Wednesday, November 1, 2017

NAFTA Renegotiation: to Stay or Go Away? 北美自由贸易协定重开谈判:留下还是离开

Abstract: The Trump trade team has listed higher U.S. automotive content, Buy America on infrastructure such as pipelines and an end to trilateral trade-dispute mechanisms as top objectives in the talks aimed at reducing its trade deficit, largely with Mexico. Canada’s trade surplus in goods with the U.S. has narrowed considerably in recent years, and when services are included, the Canadian surplus becomes a small deficit. Also, Freeland pushed back at Trump’s so-called “Buy-American-Hire-American” agenda on government pro- curement contracts, saying “mutual access” was achieved in the Canada-European Union trade deal, and should be achievable within the NAFTA re-negotiation talks. Trump would like to eliminate the third-party arbitrators, but Canada and Mexico may not like the referee picked by the US side, nor will the US like him to be picked by Canada or Mexico. As long as the third-party arbitration system is kept and the trade between the borders are reasonable and mutually beneficial, NAFTA should be kept, as trade has increased significantly, and all parties have enjoy the comparative advantage of international trade, which is not only an exchange of different items, and also a scale of economy. It may need to be modernized and updated to solve the problems of labor standards, environmental pollution, customs clear- ance and limitation in the occupations for talent exchanges. Without NAFTA, Canada may have to take some time to readjust to the new structure and the rules in the game. Moreover, the original Canada-US pact doesn’t allow foreign corporations to challenge Canadian laws. Actually, almost half of Canadian exporters no longer use the NAFTA preference in their trade arrangements, which means NAFTA has to be modernized and made more efficient. Also, in May 2017, the 11 remaining members of the TPP, including Canada and Mexico, agreed to proceed with the trade deal without U.S. participation. Due to the sunken cost, opportunity cost, comparative advantage, scale of economy and the repetitive win-win situation, the author recommends Canada to stay in NAFTA although separation may be put as a second option.

Keywords: NAFTA, trade deficit, dispute resolution, win-win or zero-sum

I.                    Introduction
Trade experts warn that the industrial chain of the three countries in NAFTA has a high degree of integration with huge mutual investment, and any attempt to change or undermine the existing supply chain and production network will have a great impact on the production and employment of the three countries, therefore, dissolution of the North American FTA will eventually cause serious injuries to the three economies. Mr. Ritchie predicts that ultimately the Americans will walk away from the NAFTA negotiations, and that Canada will end up in bilateral talks with the U.S. alone. The problem, he says, is that "the American demands would remain the same and those demands are outlandish. They're designed to blow up talks, instead of reach agreement." Canadian Foreign Minister Christie Freeland agrees with Mr. Ritchie's view that the U.S. has been imposing unfair and punitive tariffs on Canadian industry, notably on softwood lumber and Bombardier planes. But she argues that NAFTA offers Canada an opportunity to push back on those measures, and says she refuses to give up on the possibility of reaching an agreement. Upholding a position pragmatic, well reasoned and with goodwill, in an attempt for a win-win other than a zero-sum result, she emphasizes that our focus right now is, and needs to be, on getting an improved, modernized NAFTA out of these negotiations. Meanwhile, she mentions that only 42% Canadian exporters surveyed use NAFTA preference due to either the red tape or long delay in the processing time or the narrower margin between NAFTA and WTO rates[i].

