Monday May 01, 2017

Should Canada pre-empt the U.S. and pull out of NAFTA?

Trump decided to not cancel NAFTA after talking to Canada/Mexico 1:29

Listen 19:32

Read story transcript

Reading Donald Trump's intentions when it comes to renegotiating the North American Free Trade Agreement can be a difficult task. One moment the U.S. president says only minor tweaks are necessary to U.S.-Canada trade. And in the next, he's threatening to rip up the entire agreement.

But another important question has largely got lost with the laser focus on the White House: Does NAFTA work for Canadians?

David Orchard doesn't think so.

"It's not good at all. We had better access to the U.S. market before we entered," says Orchard,  a former candidate for the Progressive Conservative leadership.

"We chased the fantasy of secure access to the U.S. market and we signed a deal that has whole sections of it that have nothing to do with trade at all," Orchard tells The Current's Anna Maria Tremonti.

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Maybe it's time Canada should consider cutting ties with NAFTA. (Sean Kilpatrick/Canadian Press)

The essential benefits of free trade and globalization were a part of mainstream political and economic orthodoxy for decades before Trump's meteoric political rise and the anti-trade rhetoric that fuelled it. Many still believe NAFTA has helped Canadians.

Ron Davidson, senior vice-president for International Trade and Public Affairs at the Canadian Meat Council, says NAFTA has been hugely beneficial to the beef and pork industries, which have seen their exports triple to $3 billion under the agreement. 

"We're too small a consumer population to consume the agricultural products that we produce in this country, but through NAFTA we are able to obtain the scale by working with the U.S. and Mexico to be competitive for all three countries on the international marketplace," Davidson tellsTremonti, adding that NAFTA's benefits are particularly important in rural Canada, where meat-processing plants are often the only major employer and corporate taxpayer.

Trump's NAFTA flip-flops1:04

"Without NAFTA, rural Canada would be in a much more difficult situation than it is today."

Economist Armine Yalnizyan said that despite the success of specific industries under NAFTA, it is still difficult to get an overall picture of the agreement's impact on the Canadian economy.

"We don't have really great data — which is kind of surprising when it comes to a trading nation — [but] we don't know what the net impact is of free trade deals, or trade in particular, on jobs and wages," Yalnizyan tells Tremonti.

"We have some idea of what it does to GDP, but not whether the net impact of job loss is outweighed by the net impact of job gains  … in rural Canada."

Related: Mexico and Canada 'in this together' on NAFTA, amid Trump confusion

Orchard questions the impact NAFTA has had on the independence of Canadian businesses. He says 12,000 Canadian companies have been bought up by American corporations — including meat-processing plants. Before NAFTA, they were Canadian-owned. Now most are American-owned.

He suggests the same thing has happened in other industries, and even in retail.

"I went to a mall the other day and I couldn't find a store that was Canadian," Orchard says, who adds that NAFTA also puts the United States' energy needs ahead of Canada's — even when it comes to Canadian-produced oil and gas.

"We've given away our energy. We've given away our right to to pursue our own economy and we're being integrated into that of the United States."

Listen to the full segment at the top of this web post.

This segment was produced by The Current's Lara O'Brien, Willow Smith and Seher Asaf.