Not So Fast: NAFTA Isn't Dead Yet, Thanks to Concessions From Canada
Reports that NAFTA is finished could be premature, or at least exaggerated. After President Trump announced on Monday that the U.S. had reached a new trade deal with Mexico, potentially leaving Canada on its own, Canadian Prime Minister Justin Trudeau said that NAFTA agreements could come as soon as Friday.
"We recognize that there is a possibility of getting there by Friday," Trudeau said, according to CNN. "But it is only a possibility, because it will hinge on whether or not there is ultimately a good deal for Canada. No NAFTA deal is better than a bad NAFTA deal."
Things are looking good for Canada in that regard, actually. Nasdaq reported today that the Canadian Dollar surged after Canada is reportedly readying concessions to reach an agreement over NAFTA.
The focal point of those concessions are dairy farms, as Canada is considering allowing U.S. farmers to access Canada's dairy market.
Nasdaq's Justin McQueen wrote:
Canada's protected dairy industry has been one of the major stumbling blocks in NAFTA renegotiations, as such, this concession from Canada increases the possibility that the U.S. and Canada could reach an agreement before the October 1st deadline. That said, sentiment around NAFTA has been relatively upbeat with the Canadian Trade Minister stating that talks had been constructive. The outlook for the Canadian Dollar is very much dependent
The deadline for President Trump to submit a renegotiated NAFTA deal to congress is in 18 days. If Canada and the U.S. don't make nice before then, the deal the president announced with Mexico could be the route they take, with Canada given the option to join later on. That wouldn't be ideal for Canada, though.
The NAFTA talks have been ongoing since shortly after Trump took office. Throughout his tenure in the Oval Office, he's been vocal about the deal's perceived flaws:
The U.S. has taken an "all or nothing" standpoint throughout the talks, despite Mexican and Canadian officials being optimistic about them. It ties in with the populist platform of the Trump administration.
Canada, which hasn't solidified its buy-in to the new system like Mexico reportedly has, has to play by Trump's rules for a seat at the table. The dairy concession is a good indicator that it's willing to play ball a little, but it's standing strong on its commitment to a dispute resolution system it fought for 30 years ago—something Trump wants to end.
The prediction? Trudeau might be right about Friday, or at least one day soon.
"So what's the path to a deal? In all likelihood, Canada giving in a bit on dairy, and the U.S. backing of demands to completely nix the Chapter 19 binding arbitration regime Canada holds so dear—if Trump and Trudeau can get over past mudslinging," wrote Politico's Lauren Gardner.
Mexico was in a unique situation, electing a new president in the midst of the negotiations. Trump and Trudeau have more of a past, which became competitive quickly. Canada likely won't join as easily as Mexico did, but their cooperation gives onlookers a reason to share in the optimism Canada's trade officials felt (or faked) during the talks.