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How Trump’s opposition to NAFTA affects Canada

November 19, 2016 at 4:54 PM EDT
During his campaign, President-elect Donald Trump opposed NAFTA, the North American Free Trade Agreement, which began in 1994 and opened up trade between the U.S., Canada and Mexico. He stated that the treaty sent U.S. jobs out of the country, particularly to Mexico. Alexander Panetta, a Washington correspondent for The Canadian Press, joins Alison Stewart to discuss.

ALISON STEWART, PBS NEWSHOUR WEEKEND ANCHOR:  During his campaign, candidate Trump said he opposed NAFTA, the North American Free Trade Agreement, that went into effect in 1994.  It eased trade among the U.S., Canada and Mexico.

Critics, like Mr. Trump, blame NAFTA for causing U.S. companies to move jobs particularly to Mexico, where labor is cheaper and regulations less stringent.  But what about Canada?  Both Mexico and Canada send most of their exports to the U.S.

To discuss the trade issue further, I am joined now from Washington by Alexander Panetta, the Washington correspondent for “The Canadian Press.”

Alexander, both Canadian and Mexican leaders reached out to the incoming Trump administration, signaling a willingness to talk about NAFTA.  Why do this before Mr. Trump even takes office?

ALEXANDER PANETTA, THE CANADIAN PRESS:  Well, I suspect part of the — part of the rationale was to remove some of the drama from the conversation.  There have been adjustments made to NAFTA over the years, including when Bill Clinton took office, and afterward afterwards in 2001, 2004.  The rules of origin for a few products were changed, including for feathers, for ore, for cocoa, cranberry juice.

So, the question now is how much he wants to change it.  You’ll note that he wasn’t exactly very explicit in the campaign about the changes he would be seeking.  So, does President-elect Trump intend to do a drastic overhaul or something along the lines of what’s already occurred several times?

ALISON STEWART:  Canadian Prime Minister Justin Trudeau has been proactive about this.  He spoke about it at a news conference on Wednesday and then some of his critics said, “Wait, you just weakened our negotiating position.”  Has he, and what does Canada have to lose if NAFTA should can change or be eradicated?

ALEXANDER PANETTA:  I think one of the best metaphors for the U.S.-Canada relationship came from the prime minister’s father, Pierre Trudeau.  During a state dinner here in Washington, described the Canada-U.S. relationship as basically a mouse sleeping next to an elephant, that no matter how even-tempered the elephant is, every twitch is felt by the partner.  And lately, the elephant’s been twitching a lot.

Seventy-six percent of our exports come to the United States.  About a quarter of our jobs are dependent in some way on trade with the United States.  It would be devastating to our economy.

ALISON STEWART: Globalization has changed the conversation in so many different countries.  And it’s changed the political tenor in so many different countries.  What about Canada?

ALEXANDER PANETTA:  I think a lot of Canadians would like to pat themselves on the back and say, we are so open to globalization, we are welcoming refugees and trade and foreigners and everything is going swimmingly.

But the truth is that there are different factors at play.  One being basically that we share a border with you, with a very developed country, that we — that immigration hasn’t changed necessarily the tenor of our labor market, where — as opposed to the United States, where a lot of immigration has basically driven down some low-cost wages.  And so, that, you know, creates some social tension.  That doesn’t exist in Canada very much.

Our immigration system also operates on a point system.  Basically, we can pick and choose engineers, doctors, basically, immigrant who come and fill certain slots in the economy.  That also changes the feelings about trade and globalization.  So, essentially, you have the conditions there for a country that’s very happy with the globalized world and economy.  So, you don’t hear this kind of explaining complaining about trade in a national election.

ALISON STEWART: Alexander Panetta from the “The Canadian Press” — thanks so much.