Donald Trump's NAFTA wishlist

A promise to rip up or at least renegotiate the North American Free Trade Agreement, "the worst trade deal in history", was a key part of Donald Trump's election platform.  Six months after Trump's inauguration, his administration has now published a comprehensive list of what it hopes to get out of the renegotiation, which is supposed to begin around August 17.  There are some important demands that will cause serious problems for Ottawa's negotiators, but the list also includes a number of items that would be widely welcomed by Canadian consumers.

Let's start with the problematic stuff:

• The US wants to eliminate entirely the dispute resolution mechanism in the current NAFTA agreement, known as Chapter 19.  In a way this is a bit surprising: the US always seems to ignore judgments made against it under this chapter.  Removing it is likely to be something of a red line for Canadian negotiators, particularly since the US recently imposed fresh tariffs against Canadian softwood lumber, and Chapter 19 would currently be the mechanism for attempting to resolve this issue,  It is difficult to see how a free trade agreement can exist without some provision for handling disputes, but that will be the US position going in.

• Free trade agreements these days are as much about investment as trade in goods, and the US is seeking greater rights for US companies to make investments in Canadian or Mexican companies.  Canada severely restricts or outright prohibits foreign ownership in a number of key sectors of the economy (banking; media; airlines) and this may well turn out to be an area of serious disagreement.

• The US appears to want asymmetrical rules on public contracts.  While it wants US companies to have unfettered access to tenders in Canada and Mexico,  it seeks to maintain its Buy America provisions (particularly close to President Trump's heart) and to exempt state and local government procurement altogether.  Canada unashamedly favours domestic producers for large public contracts, often with disastrous results, as the fiasco of Toronto's streetcar deal with Bombardier shows.  The problem at the negotiating table is likely to be the fact that many of these preferential deals originate at the provincial rather than national level; it will be difficult for federal negotiators to water them down.

Then there are the provisions that are likely to go down well with Canadian consumers:

• Although dairy products are not mentioned specifically in the US wishlist, Canada's extraordinary supply management system has been a bone of contention for many years.  It represents one of the most egregious examples of "producer capture" to be found anywhere in the world.  Production of milk, butter, cheese and eggs is subject to strict quotas and import restrictions, which keep the farmers profitable but mean that Canadian shoppers pay far more than their American neighbours for these staple food items.  It's hard to imagine that many Canadians (aside from the influential farm lobby) would be sad to see the whole system blown up.

• Canadians face some of the world's most miserly limits on cross-border duty free purchases, with anything above C$ 20 subject to duty.  The US wants that limit raised to C$ 800.  This would bring joy to the legions of Canadians who line up at the border crossings here in Niagara each day on their way to American malls, but would deal a further severe blow to the ailing retail economy of the region. 

What's most striking about the US list, at least from a Canadian perspective, may be the fact that it has been published at all.  That has happened thanks to the more open US system of governance.  The Ottawa government no doubt has a similar wishlist of its own, but is under no obligation to publish it. Canadians will only find out what their government is prepared to deal away once the talks get started.