The NAFTA showdown between Canada and the United States will pit the interests of the automotive industry and other exporters against protected sectors like dairy, telecommunications, airlines and banks, Carleton University Associate Professor Ian Lee said.
“You can bet that those four industries will shamelessly invoke Canadian nationalism to protect their own greed, their own private interests,” Lee said. “They’re going to wrap themselves in the flag and say they’re doing this for Canadian identity.
“The question is will the government if Canada, the Trudeau government, have the courage to take them on?”
The country’s dairy farmers, “12,000 multimillionaires” whose supply management system in the absence of American competition allows them to jack up prices, are most vulnerable to NAFTA renegotiations, he said.
The telecommunications industry employs more people than the dairy industry but far fewer than the auto sector, and it has used its protection to give Canadians the highest cellphone rates in the world, he said.
Despite what President Donald Trump said following a meeting with Prime Minister Justin Trudeau — that the Canada-U.S. portion of the deal would be “tweaked” — the revisions will be major, he said.
With about 5 million jobs dependant on exports, two-thirds of which are headed to the United States, Canadian negotiators will be determined to secure open access to American markets.
Giving up that access on behalf of 12,000 well-off farmers seems unlikely.
“I think it would be economic suicide for any Prime Minister to adopt such a position,” Lee said.
U.S. Commerce Secretary Wilbur Ross used more pointed language than his boss, telling reporters he wants “concessions” from Canada and Mexico.
Ross said he expects the renegotiation of NAFTA to begin in about three months and to take roughly a year to conclude.
It’s clear the U.S. wants to add some sectors that were not an issue when NAFTA came into effect in 1994, such as intellectual-property protection, as well as open the market to competition in those sectors that were purposefully excluded like dairy and telecoms, Lee said.
Isabelle Bouchard, a spokesman for Dairy Farmers of Canada (DFC), said in a statement that it is monitoring the NAFTA situation closely.
“If (the U.S) should inquire about dairy, we have no reason to doubt that our government will protect and defend the Canadian dairy industry,” Bouchard said. “Canada and the U.S. have a strong agriculture trading relationship…Our agriculture markets are highly integrated and our agriculture trade is balanced overall.”
The two countries do $47 billion U.S. in bilateral trade of agricultural products annually.
The U.S. had an agricultural trade surplus of more than $2.4 billion in 2015 and Canada is the top agricultural export market for 29 U.S. states, she said.
Lee noted there are 1.7 million dairy cows in Republican Speaker Paul Ryan’s home state of Wisconsin.
“It’s the second largest dairy milking cow state in the United States after California. That’s a lot of farmers who are really upset at us Canadians because they can’t export their stuff to us,” he said.