Tearing up NAFTA ‘would be devastating’: major U.S. business lobbyist

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The head of the biggest business lobby in the United States is warning against tearing up NAFTA, saying this would wreak havoc on the North American economy.

And U.S. Chamber of Commerce chief executive Tom Donohue vows he will take steps to defend the three-country trade deal in the Trump era.

"Withdrawing from NAFTA would be devastating for the workers, businesses, and economies of our countries," Mr. Donohue told a Canadian business audience in Ottawa.

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"Beneath all the debates, arguments, and attention-grabbing headlines, I think our leaders across the board understand this."

Mr. Donohue may very well end up being one of Canada's biggest allies in the campaign to preserve the North American free-trade agreement.

U.S. President Donald Trump has warned he would pull the United States out of NAFTA if his administration cannot extract better terms for American workers from the agreement with Canada and Mexico. He's expected to serve Ottawa and Mexico City notice shortly of an intention to renegotiate.

Mr. Donohue told an Economic Club of Canada meeting that business groups need to speak out and defend NAFTA, which Mr. Trump as recently as last week described as a catastrophe for the American economy.

"It's our job to ensure that our leaders understand and appreciate how much of our prosperity is linked to this relationship," he said of NAFTA.

He said it would be a mistake to replace the tripartite NAFTA with separate two-way trade deals between the U.S. and Canada and the U.S. and Mexico, saying the North American economies are tied together by interwoven manufacturing chains stretching across borders.

"The way we've set up this system – the way we make automobiles; the way we make airplanes; the way people go back and forth every day – is a benefit to both of these economies. Take one of them out of it, the other will suffer."

Two-way trade in goods and services between Canada and the United States exceeded $885-billion in 2015.

Mr. Donohue warned that things may get rocky in the months ahead, when the Trump administration is expected to press hard for Canada and Mexico to accept changes in NAFTA that tilt the agreement more in the United States' favour.

"We're in a new political environment and our bilateral ties are going to be tested. But I believe, with the engagement of the private sectors and the commitment of leaders on both sides, they can be strengthened."

Rona Ambrose, the interim Conservative Party Leader, asked the Prime Minister to explain what leverage the Liberals have found to defend Canadian jobs from a protectionist American administration.

"Three-quarters of everything we make and sell goes to the United States. The Prime Minister keeps saying that everything will be okay. But the truth is, millions of jobs are being targeted by the U.S. administration: Our farmers, our forestry workers and our steel manufacturers," Ms. Ambrose said in the House of Commons.

Mr. Trudeau said Canada has leverage in trade talks because so many American jobs depend on Canadian customers. "Millions of American middle-class jobs depend on close trade relationships with Canada. Thirty-five different American states have Canada as their number one export destination. Our economies are integrated like no two countries in the world."

It's unclear how quickly NAFTA renegotiation talks will begin.

Mr. Donohue warned that an expected executive order from Mr. Trump will affect employment visas and potentially thwart the movement of Canadian workers into the United States.

He said the U.S. Chamber of Commerce will try to "work with the White House to ensure that these programs allow America's diverse economy to attract – not shut out – the variety of workers we need to grow and compete."

Both Canadian Chamber of Commerce president Perrin Beatty and Mr. Donohue said a NAFTA renegotiation needs to modernize business and employment visa categories that are unchanged from nearly a quarter century ago. "If we don't update and expand some of these categories – especially those in the science and tech sectors – we risk shutting out high-skilled talent needed to innovate and grow our economies," Mr. Donohue said.