The breakdown in Canada-U.S. negotiations has left Canada in a difficult position, with uncertain and challenging times ahead. But agreeing to the deal the U.S. was offering on Friday night would have been worse, writes Steve Verheul in the Globe and Mail.
Accepting tariffs against key Canadian exports in an integrated North American economy and against the fundamental obligations of our existing free trade agreement would have meant crossing a threshold that would be difficult to unwind. Canadian autos, which faced a reported 15-per-cent tariff under the terms of the proposed deal without an exemption for Canadian content, would have faced the most severe consequences. But that illustrates obstacles that would have also been faced by others.
More broadly, signing a deal heavily slanted in the U.S.’s direction would have serious implications for Canada’s long-term economic position and how we attract investment. On top of this, according to U.S. industry sources, part of the deal on the table was that Canada would match U.S. tariff levels on key products against all trading partners outside North America, including tariff-rate quotas on free-trade partners, a breach of our free trade agreements. That would take us down the path of facing the duelling pressures of a North American economy on terms slanted in the U.S.’s direction, and with our options to find alternative markets constrained.
Steve Verheul was Canada’s chief trade negotiator from 2017-21, leading negotiations that resulted in the United States-Mexico-Canada Agreement.