The fourth round of negotiations made some progress in the field of intellectual property, digital trade and some other areas. However, the United States proposed to increase a clause stipulating in the agreement automatic failure of the agreement after 5 years, also called the "sunset clause", to modify the rules of origin of cars, to levy new tariffs to imported cars to the United States, and to abolish the dispute settlement mechanism, which have caused great controversy. Freeland said at a joint press conference after the talks that the United States had proposed a series of “unconventional requirements” that would disallow the North American FTA to be predictable, open and cooperative for the 23-year period. “In some cases, these proposals are contrary to the rules of the WTO, which is disturbing.”[ii] Mexico will continue to seek constructive and creative solutions and welcome dialogue, but in order to bring these efforts to success for Mexico, the United States and Canada," said Ildefonso Guajardo, Minister of Economy of Mexico, “we must understand that we all have limitations.” The US trade negotiator felt "surprised and disappointed "on refusal to change the attitude from the two sides, and he accused them not to want to give up the unfair advantage. He once again stressed that the United States hoped to change the US trade deficit status through negotiations. On the day the negotiations began, US President Trump once again threatened to terminate the North American FTA, and said it would not rule out the possibility of a bilateral trade agreement with the two countries respectively.

II.                 Achievements Made
NAFTA does ease the flow of labour between Canada, the U.S. and Mexico but only for workers in some 60 occupations, including doctor, dentist, lawyer, accountant, hotel manager, economist, engineer and scientist. NAFTA does ease the flow of labour between Canada, the U.S. and Mexico but only for workers in some 60 occupations, including doctor, dentist, lawyer, accountant, hotel manager, economist, engineer and scientist. Trilateral trade in real terms has more than doubled. As far as direct investment is concerned, Canada did enjoy a 243% real increase in FDI from the U.S. between 1993 and 2013, and real GDP per head grew faster just barely than its neighbor's from 1993 to 2015, though it remains about 3.2% lower. Mexico enjoyed a 4 fold increase in direct investment during the same period to about US$100,000 million[iii].

According to Ms. Freeland, the negotiations taking place in Ottawa since Sept. 23, 2017 made solid progress on “bread and butter” issues that matter to Canadian businesses, such as electronic forms at the border, automatic declaration of origin and regulatory harmonization. According to negotiators, a chapter on small and medium-sized enterprise was completed in Ottawa[iv]. In the fourth round, there was also progress on intellectual property rights.

III.               Challenges
1.       Deficit
The Trump trade team, led by U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross, has listed higher U.S. automotive content, Buy America on infrastructure such as pipelines and an end to trilateral trade-dispute mechanisms as top objectives in the talks aimed at reducing its trade deficit, largely with Mexico.

Over the last decade, the U.S. deficit with Canada exceeds US$365 billion. Canada’s trade surplus in goods with the U.S. has narrowed considerably in recent years, and when services are included, the Canadian surplus becomes a small deficit. Freeland likes to say that these numbers suggest trade between Canada and the U.S. is “balanced”. However, Canada’s trade surplus with the US is still smaller than Mexico’s[v]. Nevertheless, a big deficit of the US with the two brothers does not mean it should block trade with them as this is determined by supply and demand, and actually the people in the US can gain more with imports from other countries.

The report which came out in July 2017 reminded us what life in Canada would be without NAFTA. Exports to the US and Mexico suffered significantly as auto makers took a summer break.

Dan Ujczo, an Ohio-based international trade lawyer, said, most people were on a different page than Trump and saw NAFTA as essential. According to him, everything the U.S. is adding are those types of measures that will restrict trade, and stakeholders are already preparing for the demise of NAFTA, with some who made investment decisions based on the pact even getting ready to launch litigation against the U.S[vi].

2.       Dumping
U.S.-based Boeing Corporation initiated the complaint that Bombardier’s export sales to Delta were priced below cost in the U.S. market and that Bombardier benefited from unfair government financial subsidies. In particular, Boeing highlighted direct financial aid from the governments of Canada and Britain, as well as a C$2.5 billion investment in the company from the Province of Quebec and its largest pension fund as the main sources of unfair government subsidies.

Boeing argued, somewhat confusingly, that the subsidies made it possible for Bombardier to price below cost or, equivalently, to engage in dumping, although one would think that the subsidies effectively lowered Bombardier’s costs so that it would not incur sustained financial losses on its airplane sales by selling at prices below its long-run incremental costs. The confusion about the linkage between government subsidies and dumping was not relieved by the Commerce Department’s ruling, since the department’s preliminary duty order provided no rationale or methodology for how it calculated the 219 per cent duty.

