Canadian View Of NAFTA
RACHEL MARTIN, HOST:
Canadian negotiators are working away here in Washington to hammer out a trade deal ahead of a Friday deadline to revise the North American Free Trade Agreement, or NAFTA. President Trump said Wednesday that a deal would be, quote, "very good for Canada." And Canada's foreign minister, Chrystia Freeland, seemed to agree, sounding a cautiously optimistic note about talks this week. But Canada's prime minister, Justin Trudeau, made it clear he will not sign just anything.
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PRIME MINISTER JUSTIN TRUDEAU: I said from the very beginning - no NAFTA deal is better than a bad NAFTA deal.
MARTIN: We've got Christophe Bondy on the line with us. He was senior counsel in Canada's negotiations with the EU over a trade deal. And he joins us from the BBC in London.
Mr. Bondy, thanks for being here.
CHRISTOPHE BONDY: Thanks very much.
MARTIN: So those are bold words from the Canadian prime minister. The U.S. is Canada's largest trading partner. I mean, can Canada afford not to sign some kind of revised NAFTA agreement?
BONDY: Well, I think Canada is going to continue its longstanding efforts to have a good update to the NAFTA. One knows that President Trump only has congressional authority to do a three-way deal. And the deadline of Friday really relates to his efforts to get this deal over the line in time to have congressional approval before the midterms so that he can declare a win.
I think Canada's negotiators are very experienced. They're level-headed and will agree to the deal if it's in Canada's interests. If not, the discussions will continue, and the original NAFTA stays in place. Don't forget - this is just a preliminary agreement in principle on some of the sticking points. So I think the Canadian negotiators may see this as an opportunity to deal with some of the more difficult issues.
MARTIN: And I want to talk about those, but you do point out something important here - that Canada does have some leverage even though President Trump has established this deadline of Friday so he can get this through before there's new leadership in Mexico. He actually doesn't have the authority to negotiate two bilateral deals. That would be different. Congress gave him the authority to negotiate a deal that would include Canada and Mexico. So you feel like Canada has some leverage in the moment?
BONDY: Well, the other thing is that Canada is the U.S.'s single biggest foreign export partner. For 35 U.S. states, Canada is their single biggest foreign export market. Millions of U.S. jobs depend upon three-way trade between Canada, Mexico and the United States. The automotive industry, in particular, is deeply integrated. And so to, you know, try to sort of throw a spanner in that kind of works would be very economically damaging for the United States.
But that's not what we're focusing on here. I'm sure that the negotiators are looking to work to mutual advantage. And they're thinking about some of the negative impacts that may flow from some of the more protectionist rules that have been proposed. So one of the interesting questions is, if you increase the amount of auto parts content - for example, the North American content rule - what impact will that have on the total sales of North American cars?
MARTIN: We should just say that this is a tenant of the U.S.-Mexico proposal that President Trump has agreed to that would require that a certain percentage of the parts of any car be - come, originate from North America.
BONDY: Yeah. So I think one has to just analyze that and see, does it come to the right outcome? I mean, Canada is a high-wage economy, so perhaps it's less relevant for us. It's like the steel and aluminum tariffs that have been imposed that end up acting as a tax to American producers, to American consumers, and end up leading to countervailing tariffs, which are damaging to both economies. So I think that we're trying to seek - the negotiators will be trying to seek a rules-based approach, an update that makes sense for everyone.
MARTIN: What concession would Canada make?
BONDY: I don't know. I'm not part of the negotiations right now. I think they're going to be looking at the deal that's on the table and considering whether they can agree to the elements - at least these issues in principle - that U.S. and Mexico have been discussing. Don't forget - it's not unusual in a multiparty negotiation to have sideline discussions. Canada has been following those closely and is coming to the table with an understanding of what's being discussed. But I'm sure that the outcome, if it's in everyone's interest, will be a positive one.
MARTIN: Christophe Bondy was lead counsel to Canada in multiple NAFTA arbitrations. He now practices law with Cooley LLP. He joined us from the studios of the BBC in London. Thanks so much for your time this morning. We appreciate it.
BONDY: Thank you.
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