10 Things Canada Is Doing Right In NAFTA Negotiations

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Multinational trade negotiations are often accused being a closed door mess with a never ending series of mistakes, but Canadian negotiating strategies on NAFTA have been very successful.

Successful is a subjective word and this site aims to keep to the facts and avoid too much opinion, so let’s define success.  In the context NAFTA negotiations, success is defined as a trade agreement that is as favorable to your country as possible, with least amount of drama.

Canada, so far, has been “walking softly and carrying a big stick” with the following successful tactics:

1. Starting Negotiations With Demands: Canada laid out its criteria early in the process.  This instantly gave the Canadian negotiators important bargaining chips to potentially throw in at the end to close a deal.  Things like the dispute mechanisms and protecting the Dairy industry make great domestic politics, which bolsters your position with the other side, but are “nice to haves” and not truly critical to the success of a final deal.

2. Quietly Racking Up Negotiating Chips: In Canada’s case starting superficially unrelated proceedings, like attacking Boeing’s now demonstrably malicious claim against Bombardier, and starting a WTO claim against the US’ unfair trade practices, gives Canadian negotiators more “chips” to bargain with.  Massive deals like NAFTA often include side arrangements to terminate other proceedings.

3. Ignoring Trumps Bluster:  It is easy to follow the Mexican example of publicly rebutting US President Donald Trumps often inaccurate statements.  It makes very good domestic politics to “stand up” to Trump in public, but like most bullies, you are often best to just ignore them.

 

4. Being Friendly With Trump:  When Prime Minister Trudeau meeting with Trump, he is all smiles and happiness.  I am certain Trudeau is biting is tongue and patting Trump on the back as often as possible in back room conversations.  Clearly this is annoying, but it is important to make your opponents your friends where possible.  Bad things may still result, but they are less likely when you ‘get along’.

5. Knowing Who You Can Argue With:  There is no point in arguing with Trump but the lead US negotiator, Robert Leithauser is another matter.  Leithauser is just not a warm and fuzzy personality and his brisk demeanor REQUIRES some someone to stand up to him.  If you don’t get in Leithauser’s face from time to time, he is going to plow you under.

6. Making Similar Deals with Others: This is not always possible, but if you can make a similar deal with someone else during active negotiations, you will show the other team that you are skilled and that the deal is not critical.  In Canada’s case, getting a signed deal on the Trans-Pacific Partnership (TPP) while negotiating NAFTA is a either a stroke of genius or of great ‘luck” for Canada.

7. Showing The US Canada Doesn’t NEED The Deal:  This is the number one rule in negotiations… never let the other side know how badly you want something.  Trump, for all his foibles, mastered this technique long ago.  He constantly claims that he will walk away from… whatever topic you want to insert here even if he badly needs a deal. Chrystia Freeland and her team have also been masterfully handling the “we want it, but not at that price” tone.  She keeps smiling at the American’s and saying “no, that is not acceptable to us but lets keep talking friend” even when they are visibly annoyed.

8. Undermining the Opponents Authority: Prime Minister Trudeau, Trade Minister Chrystia Freeland, Canadian Ambassador to the US David MacNaughton, all of the Premiers including Alberta’s Rachel Notley and Ontario’s Kathleen Wynne along with countless trade associations and business leaders have made both high and low profile visits to the US with a single message of “you NEED Canada”.  Even though it has taken nearly a year of constant messaging, it appears that those messages have been received loud and clear in boarder states.  Both Democrat and Republican Congressman, State Governors, City Mayors and captains of industry have come out strongly in favour of NAFTA.

9. Knowing That Trump Doesn’t Have Authority:  President Trump gives the impression that he can ‘tear up’ NAFTA but he has no such authority.  NAFTA authority resides with Congress.  Technically Trump does not even have the authority to start negotiations.  However, President Trump is not known for his concern for rules and he has thus far successfully pushed negotiations so it is best to play along.  If Congress is not going to tell Trump to ‘sit down’, Canada, and all other foreign entities are wise to that conversation.  However, in the end, Canada and Mexico can simply pat trump on the head and say, it is time for you to step aside and let the adults (Congress) make the decision.  As it stands today, it is highly unlikely that Congress will walk away from their largest trading partner.

10. Knowing Canada’s Downside: Unlike the US, Canada’s negotiating team seems to be keenly aware that in the absence of NAFTA other trade deals, like the old auto pact, combined with old dispute mechanisms, like the courts and the WTO, will have some effect.  More importantly, in the event of a NAFTA collapse, President Trump has repeatedly said he wants a bi-lateral deal with Canada which would almost certainly be in place before any shutdown of NAFTA.  It would be a very ‘big deal’ if NAFTA dies, but the Canada’s world would not stop spinning.

 

We could spend a long time debating what Canada has done wrong in this current cycle of NAFTA Negotiations but I think it is fact and not opinion, that Canada so far has ‘held it’s own’ and will likely end up with a more than tolerable deal.

This page is full of interesting links to other articles and reference materials, but if you are interested in this topic I think you will find this story from the Toronto Star to be quite and interesting read.  Canada’s stark choice on NAFTA talks: The United States is no longer a dependable trading partner and Canada needs to act accordingly. Leave the NAFTA negotiating table and this can be a defining moment in our history.

 

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