But what makes the latest U.S. initiative particularly troublesome is that Boeing did not compete for the Delta order. Rather, Boeing’s motive appears to be to delay or prevent the entry of a competitor into a segment of the civilian airliner market in which it currently does not successfully compete. While Canada might ultimately challenge any final U.S. tariff decision, in part on grounds that Bombardier is expected to repay the government financial assistance, and hence, the assistance does not qualify as a subsidy. Furthermore, in this specific case, U.S. airline passengers will ultimately face higher ticket prices as airplane costs increase for airline service providers such as Delta with the imposed import duties[vii].

3.       Labor Standard
Since NAFTA, Canada’s auto trade deficit with Mexico has quadrupled to $12 billion, and the U.S. deficit has grown a stunning 18-fold. Half our Detroit Three members are lost, and Canada has shed one in four auto jobs in the last decade alone. Although there are four million more vehicles being built in North America today than when NAFTA was signed, two thirds of the added production went to Mexico, one-third to the U.S., and Canada has seen no growth. With only 8 per cent of the auto market, Mexico now has nearly half the auto jobs in North America. Moreover, wages in Mexico are lower today in real terms than before NAFTA. Sources said that the US is demanding an eight-fold increase in Mexico’s minimum wages, which is now less than $1 per hour[viii], yet the Mexican delegation flatly rejected that idea of raising the wages eight-fold. Canada has tabled labour standards at the negotiations along the lines of the Canada-European Union free-trade deal to ensure that Mexico can’t take advantage of its lower wages to steal jobs away from Canada and the United States, focusing more generally on the principles of improved working conditions, fair compensation, gender equality and the right to collective bargaining. Mexico has said it too wants to improve labor standards, but Mexican officials are concerned that small businesses, which employ the vast majority of the country's workers, can't afford to pay dramatically higher wages. However, Mexico signed TPP, and it is more willing to accept the terms of TPP. Therefore, what Canada can look for is a TPP-light kind of agreement. Also, America’s more recent trade agreements with, for instance, South Korea and Colombia include binding safeguards against the use of child or forced labor. Such structures could be wired into a revised agreement in order to address concerns about a race to the bottom in labor and environmental standards[ix].

As far as the labor union is concerned, the Canadian delegation wants the U.S. government to pass legislation that would impose on the constitutional ability of states to extend federal labour laws, which currently allow state governments to pass “right-to-work” laws. These laws actually empower workers by allowing them to choose whether or not to join or financially support labour unions. The minimum standard in the U.S. is that workers are not required to join a union and can only be forced to pay dues related to representation with their employer. Indeed, unionized U.S. workers can opt-out of dues allocated to political activities including donations to political parties and causes. Missouri recently became the 28th state to pass a right-to-work law. It is found union workers in right-to-work states pay fewer dues, and union executives get lower salaries. However the satisfaction of the unionized workers is the same, and employment levels are higher. In fact, rather than pushing the Americans to limit worker choice, Canada should emulate our southern neighbour because worker choice laws encourage unions to be more accountable to their members; these laws also contribute to a stronger economy and labour market[x].

4.       Rules of Origin
As far as the rules of origin are concerned, both Canada and Mexico would like to maintain the current 62.5 per-cent requirement for North American sourced content, while the US wants to require a higher American-made content for duty-free movement of auto vehicles and parts[xi]. Canada and Mexico don’t like the idea to set a bar for domestic content from any NAFTA country.
The proposed changes from the Trump administration to “rules of origin” would have a big impact on auto manufacturers by redefining which products can be shipped duty-free across borders, based on where their component parts come from.

