Should Canada ditch Mexico and go it alone with U.S. on new trade agreement?

As the trade dispute between Canada and the U.S. escalates, some observers are arguing that Ottawa should drop Mexico and form a bilateral agreement with Washington. But one former diplomat argues that Mexico is Canada's third-largest trading partner, and we could be turning our backs many other markets.

NAFTA was designed to help Mexico, but now it's hurting Canada, argues journalist

As NAFTA talks become ever more fractious, some commentators are asking whether it's time to disband the three-way agreement and form bilateral pacts between the countries. (Judi Bottoni/Associated Press)
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Canada should recognize Mexico as a "toxic" trading partner, and pull out of NAFTA in favour of a bilateral trade agreement with the U.S., says Diane Francis, editor at large with the National Post.

"Canada should look after Canada," Francis told The Current's Anna Maria Tremonti. "We have nothing to be sorry about."

The U.S. announced Thursday that Canada, Mexico and the E.U. would be subject to tariffs of 25 per cent on imported steel and 10 per cent on aluminum. Ottawa responded with a promise of dollar-for-dollar tariffs on a variety of goods.

Industry insiders said the U.S. tariffs are intended as leverage over NAFTA negotiations, which stalled last month. In a tweet earlier today, U.S. President Donald Trump condemned Canadian "trade barriers."

Francis told Tremonti that signing the trade deal with Mexico in 1994 "was a bootstrapping exercise to help the neighbour to the south get better living standards, higher wages and get their act together."

But more than two decades later, Francis said that Mexico is worse off now than it was back then.

Those low wages are bad for Mexican workers, Francis said, but low costs also draw investors south, hurting Canada's industrial base.

Former U.S. president Bill Clinton signs the North American Free Trade Agreement Dec. 8, 1993. (Paul J. Richards/AFP/Getty Images)

By contrast, Francis points to the strong, "harmonious" trading relationship between Canada and the U.S.

"Bilaterally, we have so few irritants between each other," she said.

She argued that adding Mexico to the mix and trying to "cling to a trilateral agreement" isn't in Canada's best interest.

Mexico is a 'hidden success story'

Turning away from Mexico would be a strategic blunder, according to Colin Robertson, a former Canadian diplomat who helped to negotiate the Canada-U.S. Free Trade Agreement in the late '80s, and then later NAFTA.

"[It] would put us at a disadvantage with both the United States and any effort we wanted to have to expand trading ties, especially within the Americas," he told Tremonti.

"I think there'd be a certain temptation on the part of Latinos: If we were to throw Mexico under the bus, then they would think, 'How reliable is this further gringo to the north?'"

Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto in Mexico city on Oct. 12, 2017. Former diplomat Colin Robertson said that the countries had formed a strong alliance through NAFTA. (Alfredo Estrella/AFP/Getty Images)

Mexico has been a "hidden success story" of NAFTA, he said, with improvements in the democratic process and a growing middle class.

"When we went into the North American Free Trade Agreement it was about number 13 or 14 in the list of our trading partners," said Robertson, who is now vice-president and fellow at the Canadian Global Affairs Institute.

"It's now our third largest trading partner, we've got big investments in mining and banking and manufacturing."

Robertson pointed to the country-of-origin labelling dispute over meat products in the late 2000s as an example of Canada and Mexico working together to win a dispute with the U.S.

"[Donald Trump's book] The Art of the Deal is all about divide and conquer," Robertson said, "and it would make no sense for us to separate from Mexico when together we have a much better chance of getting a good agreement."

Prime Minister Justin Trudeau with U.S. President Donald Trump in Washington, where they discussed NAFTA on Oct. 11, 2017. (Jonathan Ernst/Reuters)

The elephant and the mouse

Seeing Mexico as an ally against the U.S. is a mistake, Francis argued, because Mexico and Canada represent only 7 per cent of the three countries' combined GDP.

Comparing the U.S. and Canadian economies is like comparing an elephant and a mouse, she added — referencing Pierre Trudeau's famous analogy from 1969.

"Now we're aligned with another mouse, who's toxic, and is actually kind of toxic to us."

Ending the deal and pursuing separate agreements is the solution, she believes.

"I really think that we need to reorient ourselves, and get in the same space to a certain extent, as the Americans are, vis-a-vis Mexico," she said.

Listen to the full conversation near the top of this page.


This segment was produced by The Current's Idella Sturino and Pacinthe Mattar.

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