Negotiations on the North American Free Trade Agreement — panned by President Donald Trump as the worst trade agreement ever— enter the sixth round next week, and a Canadian trade expert was in Topeka this week touting the treaty’s benefits.
Stéphane Lessard, consul general for Global Affairs Canada in the Midwestern region, met Wednesday with Lt. Gov. Jeff Colyer and other state legislative leaders with one primary concern in mind: encouraging continued U.S. participation in NAFTA.
“The first message and really the most important is the incredible value of the economic partnership that we have developed between Canada and the U.S., but also Canada and Kansas in particular, to sort of of raise awareness about the incredible prosperity that we have built together, in particular through NAFTA. There’s a lot more we can do together, but we need to keep our free trade arrangement going between us. We can modernize NAFTA, but we cannot jeopardize the gains we’ve achieved.”
Trump has been critical of NAFTA, although he appears to have moderated his stance in recent days, with national media reporting that he’s still intent on tough negotiating but is seemingly less likely to abandon the agreement. Agricultural leaders, supported strongly by Sen. Pat Roberts, have worked to make sure Trump understands the significant losses Kansas would see if the U.S. fails to stay in the NAFTA.
Lessard said Canada is in agreement the NAFTA should be modernized, but they strongly support continuing partnerships between the three countries. Kansas in 2016 exported $1.8 billion in goods to Canada, and imported $1.6 billion of goods from the country.
Data for 2017 isn’t in yet, but Randi Tveitaraas Jack, Kansas Department of Commerce’s international development manager, said it appears that Canada moved back into its position as Kansas’ largest export market at $2.348 billion through November.
“Canada is an important export market for Kansas, traditionally ranking as one of our top three trading partners,” she said. “Based on 2016 data, exports to Canada accounted for 17.5 percent of total Kansas exports. Top industry categories for exports are industrial machinery, aircraft and parts, vehicles and parts, electric machinery, food industry residues and waste. The biggest winner is the vehicles and parts sector, which saw $23 million in growth.”
NAFTA needs to be modernized and brought into the 21st century, Lessard said.
“It’s a free trade agreement that should cover as much of our economy as possible. In 1993, when NAFTA was put in place, there are entire sectors of the economy that did not exist,” he said. “Like digital trade, for example. The internet did not exist.”
Other issues, such as opening up government procurement to allow free trade between the country’s economies, are critical. Facilitating the movement of professionals between the U.S. and Canada is important, allowing the process for Canadian business people to locate interests in the U.S. and vice versa to be eased.
“Another one which is important to us is what we call progressive trade,” Lessard said. “The guiding idea behind this is we’re trying to make sure that trade benefits not just the people at the top of the economic ladder, not just the 1 percent. That means we want to open up opportunities for people in the middle class to not just do the work but benefit, maybe become entrepreneurs and just become part of the economic activity of trade.”
Other concerns focus on bringing women into more leadership positions through economic activity, and tightening labor and environmental standards, he said.
Philosophically, Lessard said he believes the three countries agree on job creation for the middle class. But the question is how to achieve that goal. Unfortunately, sticking points in the first five rounds of NAFTA negotiations have been evident. Rules of origin for car automaking, in which the U.S. wants to set a requirement that 50 percent of the value of a car has to be from American sources, are problematic.
“We know that this is not even supported by American carmakers, and we don’t know how this would benefit America, let alone Canada,” Lessard said.
NAFTA negotiations are expected to conclude by the end of March, and Lessard said they’re entering “crunchtime” next week as the countries meet in Montreal.
Although expressing confidence issues can be resolved, Lessard said any negotiators have to consider the possibility of failure.
“We have to be prepared for every eventuality,” he said. “The American president, President Trump, has already mentioned his negative views about NAFTA on several occasions and his possible intention of terminating NAFTA.”
Devastating consequences in job loss and economic losses would occur for all three countries, he said.
“Canada by far is the number one customer of America,” Lessard said. “This is something not really well-known. Sometimes people will think that China is your No. 1 trading partner. Canada buys more from America than all of China, all of Japan and all the UK combined.”