5.       Supply Management System
President Donald Trump demands for an end to Canada’s supply management system as well as reducing or eliminating remaining tariffs that keep US agricultural goods from reaching Canadian shelves during the renegotiation of the NAFTA treaty due to many lost jobs on Midwestern farms[xii]. U.S. Trade Representative Bob Lighthizer said "some very difficult and contentious issues" lie ahead, including the inevitable showdown on Canadian dairy practices. Canada's dairy, egg and poultry industries are governed by a supply-management system that dates back to the 1970s. It has three parts, The Globe's Barrie McKenna explains: Fixed prices, production quotas and tariffs to protect Canadian producers from foreign competition. The dairy tariffs which run up to 270 per cent, and which Canada tightened last year to include unfiltered milk products used to make cheese and yogurt[xiii] have been a thorn in the side of other dairy-producing nations like the United States, Australia and New Zealand.

Anyone in Canada who wants to produce or import dairy products, poultry and eggs and sell them must buy a quota from other farmers or face prosecution resulting in fines or jail. With the ownership of the quota comes the right to sell a specified amount of these products at prices fixed by a government-sanctioned association of producers. Recently, according to a non-profit organization that represents Alberta’s dairy producers, the cost of a quota in Alberta came to $36,000 per cow or $3.9 million for an average-sized dairy herd of 108 cows. According to one recent peer-reviewed publication, the average family in Canada would save $444 annually. This burden is greater for the poor and families with children, and smaller for the rich and childless. As a result, Prime Minister Justin Trudeau’s Liberal government faces a problem. If it insists on maintaining the system, U.S. negotiators will demand reciprocal concessions on trade such as in automobiles or government procurement that decrease Canadian exports, the exchange rate, employment and economic growth. The government can deal with this problem by creating a financial adjustment program, the basic features of which are found in Australia’s recent experience. That country in 2000 had ended supply management and assisted farmers through quarterly payments over eight years. Farmers leaving the industry were paid a lump sum[xiv].

Some economists believe, if the Liberal government agrees to abolish supply management, with economic and personal freedom, free market forces will be allowed to improve through time the quality, variety and costs of all agricultural products. Consumer prices will fall and the present level of U.S. restrictions on Canadian exports will be maintained or even lowered and bring other benefits to the middle class the Liberals have promised to help. However, farm products are strategic products, and farmers belong to a special interest group whose interests that American government would also like to protect. An immediate access to the Canadian farm products may pose an economic threat to Canada and may devastate the farmers’ peaceful lives. Also, there is a need for a more diversified and even distribution of importers of those farm products so that the effects of an embargo or a natural disaster may be reduced to the minimum. Therefore, the writer would recommend a gradual opening of the farmers’ market.

6.       Reciprocal Market Access
Freeland pushed back at Trump’s “Buy-American-Hire-American” agenda on government procurement contracts, saying “mutual access” was achieved in the Canada-European Union trade deal, and should be achievable within the NAFTA re-negotiation talks. She wants Canadian companies to be able to bid on sub-national procurement contracts at the state and municipal level.
Robert Lighthizer reiterated that measures should be taken to ensure “reciprocal market access for American farmers, ranchers and businesses.”[xv]

The United States is threatening to impose trade barriers against other countries to protect such industries as steel. For Canada, there are telecoms and financial services (and, less explicitly, dairy and poultry farming) they want open. The United States’ partners are preparing defences and counter-demands. Mexico’s businesses are thinking about how to change their supply chains in case the deal blows up. Canada is pushing for access to contracts awarded by American states and cities, which Mr Lighthizer wants to keep out of NAFTA 2.

Reforms now allow greater foreign investment in its oil and gas industry. NAFTA opened up trade between America and Canada but exempted Mexico from some of its obligations. America now does ten times as much trade in electricity with Canada as with Mexico[xvi]. An upgraded NAFTA could bring about an integrated North American energy market. That will require a streamlining of the process by which America grants permits for cross-border grids and pipelines.

