Wednesday September 20, 2017

Midweek Podcast: Ottawa's version of a trade deadline

National flags representing Canada, Mexico, and the U.S. are lit by stage lights at the North American Free Trade Agreement, NAFTA, renegotiations, in Mexico City, Tuesday, Sept. 5, 2017.

National flags representing Canada, Mexico, and the U.S. are lit by stage lights at the North American Free Trade Agreement, NAFTA, renegotiations, in Mexico City, Tuesday, Sept. 5, 2017. (Marco Ugarte/The Associated Press)

Listen to Full Episode 28:25

The NHL pre-season is just under way, so the trade deadline is still a ways away, but there's plenty of trade fodder in Ottawa these days.

Most of the Canada-European Union Comprehensive Economic and Trade Agreement is finally coming into effect on Thursday. Then, Canada hosts the third round of negotiations of the North American Free Trade Agreement starting on Saturday.

On top of those massive deals, a potentially new pact with the United Kingdom once it leaves the European- Union.

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Local Caption Prime Minister Justin Trudeau and British Prime Minister Theresa May said Monday they hope the Canada-EU trade deal would form the basis for a 'smooth transition' to a post-Brexit relationship. (Justin Tang/Canadian Press)

While accepting an award from the Atlantic Council Global Citizen Awards in New York Tuesday night, Prime Minister Justin Trudeau said critics ridiculed his government for trying to make trade more progressive, including pushing for chapters on gender equality, Indigenous rights, and labour protections as priorities for a new North American Free Trade Agreement.

He suggested these issues are no laughing matter for anyone who cares about preserving trade, in an era when populist currents have threatened to topple international agreements in Europe, Asia and North America.

"I'm not sure if exploring them with the United States, with our largest trade partner, under this particular administration is the right place to start testing these questions," said Meredith Lilly, Simon Reisman Chair in International Affairs and an associate professor of international affairs and economics at Carleton University.

Lilly, who was also a foreign affairs and international trade advisor to former prime minister Stephen Harper between 2013 and 2015, said including a gender chapter made sense when modernizing Canada's trade deal with Chile, given it has a more progressive leader in President Michelle Bachelet.

"What Canada should be doing is focusing very much on jobs and the economy and  that it should be prioritizing those issues first and foremost," said Lilly.

When it comes to deadlines on NAFTA Lilly says "it is what it is."

Trudeau G20 Germany 20170708

Prime Minister Justin Trudeau, left, chats with European Commission President Jean-Claude Juncker before the start of the G20 summit Saturday, July 8, 2017 in Hamburg, Germany. The two agreed on Sept. 21 as the provisional application for CETA. (Ryan Remiorz/The Canadian Press)

"That's because Canada is going to be a taker on this timeline," she said referring to the Mexican elections and U.S. midterms.

"This will be an accelerated negotiation until it's not an accelerated negotiation and Canada won't be the one to make that call."

However, Canada does have the option of pulling the plug if it's faced with signing an unsatisfactory deal, says Scott Sinclair, a senior research fellow with the Canadian Centre for Policy Alternatives.

"We have to be at the table, but if at the end of the day we would be better off reverting to WTO [World Trade Organization]  multilateral trade rules in an American first NAFTA, of course we should walk away," he said.

A CCPA report found that, based on 2016 trade figures, reverting from NAFTA to WTO bound tariff rates would result in about $4.2 billion US in extra tariff costs.

"That would be disruptive, it would be a speed bump but it definitely would not bring trade to a screeching halt."