Trade negotiations between the United States and Canada resume today with a new 30-day deadline. They must be brought to a successful conclusion if the North American Free Trade Agreement is going to survive.
There is no doubt that the United States benefits from open trade with Canada and Mexico, with which President Trump last week reached a new trade deal. On Friday Mr. Trump notified Congress of his intention to sign the Mexican agreement, setting in motion an official timetable that gives Canada 30 days to sign up. Mr. Trump said he would be open to Canadian participation, “if it is willing ... to meet the high standards for free, fair and reciprocal trade contained therein.”
But to call North America under NAFTA a “free trade” area is a bit of a stretch when Canada imposes tariffs of 200 to 300 percent on American dairy products and discriminates against American wheat. From Vermont to Washington state, American farmers who can see over the border can’t sell their products in Canada.
Indeed Canada has been so protective of its agriculture that it would not even agree to including the industry in the original NAFTA. But the most prominent benefit for Canada is free entry into the United States of motor vehicles manufactured in Canada.
Mr. Trump has taken up the case of American farmers and manufacturers in his typically flamboyant way and has hinted he might place tariffs on Chevrolet Impalas made in Canada if he does not get his way.
He has even suggested that NAFTA itself will be allowed to lapse. That would hurt Canada, but it would also devastate the U.S. economy.
The U.S. Chamber of Commerce and top politicians of both parties support including Canada in a new NAFTA deal.
Mr. Trump’s unilateral imposition of tariffs using a dubious allegation of threats to national security has undoubtedly jumpstarted trade talks with Mexico, Canada and Europe, and this hard-nosed bargaining tactic appears to have had some success.
It may have led to the trade agreement with Mexico, and European negotiators have recently said they are willing to drop their 10 percent tariff on some, if not all American motor vehicles and further open their agricultural markets.
But last week, the U.S. International Trade Commission said Mr. Trump had gone too far when he imposed a new tariff on Canadian newsprint last January. It overruled the tariff, which hurt small and medium-size newspapers, like The Post and Courier.
For Canada the key sticking point holding up negotiations, besides dairy, is the U.S. desire to modify dispute settlement provisions of NAFTA. But the broader benefits of the trade deal shouldn’t be outweighed by the technicalities of dispute settlements.
Canadian and America negotiators are looking for a compromise that both parties can sell to their supporters. It won’t be easy. But failure would be bad for both sides.