Canada and Mexico have just been through the same kind of trial in trade talks. The aftermath is a little awkward.
The two smaller partners in the old North American free-trade agreement talked up a common front, but at key points, they let that slide to look out for No. 1.
That’s the story of the North American bloc since the beginning: for both Canada and Mexico, the relationship with the United States outweighs their relationship with each other. Now, U.S. President Donald Trump clearly doesn’t see North America as a bloc, anyway. The recent negotiations for the rebranded United States-Mexico-Canada Agreement ended as hub-and-spokes talks where the United States dealt with Canada and Mexico separately.
Mexico’s Ambassador to Canada, Dionisio Perez-Jacome Friscione, is keen to emphasize it all worked out and insisted that throughout the negotiations Mexico wanted a trilateral deal and kept in close touch to Canada.
“We always had not only good relationships but also good communication at all levels, starting with the President and the Prime Minister,” Mr. Perez-Jacome said, noting that in the week before the deal was closed, Prime Minister Justin Trudeau met Mexican President Enrique Pena Nieto on the sidelines of the United Nations General Assembly in New York.
But there were bruises.
In the spring, the Canadian team, seeking a way past the U.S. demand that 50 per cent of North American cars be American-made, suggested to the U.S. team that car content might instead be tied to higher wages – essentially proposing a Mexican concession.
In the summer, the Mexicans, keen to close a deal before new president-elect Andres Manuel Lopez Obrador takes office Dec. 1, agreed to bilateral negotiations with the United States, excluding Canada. In August, Mexico signed a bilateral agreement-in-principle that dealt with some trilateral issues, too. That left Canada on its own to try to wheedle out further concessions from the Americans.
“Having spaces for bilateral conversations, it’s common,” Mr. Perez-Jacome said. “We both had our process with the United States.”
He argued those separate talks in fact helped unblock a deal: The Mexico-U.S. arrangement on auto rules was a key breakthrough, he noted, and Mexico got the United States to water down a demand for a sunset clause that would have seen the USMCA expire after five years unless it was renegotiated.
Mexico didn’t insist on Canada’s red lines, such as retaining the dispute-settlement panels in Chapter 19 of NAFTA – but Mr. Perez-Jacome said Mexican negotiators always made it clear to their Canadian counterparts they were focused on other priorities.
It’s worth noting, too, that at times Mexico’s heft in NAFTA served Canada.
When Mr. Trump was first elected, several Canadian public figures suggested Ottawa ditch Mexico for separate trade talks. But in the moments when Mr. Trump threatened to trigger immediate U.S. withdrawal from NAFTA – notably in April, 2017 – Mexico’s weight probably tipped the balance. Republicans feared U.S. farmers would lose important markets in Mexico.
“In the end, working together was useful, but only up to a point,” said Derek Burney, a former Canadian ambassador to the United States and chief of staff to former prime minister Brian Mulroney.
In a colder world, he said, Canada now has to keep in mind the axiom of 19th British Prime Minister Lord Palmerston, that countries have interests, not friends.
In NAFTA talks, Mexico’s domestic politics inserted some extra realpolitik. Mr. Trudeau’s government had worked to build ties with that of Mr. Pena Nieto, but it was the election of Mr. Lopez Obrador that accelerated the talks – the left-leaning president-elect wanted the deal done when he took office to focus on domestic affairs.
Now, Mr. Trudeau’s relationship with Mr. Lopez Obrador will start from an awkward standstill.
“I don’t think there’s going to be bad feeling, but I don’t think it’s going to be warm and fuzzy, either,” Mr. Burney argued.
Mr. Perez-Jacome insists it should be easy to move on. The two governments have institutional ties. Mexican students and tourists now make Canada a destination. Canada-Mexico trade, although relatively small, is growing faster than trade with the United States. The trade talks were “non-traditional” at times and raised “sensitivities,” he said. “But everything ended up well. And there was always communication.”