The House

Midweek podcast: NAFTA tipping point could leave Canada outside looking in, says economist

This week on the midweek podcast, guest host Terry Milewski is joined by economist Daniel Schwanen to explore Canada's options when it comes to negotiating a trade deal with the U.S. — which announced a bilateral deal with Mexico this week.
U.S. President Donald Trump has floated the idea of leaving Canada out of a future trade deal with Mexico. (Kevin Lamarque/Reuters)

 As Canada and the U.S. engage in extremely intense last minute NAFTA negotiations, one economist says Canada still has some room to strike a good trade deal with the U.S. and Mexico.

Canadian negotiators flew to Washington to resume NAFTA talks this week after President Donald Trump announced a U.S.-Mexico trade deal that he said could replace the trilateral one in existence now.

Canada hasn't been left without options though.

This week on the midweek podcast, guest host Terry Milewski is joined by economist Daniel Schwanen to explore Canada's options when it comes to negotiating a trade deal with the U.S. - which announced a bilateral deal with Mexico this week. 13:52

"Everyone would prefer a trilateral agreement," Daniel Schwanen, an economist with the C.D. Howe Institute told CBC Radio's The House.

Even if the president won't admit it, Schwanen added, it's easier — legally speaking — to keep the foundation of NAFTA intact. "Canada has a bit of room to manoeuvre here," he said. 

The U.S. Congress hasn't been notified of a bilateral deal with Mexico, meaning U.S. President Donald Trump's suggestion he could go it alone with that country may not be within his ability.

Schwanen cautioned that it's not impossible for the two-party deal to pass, since Trump could argue he attempted to sign with both nations and a bilateral deal could still be considered a product of trilateral negotiations.

The tariffs recently imposed by the U.S. show Canada has paid the price for standing firm on things like supply management in the dairy sector — something that has angered Trump since the outset of negotiations, since it doesn't allow large quantities of U.S. dairy products to flow into Canada.

Supply management might be one thing for Canada to rethink, Schwanen said; "It is something that we could give up," and not "suffer tremendously."

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