Contributors
Bogdan Kipling: Canada and NAFTA
01:00 AM EST on Tuesday, November 27, 2007
WASHINGTON
DID THEY GATHER to bury Caesar or to breathe new life into his lungs? That might have been the appropriate question earlier this month when top trade, economics and North America experts gathered at the Canada Institute of the Woodrow Wilson International Center for Scholars here.
“Requiem or Revival? The Promise of North American Integration” said the invitation to the two-hour session in the monumental Ronald Reagan Center in the heart of Washington, a comfortable walk from the White House.
Canada, the United States and Mexico are bound together for better or worse by NAFTA, the North American Free Trade Agreement, and nobody of consequence is suggesting that this should not be so.
NAFTA is a decade old and, by all traditional yardsticks, it is an economic success. Trade is dramatically higher among the three countries and, as political hucksters of all hues like to brag, everybody wins.
The continental deal had a difficult beginning, as Canadians surely recall. Brian Mulroney’s Conservative government was in power in the late 1980s, and Jean Chretien’s Liberal opposition swore that it would have no truck or trade of this integrating kind with the Yankees and their Mexican peons.
The Canada-U.S. Free Trade Agreement had just been signed and delivered by Jan. 1, 1989, and that was not the easiest go. It wasn’t only Canadians who were among the naysayers. In Washington, the AFL-CIO gave voice to millions of blue-collar Americans opposed to free trade.
In the 1992 presidential elections, Ross Perot, an early tycoon in computerized data processing, jumped into politics as a third-party independent and got 20 percent of the votes with his resonant warning of the “great sucking sound” of American jobs heading down Mexico way.
In Washington, Congress had to approve the deal, and opposition from organized labor was strong. Unions representing workers in the auto and steel industries raised hell on Capitol Hill, but the vote carried. President Reagan signed the Canada trade deal as one of his last acts in office.
With NAFTA proposed on the heels of the Canada-U.S. agreement, neither Canadians nor Americans could easily see rhyme or reason. Why, many asked — and not only in union halls and union households — is the just-implemented deal between like-minded neighbors and their compatible economies not enough?
In Washington, the accepted view among the tiny band of trade freaks in the media is that American business interests were pushing the expansion south. Mexico had plenty of cheap labor, which Canada did not. Therefore, free trade with Canada is fine, but not nearly fine enough.
Experts hardly ever accept simplistic reasons, and for good reason. Trade and economics are complicated beyond belief. The place of the proverbial comma is no figure of speech. More often than not, it is worth millions, or billions. It makes the difference between job security and the dole.
Gary Hufbauer, of the Peterson Institute of International Economics, arguably one of Washington’s most respected thinkers and former government official with extensive hands-on experience in the real world of international negotiations, pointed out Canada’s split views in this area. Canada, he said, wants closer, more exclusive economic ties with the United States — and political distance.
Other experts pointed to the widely acknowledged realization that Canada set out to gain full access to the American market, but failed to secure it in the initial Canada-U.S. free-trade agreement. That’s why Canada is seen as the father of NAFTA, the wider agreement that was supposed to make up the shortfall.
That doesn’t square with Canada’s real preference for direct deals with the United States, and that is at the heart of Canada’s paradoxical relationship with NAFTA that Hufbauer talked about.
Canadians believe in multinational links in an almost religious way. And yet, as even the lumber deal the Harper government cut with Washington shows, multilateralism as represented in NAFTA doesn’t work.
This raises a question. For all the talk of wider international safeguards, has Canada ever really tried to leave the bilateral embrace of the United States?
If not, maybe NAFTA is dead or, at best, in desperate need of artificial respiration.
Bogdan Kipling, an occasional contributor, is a veteran Washington columnist for The Halifax Chronicle Herald ( bkipling@herald.ns.ca).
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