Politics

Next week's NAFTA challenge: Restore momentum after Trump's latest 'bullying'

As he left the stage after an event in North Carolina on Friday, Donald Trump's team played the song You Can't Always Get What You Want by the Rolling Stones. It is fun to imagine it as a commentary on the NAFTA talks — but was it a message for Canada, or Trump's supporters?

U.S. President bragged about deal 'totally on our terms,' but Freeland isn't giving up

President Donald Trump kept right on talking tough about Canada at a Republican fundraiser in Charlotte, North Carolina Friday. Earlier in the day, comments he intended to be off the record were somehow given to The Toronto Star, and it cast a pall over the NAFTA negotiations. (Yuri Gripas/Reuters)

As he left the stage after an event in Charlotte, N.C., on Friday, Donald Trump's team played the song You Can't Always Get What You Want by the Rolling Stones. 

It is fun to imagine it as a commentary on the NAFTA talks — but was it a message for Canada, or Trump's supporters?

The renegotiation of the North American Free Trade Agreement hit a rough patch Friday morning, after Trump's "off the record" comments about how the U.S. would not make any compromises and that any deal with Canada would be "totally on our terms."

For good measure, Trump repeated in public his threat to slap oppressive car tariffs on Canadian imports if Canada will not concede.

"I've never seen, in my experience, this kind of bullying — just abject bullying," said Jennifer Hillman, a former international trade adjudicator and general counsel in the U.S. Trade Representative's office. "I don't believe the majority of Americans support this."

Worse for Trump's supporters, it isn't delivering. 

"This is a lot of talk of getting good deals, but we haven't seen any," she said. 

Before Friday morning, Foreign Affairs Minister Chrystia Freeland had been emphasizing the "goodwill" that was evident throughout several "intense" sessions with American negotiators. Then Canadians had to acknowledge Trump's unhelpful comments at the table.

Freeland shifted back to firm talking points about only signing a deal that was good for Canada. Negotiations paused for the weekend. 

Foreign Affairs Minister Chrystia Freeland told reporters she's optimistic a deal is still within reach, but 'we're not there yet.' 1:00

Undeterred, the White House notified Congress of its intentions to reach a potential trilateral agreement in a formal letter Friday. The three countries now have another 30 days to draft a text if they want to hit a Congressional timeline that permits a signing ceremony before Mexico's government changes hands on Dec.1.

Having more time is a good thing, Hillman said, because she figures there is no deal without all three.

'Would this even work?'

"If Canada is not in, it has big implications on the rest of the text, and you're going to have to start rethinking a lot of the concepts that are in the text," she said.

The rules of origin that Mexico negotiated — such as requiring 75 per cent North American content in vehicles — were premised on existing supply chains that stretch across three countries, not two.

"If you pull Canadian content out, I don't know if they can get to that 75 per cent, particularly if they have a lot of Canadian aluminum or steel," she said. "All of a sudden: would this even work?"

Foreign Affairs Chrystia Freeland spoke to reporters at the Canadian Embassy in Washington on Friday 1:38

Adding to that: whether Congress would pass a deal between only two of the partners — Hillman thinks not — and serious legal questions about whether it's possible to reactivate provisions currently suspended in the previous Canada–U.S. free trade deal. "Very complicated," Hillman says.

American negotiators have a strong incentive to find a landing zone with Canada soon. But does their boss really want a deal? That's a risk for everyone negotiating with the United States right now, Hillman said.

"Is this actually a good faith exercise to get an agreement? Or is this all about [wanting] to put a tariff wall around the United States?" she said, suggesting Trump could be using tariffs to reward friends and punish enemies.

"That's a highly cynical view, but to some degree worrying, that we're starting to go down."

Hillman's message to Canada: "Stay in there and keep negotiating. Don't give in to the bullying."

'You can't defend a bad deal'

Negotiating drama near the end is normal, said Ottawa-based trade consultant Adam Taylor, previously an adviser to former Conservative trade minister Ed Fast.

Hitting pause when things reach a politically sensitive stage isn't out of the ordinary, he said. Tough talk about not compromising is par for the course.

"Was Trump actually saying that he has no room for compromise and there's going to be no give from the U.S. side?" Taylor said. "If so, that, obviously, is a problem, because Canada's not just going to roll over.… That's not a negotiation, that's a capitulation."

The Trudeau government can't consider that, he said. "You can't defend a bad deal."

Taylor sees some threats as empty — and capable of de-escalation. Take the sunset clause issue: The U.S. threatened to insert a five-year automatic end to NAFTA, but in talks with Mexico last month agreed to compromise with a 16-year term with a six-year review process.

"Both sides can't afford it to fail," he said. "Trump's reputation as a dealmaker is on the line, ahead of crucial midterm [elections in the U.S.]."

He will want to be able to brag about the auto concessions he won from Mexico to the Republican base, and he needs Canada for that deal to work.

Prime Minister Justin Trudeau spoke to reporters in Oshawa on Friday 2:52

Given Canada's reliance on U.S. trade, the idea of no deal being better than a bad deal for Canada is a "pick your poison" situation, Taylor said. "You're going to die anyway." 

Talks restart Wednesday

Trump's comments "probably poisoned the well," he said, making it tough for Canada to make meaningful offers on Friday. They needed to send a message, and in that respect, taking a break for a few days is wise.

Where does that leave negotiations?

Trump's comments are a "momentum killer," he said. "The challenge next week will be to find a way to get momentum building again."

Chip Roh, a retired American lawyer and trade official, laughs at the idea that not reaching an agreement by Friday is a problem.

Foreign Minister Chrystia Freeland stuck to the high road Friday, insisting that Canada's goal was a "win-win" NAFTA deal but refusing to comment specifically on Trump's snark. (Chris Wattie/Reuters)

Old trade hands know to question any deadline put in front of them, he said, and even the 30-day deadline ahead is "not as real as it looks."

"The truth is, [Trump] can't do this without Canada," he said. "He doesn't know this, but enough people around him do."

Trump is a dangerous guy, Roh said, because although he makes stupid threats that are easy to dismiss, "every once in a while, he delivers on them." He did earlier in the summer, when he laid on his steel and aluminum tariffs.

Roh believes other issues are going to come up before this is over, and said he cannot rule out that even if negotiators succeed, a new NAFTA may not make it to signature for other reasons.

Under the circumstances, hitting pause was very sensible, he said. "It was all done pretty politely."

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