Gordon Ritchie is a former Canadian ambassador for trade negotiations and deputy chief negotiator of the Canada-U.S. free-trade agreement (FTA)
In the last week, U.S. President Donald Trump has turned his fire on his northern neighbours, proclaiming that the North American free-trade agreement was the worst trade deal in history and Canadians have used it to treat Americans roughly and even disgracefully, taking advantage of weak American leaders to run up a huge surplus in our trade.
These intemperate comments caused some consternation in Canada, but it is worth doing a reality check on these bold assertions, drawing on the Trump administration's own data, principally from the website of the Office of the United States Trade Representative, which will ultimately lead any negotiations with Canada and Mexico. There we read that on two-way trade of $662.7-billion (all figures U.S.) in 2015, the latest data posted, "[t]he U.S. goods and services trade surplus with Canada was $11.9-billion."
That's right: The Americans sell more to us than we sell to them under NAFTA. They sell us more services (a surplus of $27-billion) and we sell them more goods (a surplus of $15-billion) but before anyone gets too excited, these balances represent only a few days' trade in either direction.
If we look at trade in goods alone, the USTR points out that "Canada was the United States' largest goods export market in 2015." Not only the largest but the highest-value products – cars and trucks, machinery, etc. A much bigger and better market than China or Mexico.
As for U.S. imports from Canada, a sizable chunk (more than $100-billion by the most recent figures) comes in the form of energy.
In the original free-trade negotiations in the 1980s, it was a prime U.S. objective to get assured access to Canadian energy after the problems with the National Energy Program that restricted and taxed energy shipments to the United States. Mission accomplished. Canada is by far the biggest and most secure supplier of the American appetite for oil, gas, and electricity, at very favourable prices.
Take that out of the equation, and the United States runs a substantial surplus on its trade in all other goods with Canada. That's right: Setting aside energy, the United States sells us much more than we sell to them under NAFTA. And much of this trade, in both directions, is within large, American-owned companies.
The classic case is the auto companies, General Motors and Ford. It is estimated that the typical auto part crosses a NAFTA border seven times before emerging in the finished automobile. These companies are not amused by Mr. Trump's threat to terminate the agreement. As Prime Minister Justin Trudeau pointed out to the President, such a rash move would cause massive disruption to American as well as Canadian firms and workers dependent on NAFTA supply chains.
How many jobs are at stake? The United States Chamber of Commerce estimates that nearly 14 million American jobs depend on NAFTA. This, not sweet talk over the phone, is the real reason Mr. Trump has backed down from his threat to withdraw, at least for the moment. American companies, American workers and American politicians (such as Senator John McCain) pushed back hard.
There will always be room for marginal improvement around the edges of any trade arrangement but the central fact remains: The Canada-U.S. trade relationship is the envy of the world.
Perhaps Mr. Trump believes he can "roll" the unfailingly polite young Canadian Prime Minister as he claims to have rolled his opponents in so many real estate deals. That would be a serious misjudgment. It is worth remembering that Mr. Trudeau boxes for recreation and that hockey is our national game.