Negotiation of NAFTA

Canada steps on the accelerator in the negotiation of the North American Free Trade Agreement (NAFTA) and pressures its two regional partners: Mexico and the United States.

The prime minister on Wednesday sent a direct message to the Mexican government on one of the thorniest issues in the talks to update the largest trade agreement on the planet: the wage gap between the three countries, which reaches up to six times less then  Canad, in the case of the manufacturing sector. “If we can raise labour standards in Mexico, there is less incentive for companies to move there because of extremely low wages,” he said at a symposium held at the University of Chicago.

If that happens, Trudeau continued, “the companies that are there with higher wages will create a [greater] base of consumers of Canadian and American products, and greater economic growth [in Mexico].” The message is clearly aligned with the Canadian and American trade unions, which have been insisting for months that the new treaty should include wage equalisation throughout the region. Also with the voices in Mexico advocating a rise in wages as a way to achieve greater social justice while strengthening the domestic market.

The Canadian head of government, has put on the table a “progressive” reformulation of the treaty, in which wage differences, respect for minorities and the gender perspective play a fundamental role, also the PM took advantage while in Chicago to send a message to the White House, which in the last round of trilateral talks that stacked the deck against Canada. “A no agreement can be better than a bad agreement,” said Trudeau.

The prime minister has raised the tone in recent days and, as US President Donald Trump has repeatedly done, has threatened to abandon the trade agreement with the United States and Mexico, in force since 1994, if Washington persists in its demands. .

NAFTA eliminated tariffs among the three countries and multiplied trilateral trade, but did not close the crack in the average income between Mexico, Canada and the United States.

In Chicago, Trudeau was convinced that it is possible to reach a “fair” agreement on NAFTA and admitted that it is “absolutely necessary to modernise it”. At the same time, he emphasised the economic benefits that the treaty has brought -that the Trump Administration strives not to recognise- and warned that breaking it would mean in the short term a “disruption” of millions of American jobs and families. “[In the negotiation] there are no intractable problems, but they require us to sit down and see what is the best way to move forward,” he said.

The Canadian government, like its Mexican counterpart, has adopted a clear strategy in its relationship with Trump: to influence the leader of the world’s leading power, instead of talking to him, it can be more effective to seduce his environment to convince him Indirect how important the NAFTA is to your own country.

To that end, the Canadian PM on Wednesday began a four-day tour of the United States in which he visits Illinois and California but does not see Trump. Both met last February and October at the White House.

The purpose of Trudeau is to convince politicians – Democrats and Republicans – and businessmen of the benefits of the agreement at a time when the renegotiation, imposed by Trump, is in a delicate phase.

Two weeks ago, at the Montreal summit, Canada tried to open a new channel of dialogue on one of the issues that has been most blighted in the negotiation by the US side: the automotive sector. But his proposal was immediately rejected by Trump’s emissary in the talks.

Trump, who made trade protectionism an electoral emblem, considers that the treaty is too generous with its two neighbours and is responsible for the flight of jobs and the industrial decline of the Midwest of the United States.

That same fear tactics Trudeau is trying in Chicago, the first stop on his tour.

There he met with the mayor of the city, the Democrat Rahm Emanuel, and the governor of Illinois, the Republican Bruce Rauner, before speaking at the university.

Chicago is a democratic fief, the political birthplace of former President Barack Obama. But, as recalled in an article by Campbell Clark, an analyst for the Canadian newspaper The Globe and Mail, Obama barely managed to convince “nearby allies” there to defend the TPP, the trade agreement that planned to unite the US with 11 other Pacific countries, included Canada.

Trump cancelled that pact shortly after assuming the presidency and is now one step away from closing it without Washington. After Chicago, Trudeau travels to San Francisco, where he meets with entrepreneurs and entrepreneurs. And then to Los Angeles to speak on Friday at the Presidential Foundation of Ronald Reagan.

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