A year ago, Foreign Affairs Minister Chrystia Freeland was touting her relationship-building skills with her Mexican and U.S. counterparts on the NAFTA file as proof she was the right person to pilot the Trudeau government’s efforts to save the continental free-trade agreement.
“It’s extremely valuable that we’re close,” Ms. Freeland told The Globe and Mail’s Adam Radwanski as she rhymed off the names of senior U.S. and Mexican officials with whom she was negotiating NAFTA’s fate. “I exchange texts with Luis and Ildefonso all the time.”
This week, Ms. Freeland’s so-called friends happily threw her under the bus as Mexican Foreign Minister Luis Videgaray and Economy Secretary Ildefonso Guajardo negotiated a bilateral U.S.-Mexico trade deal that gives ground on several key Canadian priorities. And despite all the diplomatic niceties about hoping Canada signs on, Mexico is quite prepared to bid us adios.
“In any scenario, we will have a free-trade agreement between Mexico and the U.S., regardless of what happens with Canada,” Mr. Videgaray said following Monday’s breakthrough deal.
While Mexican negotiators were breaking out the champagne, Canadian officials were insisting that our absence from the party had nothing to do with a clash of personalities. You would hope that to be true; that any decision to exclude Canada from the talks did not stem from anything as petty as the personal dislike of top U.S. negotiator Robert Lighthizer and U.S. President Donald Trump for Ms. Freeland and her boss, Prime Minister Justin Trudeau.
Yet, we know enough about Mr. Trump to realize that operating out of personal spite or enmity is what he does best. You only had to witness his graceless reaction to the death last week of Republican Senator John McCain – one of the President’s fiercest critics who voted against Mr. Trump’s failed attempt to overhaul Obamacare – to take the measure of his smallness.
From Day 1, Ms. Freeland and Mr. Lighthizer were bound to clash. She is a proud proselytizer of the so-called Davos consensus that sees globalization as a good thing that allows high-minded elites to gather in exclusive enclaves to promote inclusive capitalism all while hobnobbing with their billionaire friends. He is an old-school negotiator who sees global trade as a zero-sum game and shares Mr. Trump’s belief that his country has been getting hosed.
By June, Mr. Lighthizer had had enough lectures on Canada’s “progressive trade agenda” to exclude Ms. Freeland entirely from the talks. While Mr. Videgaray was courting Team Trump – the Wall Street Journal reported this week that the Mexican Foreign Minister has visited the White House about 45 times since Mr. Trump took office – Ms. Freeland was taking swipes at the very U.S. administration she was tasked with softening up.
The result is that Canada is now before a fait accompli – an extremely flawed U.S.-Mexico deal – that it must somehow try to both fix and join without blowing the whole thing up. And it must do all this by Friday or risk being sidelined on trade for the duration of the Trump presidency.
To say that Canada has been out-negotiated up to this point is an understatement. But Mexico’s ability to strike a deal shows that, from the outset, it understood much better than Canada what the Trump administration needed in any new agreement. And while Mexico’s concessions on dispute settlement, investor protection, minimum content and rules of origin would turn back the clock on continental economic integration, they may be the only way to save the furniture (tariff-free access to the U.S. market) until a more trade-friendly U.S. administration comes along. Mexico has decided to accept managed trade, rather than free trade, with the United States. That was always the most likely outcome of any negotiation.
Making it unpalatable for U.S. manufacturers to locate plants in Mexico or Canada has always been the Trump administration’s top priority. No amount of lecturing by Canada on the win-win benefits of continental supply chains was ever going to change that. This is a fact-challenged U.S. administration that means what it says: America First. Anything that facilitates cross-border investment – such as a NAFTA dispute resolution mechanism independent of U.S. courts – is by definition antithetical to Mr. Trump’s way of thinking.
The question now is not whether Canada can stand its ground, but rather how much it will need to give up in order to avoid being shut out entirely by Ms. Freeland’s former friends.