7.       Dispute Resolution Mechanism
This can be the most important part of the negotiations as no game will be fair with an unfair referee. Things like illegal subsidies, dumping, countervailing duties and so on need to have an independent panel of judges to evaluate and decide who will be penalized and how. Presently there is Chapter 19 to deal with the arbitration on trade disputes and Chapter 11 to deal with the arbitration on interest infringement of international investors initiated by local authorities. The countervailing duties proposed by US International Trade Commission has hardened Canada’s stance on keeping a key dispute-resolution mechanism. The Americans don’t like many rulings on softwood; therefore they want to get them removed, which will happen in US courts. However, who would like to watch a sport when one team gets to pick the referees or kick them out?

On August 23rd the chief executives of the three largest American business associations wrote a public letter to Robert Lighthizer, the United States Trade Representative, warning him against attempts to eliminate or weaken NAFTA’s investor-state dispute settlement (ISDS) provisions. These allow investors to sue foreign governments, and have been invoked 59 times under NAFTA. They offend those who see international arbitration panels as undermining American sovereignty.
Mr Lighthizer has not yet settled on a proposal for a new ISDS system. One option floated would allow countries to opt in. In theory, this could give American investors protection in Mexican markets yet retain the supremacy of American courts at home. It seems inconceivable the Mexicans could accept such asymmetry[xvii].

ISDS provisions require governments to pay compensation for expropriated property, and provide the "fair and equitable treatment" to foreign firms. Suits are heard by an arbitration panel made up of private-sector lawyers, and proceedings can be held in secret, with no clear appeal provision.
Opponents see NAFTA's ISDS mechanism as an unwarranted intrusion on sovereignty which benefits powerful, multinational corporations at the expense of ordinary citizens. Defenders argue investor-state chapters are necessary to prevent protectionist governments from running roughshod over foreign investors for the sake of political expediency.

Canada has been particularly vulnerable to NAFTA arbitration suits. Since the treaty came into force some 25 years ago, U.S. companies have filed 39 claims against Canadian governments, winning or settling in eight cases that have cost taxpayers $215-million. (The federal government is responsible for paying claims, even when the company was challenging a provincial action.) Mexico has paid out more than $200-million (U.S.), while the United States has not lost a NAFTA Chapter 11 case[xviii].

Foreign Affairs Minister Chrystia Freeland has indicated she wants to update the accord in order to increase the legal rigour of the arbitration process and to assert governments' right to regulate in the public interest, such as on environment and labour. Such changes – along with a new appeal process – were incorporated into the Comprehensive Economic and Trade Agreement (CETA) that Ottawa concluded recently with the European Union. In its objectives for NAFTA renegotiation published last week, the Office of the United States Trade Representative proposed minor tweaking of the Chapter 11 provisions to ensure more openness in the process. It would also strengthen "national treatment" provisions. And it proposed to include a "general exception" to allow for protection of legitimate domestic objectives, including protection of health, safety and security, "among others."[xix]

Canada should ensure investor protections remain in NAFTA, given that American federal and state governments – led by the Trump administration – are increasingly willing to discriminate against Canadian companies. A country like Canada that is so trade reliant and so investment reliant would need to have the strongest protection possible in its treaties. Furthermore, under NAFTA, Mexico and Canada get special treatment. The United States has to cross a higher legal threshold to apply defensive safeguards on their exports than it does on those of other countries. In addition, under chapter 19 of the agreement, disputes between NAFTA partners over other remedies go to a NAFTA court[xx].

The writer believes that national security, environmental protection, social and community development should not be infringed upon or sacrificed to compensate some big corporations under a Chapter 11 dispute, and clauses regarding this need to be stipulated.

IV.               Possible Outcomes
1.       Minor Changes
Trade talks tend to trip and fall on the details, which is why they often take years to conclude. The negotiations for NAFTA should have proceeded much faster and be close to the completion phase, before campaigning starts for Mexico’s presidential election in 2018. A deal could be possible if all the parties can hold onto their common ground and take efforts to reconcile the differences, even through some trade-offs, for example, by picking a fight with China over one side’s lax observance of intellectual-property rights, or by working towards a common labor standard structure in NAFTA.

