Trade deals can’t be counted on

Trade deals can’t be counted on

As Donald Trump brags to the world’s billionaires at Davos about his two newest trade deals — the revamped NAFTA and a new agreement with China — how should Canadians feel about these developments?

Relief, no doubt. But a bit of trepidation, too.

First, the relief.

Since Trump came to power three years ago, vowing to rip up NAFTA and replace it with something more to the U.S.’s advantage, Canadian negotiators needed to bargain hard to avoid giving up too much in the new deal.

At the same time, Canada needed to maintain business confidence, persuading investors that their next dollar should be spent here, and not south of the border, where Trump is calling the shots.

We more or less managed both, says Brett House, deputy chief economist at Scotiabank.

Sure, the new trade agreement with Mexico and the United States costs us some protection of our dairy market. It makes the North American auto market less competitive and more inward-looking.

And some point to the deal’s weaknesses in protecting intellectual property.

Still, almost everything Canadians sell across the U.S. border does so without facing a tariff, and that’s a victory in itself, given Trump’s protectionist bent.

Compared to what could have happened, “it’s as good as it gets under the circumstances,” House said.

As for the U.S.-China truce in its trade war, “everyone is better off with these two giants not fighting,” said Rohinton Medhora, president of the Centre for International Governance Innovation.

The escalating tariff battle between the two countries had required a reorganization of supply chains around the world, cutting into global growth prospects and prompting exporters in every country to rethink how they do business.

The agreement will roll back only some of the tariffs, but more importantly, it at least represents a temporary peace, and fears of a full-blown currency war, with all the global devastation that implies, are receding, Medhora says.

And yet the fears of such a war should not be entirely erased by the deal. And the stability promised by the new NAFTA pales in comparison to that provided by the old one.

And herein lies the trepidation.

In the era of Trump chest thumping and the relentless Chinese push for hegemony, trade deals don’t offer the kind of economic stability that they once did.

No longer do they lay out ironclad rules of the game that apply to everyone. No longer are they formal arrangements under which Canada, with its small, open and trade-dependent economy, can be assured of fair treatment for its businesses in other countries.

No longer are they impeccable marketing tools for Canadian businesses to boast to investors of their market access. No longer are they necessarily built to last.

If Canadians are not jumping with joy with NAFTA, it’s probably because they don’t know how long it will stick, or how much sway it will hold.

Already, the U.S. has threatened to reimpose tariffs on Mexico for its immigration practices. And the federal Liberals are shying away from unilaterally imposing a digital tax for fear of poking the angry U.S. bear, like France just did.

And the China-U.S. trade detente is inherently unstable. How will its requirements be monitored? How will they be enforced? Ripping up the agreement seems to be the most likely way to settle any disputes.

And is there a risk that Canada will be squeezed out of newly developed export markets in China, since China is now obliged to buy from the United States?

Probably not, experts say, but we need to keep an eye on that, and investors will undoubtedly act accordingly.

So when Trump boasts about the “two biggest trade deals ever made,” Canadians can be forgiven for having their doubts. Trade deals, after all, aren’t what they use to be.

Heather Scoffield is a columnist with Torstar Syndication Services.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

(Black Press file photo)
Police seeks suspects in Bowden armed robbery

Man was beaten and robbed of his wallet

Many students and staff at St. Joseph High School are in COVID-19 quarantine. (File photo by Advocate staff)
UPDATED: St. Joseph High School reverts back to at-home learning

Majority of students under COVID-19 quarantine

Red Deer RCMP say Alexander King was last seen about a month ago. (Contributed)
Red Deer teen reported missing

RCMP ask for public’s assistance

Prime Minister Justin Trudeau speaks in the in the House of Commons on Parliament Hill in Ottawa on Thursday, Dec. 3, 2020. THE CANADIAN PRESS/Justin Tang
Payette shouldn’t get same benefits as other ex-governors general: O’Toole

OTTAWA — Conservative Leader Erin O’Toole says it’s not appropriate for former… Continue reading

More back-alley murals, such as this one behind Can-West Travel, will be painted this summer before the City of Red Deer holds it Meet the Street arts and culture festival in September. (Advocate file photo).
City of Red Deer seeks more mural artists

Creating 10 more back-alley murals is the goal

Terrance Josephson of the Princeton Posse, at left, and Tyson Conroy of the Summerland Steam clash during a Junior B hockey game at the Summerland Arena in the early spring of 2020. (John Arendt - Summerland Review)
QUIZ: How much do you know about hockey?

Test your knowledge of Canada’s national winter sport

Too many new pet owners, not enough vets make getting animal care a problem

CALGARY — Dr. Liz Ruelle says it was a difficult decision to… Continue reading

RCMP. (Phil McLachlan - Black Press Media)
RCMP officer in Alberta charged with off-duty sexual assault in Edmonton

EDMONTON — Alberta’s police watchdog says an RCMP officer has been charged… Continue reading

Canada’s 29th Governor General Julie Payette looks on alongside Prime Minister Justin Trudeau in the Senate chamber during her installation ceremony, in Ottawa on Monday, October 2, 2017. THE CANADIAN PRESS/Adrian Wyld
Trudeau says GG vetting process needs improvement after Payette resigns

OTTAWA — Prime Minister Justin Trudeau’s admission Friday that he might have… Continue reading

NDP member of Parliament Lindsay Mathyssen speaks during a press conference on Parliament Hill in Ottawa on Thursday, Nov. 26, 2020. THE CANADIAN PRESS/Sean Kilpatrick
NDP warns of long delays in equal pay for women in federal pay equity rules

OTTAWA — The federal New Democrats say new rules to close a… Continue reading

President Joe Biden waves as he departs after attending Mass at Holy Trinity Catholic Church, Sunday, Jan. 24, 2021, in the Georgetown neighborhood of Washington. Less than a week after the economic gut punch of cancelling Keystone XL, Canada is bracing for more bad news today from the White House. THE CANADIAN PRESS/AP/Patrick Semansky
U.S. president to sign executive orders enacting stringent new Buy American regimen

WASHINGTON — Less than a week after the economic gut punch of… Continue reading

Black Press file photo
Wetaskiwin RCMP investigate fatal pedestrian collision

A 37-year-old man from Maskwacis has died in hospital as a result of his injuries.

The Pfizer-BioNTech COVID-19 vaccine is administered to a personal support worker at the Ottawa Hospital Tuesday December 15, 2020 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Canadian provinces push back vaccination plans as Pfizer deliveries grind to a halt

Some Canadian health-care workers are being told they’ll have to wait longer… Continue reading

A Shell logo is seen at a petrol station in London on January 20, 2016. THE CANADIAN PRESS/AP, Kirsty Wigglesworth
Shell buys European electric car charging firm ubitricity

Experts say easier access to charging facilities key to successful rollout of electric vehicles

Most Read