NAFTA & Canada’s approach to a Renegotiation

President Trump’s global 25% tariff on imported steel and 10% on aluminum is being applied country-by-country. Canada and Mexico acquired temporary exemption subject to negotiating a ‘good deal’ on NAFTA. What constitutes a ‘good deal’ remains unspecified but could be construed as caving on most U.S. demands tabled thus far. Were the tariffs introduced as a NAFTA negotiating strategy and if so, how effective might they be?

According to Steve Weiss, Executive Director of the Centre for Global Enterprise and associate professor of international business at the Schulich School of Business, “Trying to decipher Trump’s intentions is a vexing undertaking. Is the tariff message really for domestic rather than foreign audiences? If Trump is signalling Canada, what is he trying to achieve on specific NAFTA issues? The ghost writer for Trump’s The Art of the Deal recently described him as increasingly “impulsive” and “irrational”—in other words, hard to explain and predict.

Canada’s basic options at the negotiating table are: 1) accept the terms the US is currently offering, 2) break off talks with no intention of resuming them, and 3) continue negotiation, with the goal of improving the terms. With Option 3, Canada can also make moves away from the table. There are concerned stakeholders at many levels of the deeply intertwined Canada-US relationship, and surely they are open to engagement through information, ideas, and persuasive arguments that could influence the U.S. Government’s—and Trump’s—choice among its three basic options.

NAFTA negotiations—on steel and other issues—should not be reduced to a battle of wills or punch-counterpunch and bully tactics. These produce suboptimal outcomes and abuse the very principles and values on which negotiation rests. Negotiation is an opportunity to call on the best of human ingenuity and intellect to define and develop mutually satisfactory relationships. NAFTA negotiators should be allowed to demonstrate that.”

©2020 by Centre for Global Enterprise

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