2.       Dissolution or Walk away
Dissolution is the most unfavorable option, but countries like the US and Canada should be able to sustain and find some new ways to deal with each other, for example, under a new bilateral trade agreement or under the WTO framework. Actually almost half of Canadian exporters no longer use the NAFTA preference in their trade arrangements, which means the differences between NAFTA and WTO and between NAFTA and FTA are negligible, or, NAFTA has be modernized and made more efficient. Also, in May 2017, the 11 remaining members of the TPP, including Canada and Mexico, agreed to proceed with the trade deal without U.S. participation[xxi].

3.       Constructive Major Changes
The negotiators should not dwell on the volume of deficits as that means the higher the volume, the more advantage the importing country has acquired. Nor should they argue whether to keep the third party arbitration panels, as they serve as a guarantee for a fair not a foul game. What changes, then, should there be? The constructive changes would be: more streamlined custom passing procedures, lower tariffs, fewer subsidies for domestic industries and less other non-tariff barriers, and more areas open for professional people to work freely among the three countries.

V.                 Suggested Solutions
1.       Focus on Size of the Pie instead of Its Share
From the map, one can see that more than 70% of American states rely on trade with Canada as the top partner. For years, the Canadian government has repeated its claim that Canada is the most important foreign market for 35 U.S. states. This map is posted on a government website that promotes trade ((SOURCE: STATSCAN). In some earlier months, Mr. Trump's inner circle strongly disagreed about what demands to make in NAFTA renegotiations. Treasury Secretary Steve Mnuchin and Mr. Trump's son-in-law Jared Kushner wanted to enhance NAFTA and make cross-border business easier for corporations. The Canadian negotiators are not clear what the mercurial Mr. Trump actually wants, whether he will sign a deal or whether the U.S. demands are meant to provoke Canada or Mexico to abandon the deal first. However, the real situation is that Canada, Mexico and the US are in a team to play the game of international trade, and each party is entitled to its own gear. Dissolution of the agreement will mean they will separate and look for new teammates. There will be sunken investment, opportunity cost lost as well as time, money and efforts to look for new partners. No matter which plays better, they are still bonded together if they remain in the same team. Trilateral trade has increased by 258.5% since 1993 in nominal terms. The real – that is, inflation-adjusted – increase was 125.2%. From 1993 to 2015, the US, Canada and Mexico had a per capita GDP growth rate of 39.3%, 40.3% and 24.1% respectively[xxii].

Actually, 54% of U.S. businesses (except for those in the Midwest) say free trade with Canada has made the U.S. economy better off, according to a new poll by Nanos Research[xxiii]. According to the author’s calculation, although imports seem to rise faster, the overall trade has increased, and the deficit is within control, about one fifth of the export. Also, after 1994, increase in net trade value has significantly increased, and rate of increase in exports is much faster than the one before NAFTA was signed (please see the table and chart below). Some have compared data of real personal disposable income for the period of 1985-1994 and that of 1994-2017 and got the conclusion that the trend of increase is quite consistent[xxiv]. A range of trade experts have said that pulling out of NAFTA as Trump proposed would have a range of unintended consequences for the U.S., including reduced access to the U.S.'s biggest export markets, a reduction in economic growth, and increased prices for gasoline, cars, fruits, and vegetables. The worst affected sectors would be textiles, agriculture and automobiles. Meanwhile, US-Mexico relations would worsen, with adverse implications for cooperation on border security, counter-terrorism, drug-war cooperation, deportations and managing Central American migration. The repeal of NAFTA would not increase car production in the United States, nor increase jobs in manufacturing[xxv].

US Trade with North America





Data Source: US Census Bureau: Trade in Goods in North America, Oct 5, 2017.

