Are the Americans just behaving like Americans in the NAFTA talks, or like Trumpians?

There’s a difference. The Americans have always thrown their weight around in trade talks. It’s what they do. Their interlocutors expect it, and know how to deal with it — at the table and in the back halls of the negotiations — in order to find a way through to a deal.

The Trumpians aren’t interested in a deal. They only want a win for a client base of one: Donald Trump. He’s called NAFTA “the worst” trade deal in history, which is transparently false. In the midst of the talks, he talks about “terminating” NAFTA. With the Canadian prime minister sitting beside him in the Oval Office last week, he mused aloud to the media about doing “a bilateral” deal with Canada, putting Justin Trudeau in a very awkward place.

The American negotiators may have only one client, but the client himself has a constituency of one — and it’s Trump, not America. The Trumpians are isolationist, protectionist, nativist and completely impervious to reality — to the pressure of facts explaining the empirical benefits of free trade for the American economy.

Nine million American jobs depend on exports to Canada. Another five million depend on exports to Mexico. Fourteen million American jobs depend on NAFTA. All facts. Trumpians couldn’t care less. The professionals at the trade talks must be privately mortified at the bullying behaviour of the administration.

In the last week of talks in the Washington suburb of Arlington, Va., Team Trump has put forward at least five non-starters, all potential deal-breakers:

More stringent rules of origin in the automotive sector.

A sunset clause requiring NAFTA renewal every five years.

Access to government procurement in Canada and Mexico without reciprocity in the U.S.

A demand that Canada end supply management in dairy, eggs and poultry.

An end to the dispute settlement chapters — Chapter 11 on investment, Chapter 19 on anti-dumping and countervail and Chapter 20 on disputes over the application of NAFTA.

In the face of this, Canada doesn’t want to be the one to blow up the talks — but there may come a point where we have to walk away from them.

This actually happened, when Brian Mulroney called his free trade negotiating team home from Washington on the evening of September 30, 1987.

It’s astonishing that they manage to make such demands with a straight face. Sorry. No reciprocity, no deal. It’s astonishing that they manage to make such demands with a straight face. Sorry. No reciprocity, no deal.

With no cell phone, he went to a pay phone after a speech at a Toronto club and called the PMO switchboard, which connected him to the Canadian negotiating team in Washington. With no progress on the dispute settlement mechanism, he ordered them back to Ottawa. “What’s the problem?” he was asked in the car on the way to the airport. “No leadership,” he replied. He was talking about the Americans.

The next day, the Canadian team returned to Washington with instructions from their government: no dispute settlement mechanism, no deal. Even then, it took a conversation between Mulroney and U.S. Treasury Secretary James Baker to clinch a deal just before the expiration of President Ronald Reagan’s fast-track authority to negotiate an agreement to be voted on up-or-down without amendments by Congress.

There’s a fast-track extension deadline on this NAFTA round as well, running to next July 1, which happens to be the date of the Mexican presidential and general elections. But these talks need to be over well before then, with the U.S. mid-term primaries looming over the winter, and the Mexican campaign also ticking on the timeline.

On automotive rules of origin, Trump’s ask is for 50 per cent U.S. content in North American autos, with steel specified as one of the components. He also wants 85 per cent NAFTA content, up from the current requirement of 62.5 per cent — already the highest regional content threshold in the world, according to the Canadian Vehicle Manufacturers Association.

The Canadian Automotive Parts Manufacturing Association says U.S. content in Canadian assembled vehicles is already at 63 per cent, with American content of Mexican autos at 40 per cent. Scotiabank Economics also puts North American content at 75 per cent. So perhaps there’s a margin to deal with Trump’s demand — but the auto and parts industries, and the auto workers, say it can’t be done.

The industry would rather pay a 2.5 per cent U.S. import duty than deal with all the paperwork involved in applying Trump’s ask to an integrated industry in which vehicles cross borders at least six times during assembly. This has been the case since the 1966 Auto Pact, signed by President Lyndon B. Johnson and Prime Minister Lester B. Pearson at the LBJ Ranch. It was a definitive moment in Canada-U.S. relations, the forerunner of the FTA itself in 1987.

As for a five-year sunset clause … for pity’s sake. No one in their right mind would want to re-negotiate a free trade agreement with the Americans every five years. It would mean going to Congress every five years. The only winners would be lobbyists, consultants and trade lawyers. Businesses, in the face of such uncertainty, would be the losers.

On procurement, the Americans insist on “Buy America” and “America First” at the federal level, with state governments excluded, yet are demanding access to the Canadian market. It’s astonishing that they manage to make such demands with a straight face. Sorry. No reciprocity, no deal.

On dismantling supply management over the next decade — perhaps the Canadians should show the Americans some video of Canadian dairy farmers storming Parliament Hill with their cows. Oh, and by the way, Team Canada should remind the Americans of their $400 million surplus in dairy trade with Canada.

Finally, on dispute settlement mechanisms, the Canadians might be prepared to agree on limiting or eliminating Chapter 11 on investment, on the argument that it allows private sector investors to infringe on national sovereignty. But Chapter 19 — the independent panels settling bi-national disputes on anti-dumping and countervail duties — that stays. Taking it out is a complete deal-killer for Canada, and for Mexico as well.

Trump can pull out of NAFTA on six months’ notice. But Congress would have to repeal the implementing legislation. The president proposes, but Congress disposes.

Your move, Mr. President.

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