Ticking Off Neighbors, Allies and Trade Partners

By February 29, 2008Trade

Valid point from The Toronto Star, editorializing on the recent anti-NAFTA rhetoric from a few political candidates: “Obama, Clinton err on NAFTA.” The editors note the many trade complaints the Canadians have against U.S. practices — softwood lumber being the most prominent dispute — and remind readers of the political dissatisfaction with NAFTA north of the border.

A U.S. push to reopen NAFTA now would invite Canada to use its leverage as the biggest fuel supplier to the U.S. to bargain for better terms. That would not be in the interest of U.S. consumers and jobs.

The prospect alarms business. “That would be a disaster for American jobs,” warns Frank Vargo, from the National Association of Manufacturers. The U.S. Chamber of Commerce called the Democratic candidates’ remarks “troubling.”

Business insists NAFTA has been a success. Merchandise trade among the three partners tripled to almost $900 billion between 1993, just before the pact was in effect, and 2006. Economic growth and job growth have been stronger since NAFTA than in the years before. Yet, like some Americans, many Canadians are ambivalent about the trade pact and its effects on us. We would like changes to NAFTA, too. Clinton and Obama ought to be careful about what they ask for.

In other NAFTA news, there’s a grand contretemps over a CTV report that claimed Senator Obama’s campaign had told Ottawa not to worry, the anti-trade rhetoric wasn’t serious. The Obama camp disputed the story, the Canadian embassy rejects the claims, but CTV is standing by the report. Our view? (shrug)

UPDATE (10:35 a.m.): From The Financial Times:

Canada has warned that the US’s privileged access to its oil and natural gas could be in jeopardy if a Democratic administration backtracks on the North American Free Trade Agreement.

Canada is the US’s biggest foreign oil supplier, exporting close to 1.8m barrels a day – more than 10 per cent of US consumption. Nafta provisions make it difficult for Canada to restrict oil shipments to the US.

“If Nafta is ripped up then the Chinese can buy more of our oil; there’s no further obligation on the part of Canada to sell its oil to the US,” a Canadian diplomat told the Financial Times.

UPDATE (11:20 a.m.): The CTV report is becoming a campaign issue between the two Democratic candidates.

UPDATE (1:30 p.m.): CTV’s story proves legit.

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