Furthermore, the increase of the pie should be the most important, as the bigger the pie, the more each can be assigned. The notion of a fair distribution when everyone is poor is even more dangerous than the notion of an uneven distribution when everyone is getting better off. Negotiators should look at the aggregate number of employment rather than just the employment in manufacturing; they should look at the total increase of welfare including the volume and variety of products exchanged rather than just the figures in some special industries; we should look at both products and services rather than just products; they should look at both economic factors and political and cultural factors rather than just economic factors.

Even without NAFTA, goods could continue to flow tariff-free back and forth across the Canada-US border. That’s because the original Canada-U.S. Free Trade Agreement of 1989, which eliminated most of these tariffs, has never been repealed. Moreover, unlike NAFTA, the original Canada-US pact doesn’t allow foreign corporations to challenge Canadian laws, which rules out the challenge of big US corporations[xxvi].

2.       Focus on General Welfare instead of Specific Welfare
People who go to a potluck may have to contribute a dish. However, they will get way more things in a potluck than if they are going to cook for themselves. They may sacrifice some fish or chickens, but they get more fish and chickens and they get beef and shrimps as well, let alone fruits and desserts. Therefore, focusing on the wood instead of the tree will be wiser and more beneficial.

3.       Make Progresses Based on Previous Progresses instead of Taking a New Way
People may still remember the story of the turtle-an-rabbit contest. The point is that it is not bad to take small steps but keep on continuously. It is even better than the efforts of doing something and giving it up and starting all over again. The fourth round reminded people of the fable, and it is not wise to repeat the failure like that of the rabbit.

4.       Ensure a Fair Game with a Third Party as the Referee
At the beginning, the author has touched on the idea of bringing a referee picked by only one team, which may very likely lead to a foul game. Canada and Mexico may not like the referee picked by the US side, nor will the US like him to be picked by Canada or Mexico. Thus, all parties should emphasize the importance of a third-party arbitration panel. Members sitting on the panel may rotate for each arbitration, and the panel members will have to meet a certain standard and approved by all the three countries.

5.       Re-Learning David Ricardo
International trade is not only to exchange different items. It is also to make a full use of comparative advantage, which may increase the total welfare. If all the three parties take the time to review David Ricardo’s theory, they will realize how stupid it will be to focus on the deficit, which is called mercantilism.

VI.               Conclusion
It would be good to stay within NAFTA though efforts have to be made to successfully complete the fifth and maybe some more negotiations. As Steven Leacock put, the achievers may be those who do the most and dream the most[xxvii].
                                                                                              (Prepared by Daniel Huang)



作为旨在减少贸易赤字的谈判的主要目标,特朗普的贸易团队已经列出了美国货在汽车行业的更高比例,在管道等基础设施上购买美国货,结束三边贸易争端解决机制。加拿大与美国的货物贸易顺差在近几年大幅度下降,当服务包括在内时,加拿大的盈余就会出现小的赤字。此外,加拿大外长傅里兰还强调了特朗普在政府采购合同中所谓的“美国聘请美国、雇佣美国人”的议程,他说在加拿大 - 欧盟贸易协定中实现了“对等进入”,并且应该在北美自由贸易协定重开谈判的磋商中实现。特朗普想要取消第三方仲裁员,但加拿大和墨西哥可能不喜欢裁判由美方挑选,美国也不喜欢裁判由加拿大或墨西哥挑选。只要保持第三方仲裁制度,边界之间的贸易合理和互利,那么因为贸易大幅增加,各方都享有国际贸易的比较优势(不仅仅是不同物品的交换),以及规模经济优势,所以北美自由贸易协定应该保持,虽然它可能需要现代化和更新,以解决行业劳动标准、环境污染、清关和人才流动的限制问题。没有北美自由贸易协定,加拿大可能需要花一些时间来适应新的结构和游戏规则。不过,原来的加美条约不允许外国公司对加拿大法律提出异议。实际上,几乎一半的加拿大出口商在其贸易安排中不再使用北美自由贸易协定优惠,这意味着北美自由贸易协定必须进行现代化改造并提高效率。此外,20175月,TPP的其余11名成员,包括加拿大和墨西哥,同意在没有美国参与的情况下实施贸易协议。由于沉淀成本、机会成本、比较利益、规模经济和重复博弈的多赢态势,作者建议加拿大留在北美自由贸易协定内,尽管分离也可以作为第二候选方案。


