car use by impeding the flow of traffic and subways are just a plot by drivers to get transit vehicles out of their way. Of course, transit riders also experience longer commutes in that case but I suppose they’re supposed to be happy to take one for the team? (I’ve also seen closer station spacing given as an advantage, but the TTC runs an extensively intermodal system so the first leg of a typical trip will generally be some local bus route rather than a journey on foot to the nearest mass-transit station.)
Leaving aside the fatuity of bifurcating the commuting public into transportation sinners and saints–it’s easy to be a saint when your transit option takes 20 minutes and your drive takes 15, not so easy when transit takes 90 minutes and a car 30–few Torontans have an abundance of time or money these days so most trips are liable to be non-discretionary, and such an approach will simply make life more difficult to little practical benefit. Such nonsense was bound to trigger a backlash.
marku52
I have no idea of the cause (maybe it has to do with this kerfluffle) but the cost of a basic 2X4 (a tuba-fur in my lingo) just rocketed from about $2.95USD to $3.95.
Very suddenly. Odd, Had been stable for years.