A deal experts said was dead in the water materialized over the weekend when Canada announced it had reached an agreement with the United States to replace the North American Free Trade Agreement (NAFTA). The deal came about as a frustrated Prime Minister Justin Trudeau called a late night meeting with his cabinet. Indeed, the materialization of an agreement serving to improve America’s trade position in North America would not have occurred were it not for the negotiating prowess and vision of President Donald Trump.
The workings of the trade deal actually date back to before President Trump’s election. From the beginning of his campaign, then-Candidate Trump voiced his frustration at the United States’ involvement in a deal that was hurting American workers. Calling them “bad deals,” Trump expressed his befuddlement at how politicians could agree to such catastrophic trade deals. NAFTA quickly became a centerpiece of Trump’s campaign for president and the object of his ridicule.
Upon assuming power, President Trump wasted no time threatening the stability of NAFTA by announcing his intention to pull the United States out of it. Predictably, the naysayers took to the airwaves, arguing that NAFTA was a creator of jobs. Investor Dennis Gartman called such a move, “egregiously stupid,” and CNBC proudly published his opinion. Meanwhile at Forbes Magazine, Professor J. Bradford DeLong called the prospect of leaving NAFTA, “a disaster” while Stuart Anderson, the author of the article, mocked Trump by stating that visual aids were needed to teach the President why leaving NAFTA was a bad idea. Anderson held nothing back when he concluded, “Donald Trump does not know much about the trade agreement he has so frequently criticized.”
Undeterred, President Trump continued to place his disapproval of NAFTA at the center of public discourse. Recognizing his greater advantage over Mexico, he then pealed America’s southern neighbor into a separate agreement that did not include Canada calling it a “terrific agreement for everybody.”
With the Mexican trade deal solidified, Trump turned his attention to Canada, this time suggesting that he might leave Canada out of the deal if it did not negotiate.
Canada remained defiant. “We will only sign a new NAFTA that is good for Canada and good for the middle class,” said a spokesman for Canadian Foreign Minister Chrystia Freeland. For Canada, there were a number of sticking points to a new deal. First the NAFTA dispute resolution process that protected the cultural exemptions was “fundamental.” This “exemption” protected Canadian artistic products, including media outlets. Understandably, Canadians feel threatened that American networks might buy Canadian media affiliates and essentially control their media coverage. Further, the abandonment of Canada’s tariffs on American dairy products was considered too great a threat to be acceptable.
But President Trump remained undeterred. He imposed an October 1 deadline upon Canada, insisting that if it did not provide the text for a new trade deal to the United States Congress by that time he would move ahead with the deal with Mexico and exclude Canada.
Trudeau did the only thing he could and called for “common sense to prevail.” He appealed to Canada’s partners, including the European Union, to ramp up their pressure on the United States. But the reality was that Canada could ill afford to be kept out of a new North American trade agreement. The Canadian dollar was weakening, and the prospect of Canada continuing without a treaty seemed like a doomsday scenario for its economy; and for Trudeau’s impending reelection.
With negotiations seemingly hopelessly stalled as recently as late September, Canadian negotiators went to work. And by Sunday, September 30, the two countries agreed to terms. The new agreement, known as the United States-Mexico-Canada Agreement (USMCA) is nothing short of revolutionary. Among other provisions, the USMCA curbs Canada’s high tariffs and low quotas on American dairy product; drops the percentage of a car needing to be manufactured in China that would still allow it to be considered “North American;” includes provisions that help NFL advertising; and forces Canada and Mexico to respect American drug patents for ten years. And Canada gets to keep its cultural resolution process exemption.
In a very real sense, the trade deal vindicates President Trump. He identified a palpable problem in North American trade and placed his political capital on the line to see it terminated. As a result, Trump emerged much stronger, an important perception at a time when he is knee deep in trade negotiations with China. But more importantly, President Trump’s priority of protecting American workers and improving the environment for American businesses prevailed.
There is also the glaring realization that these new agreements would have never come to fruition without President Trump. The events leading to Sunday’s breakthrough would never have been possible without Trump’s aggressive, even bombastic style. Most importantly, when President Trump said he would walk away from the deal, he was believable, forcing all players to look hard at the possibility of having no deal at all.
Say what you want about President Trump, he has become America’s greatest weapon in international negotiations, much to the joy of the American worker.
RELATED ARTICLE: How the Economic Boom Is Lifting Latino Communities