[i] What would a post-NAFTA Canada look like? CBC Sunday Edition, October 22, 2017.
[ii] North American FTA ended in the fourth round of negotiations (in Chinese), Voice of America, October 18, 2017.
[iii] David Floyd: NAFTA's Winners And Losers, Investopedia, August 15, 2017.
[iv] Robert Fife and Steven Chase: Freeland vows Canada will stand up to U.S. on autos, dairy in NAFTA talks, Globe and Mail, Sept. 25, 2017; Sean Kilpatrick: NAFTA negotiators make some progress amid strains in US-Canada relations, National Post, Sept. 27, 2017.
[v] Mike Blanchfield: Trump threat hovers over NAFTA as Ottawa talks end with no major progress, Metro News, Sept 27, 2017.
[vi] Sean Kilpatrick: NAFTA negotiators make some progress amid strains in U.S.-Canada relations, National Post, Sept 27, 2017; Redesigning the North American home - the outlines of NAFTA 2 emerge, the Economist, July 20, 2017.
[vii] Steven Globerman: American firms smell blood in the trade waters, Fraser Institute, Sept 25, 2017.
[viii] Jerry Dias: The truth is NAFTA has damaged Canada’s auto industry, Toronto Star, Sept 28, 2017; please also refer to Note ii.
[ix] How to improve NAFTA, the Economist, Aug 17, 2017.
[x] Charles Lammam and Hugh MacIntyre: NAFTA negotiations—Canada has it backwards on worker choice, Fraser Institute, Sept 16, 2017.
[xi]  Tonda Macharrles, etc: Contentious issues lie ahead as Ottawa NAFTA talks end, Toronto Star, Sept 27, 2017.
[xii] Please see Note iii and Note ii.
[xiii] Judy Bottoni: NAFTA, Trump and Canada: A guide to the trade file and what it could mean for you, Globe and Mail, Oct 24, 2017.
[xiv] Herbert Grubel: Ending supply management will greatly benefit Canadian consumers, Fraser Institute, Aug 23, 2017.
[xv] Please see Note ix.
[xvi] Please see Note vii.
[xvii] Have a domestic: on NAFTA, Donald Trump’s most dangerous opponents are at home, the Economist, Aug 31, 2017.
[xviii] Shawn McCarthy: NAFTA’s Chapter 11 under fire, Globe and Mail (BC Ed.), July 23, 2017.
[xix] Please see Note xvi.
[xx] Please see Note v.
[xxi] Shaffer, Sri Jegarajah, Craig Dale, and Leslie: TPP nations agree to pursue trade deal without US, CNBC, rretrieved July 4, 2017.
[xxii] David Floyd: NAFTA's Winners and Losers, Investopedia, August 15, 2017.
[xxiii] Erica Alini: Most U.S. businesses positive about trade with Canada but not Midwest, key Trump stronghold: poll, Global News, July 17, 2017.
[xxiv] Tom Armistead: Disposable Personal Income: Are We Better Off Or Worse Off Since NAFTA? Seeking Alpha, April 2, 2017.
[xxv] The missing dimension in the NAFTA debate, Washington Post, retrieved February 12, 2017; Driving Home the Importance of NAFTA, Econofact, retrieved February 15, 2017.
[xxvi] Thomas Walkom: If Donald Trump kills NAFTA, Canada could benefit, the Star, November 11, 2016.

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