Continual emphasis on the severity of Canadian politics is needed to understand the latest developments in the U.S-Canada trade negotiations.
The Trump administration set a deadline of today for Canada to join the U.S-Mexico trade agreement and make the NAFTA replacement agreement a three-way pact. The concessions needed by Justin Trudeau and Chrystia Freeland to join the agreement were politically devastating.
In order for Canada to accept or join, via a NAFTA 2202 modification, they would need to agree to the U.S-Mexico modification terms. For Canada they would have to:
open their telecommunications and banking sector (eliminate non tariff barriers).
eliminate soft-wood (lumber) and aeronautics subsidies.
begin a process of lowering their assembly use of Chinese/Asian goods.
accept the rules of origin for North American manufacturing.
eliminate protectionist tariffs on dairy and farm products.
accept the U.S-Mexico terms for arbitration and dispute resolution.
President Trump and U.S. Lighthizer are holding all the cards. As we previously highlighted they don’t care if Canada doesn’t join; the U.S. would likely prefer to send congress a NAFTA 2205 withdrawal notification removing the U.S. from the original 1993 NAFTA construct in combination with a simultaneous 2202 modification notification for the U.S-Mexico side of the agreement.
This would allow the U.S. to go into a one-on-one trade negotiation where six months and a day from the 2205 notice. The U.S. would then apply 25% auto tariffs on Canadian made vehicles while negotiating a bilateral deal. Canada is in a very weak negotiating position; politics are paramount for the Canadian team; their exit needs political cover. Media need to help the optics for the Canadian team.
http://theconservativetreehouse.com/2018/08/31/no-u-s-canada-trade-deal-likely-canada-deploys-media-to-frame-political-cover-for-failed-negotiations/
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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