The buzzwords for the latest round of NAFTA talks in Montreal were "cautious optimism," but in reality, that meant heavy on caution, light on the optimism – with a helping of grumpy U.S. warnings, and the ever-present reality that no one knows what U.S. President Donald Trump might do.
It ended with all three countries talking about the next round of talks in Mexico in February and planning for an eighth round in Washington, probably extending the March deadline yet again. But Foreign Affairs Minister Chrystia Freeland was still unwilling to express confidence that Mr. Trump won't trigger a withdrawal from the North American free-trade agreement next month, or in three months, or Tuesday night in his State of the Union address.
More and more, it looks as though this is going to be Canada's new reality: The talks continue for a year, perhaps even three years, with Mr. Trump's threat to withdraw from NAFTA constantly hanging in the air. On trade, Canada could be living dangerously for years.
U.S. Trade Representative Robert Lighthizer, like Ms. Freeland and Mexican Economy Secretary Ildefonso Guajardo, said there had been progress in Montreal. Negotiators at least started to talk about some of the most contentious issues, he said.
But Mr. Lighthizer added a fair helping of his customary cantankerous assessment, suggesting Canada and Mexico are moving too slowly and calling one Canadian proposal a "poison pill." Canada had put forward a proposal to redefine the way North American content of cars is calculated, billing it as a potential compromise on one of the most divisive issues in the talks – but Mr. Lighthizer attacked it as even worse than the deal as it is now.
This is progress? Not much has changed in the actual negotiations. The big outcome of the sixth round of NAFTA talks is that there will be a seventh and an eighth.
Mr. Guajardo, the Mexican minister, optimistically stated that the talks put the three countries on "the right track to create landing zones" for an agreement, whatever that is. But these talks are still stuck on American proposals that Canada and Mexico consider non-starters.
Yet the talks go on. Canadian officials like to think that's partly because there has been a more vocal pushback from U.S. business interests, farmers, governors and members of Congress warning Mr. Trump they want him to renegotiate NAFTA, not tear it up. Members of the ways and means committee of the U.S. House of Representatives, briefed by Mr Lighthizer in Montreal, expressed that view. They don't want a NAFTA disruption in an election year, at any rate.
Dragging it on might even sit well with Mr. Trump. He's busy crowing about his tax-cut bill and the economy, and NAFTA isn't at the top of the U.S. agenda. Tearing up NAFTA would hurt a lot of voters in Republican districts, but it will also be hard to negotiate a NAFTA 2.0 that lives up to his promises.
Maybe Mr. Trump will keep attacking NAFTA, and threatening to tear it up, while Mr. Llighthizer's office launches trade litigation, as it has against Canadian lumber, airplanes and wine. The President can take credit every time a company opens a plant in the United States – as he did this month when Fiat Chrysler decided to move production of Ram trucks from Mexico to Michigan.
Justin Trudeau's Liberal government will consider that better than having the whole deal collapse. The danger is that it will discourage companies from investing in Canada because at any given time it is unclear if trade rules governing access to the world's largest market will be ripped up, and if that will happen next year or next Tuesday.
The Liberal government's trade policy is somewhere between Plan A (focus on a new NAFTA deal) and Plan B (mitigate the impact of NAFTA's collapse). In November, Mr. Trudeau refused to sign the 11-nation Trans-Pacific Partnership after the auto industry lobbied against it, partly because it could complicate NAFTA talks. In January, Canadian negotiators accepted pretty much the same deal, because the other 10 countries threatened to go ahead without Canada and the Liberals felt they couldn't afford to be left out of a new trade deal when NAFTA is up in the air.
The signal from this round of NAFTA talks isn't that a deal is close, but that Mr. Trump's threats to withdraw might hang in the air for a long time – and Canada will have to get used to it.
Campbell Clark