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THE CANADIAN PRESS\/Patrick Doyle<\/p>\n
Prime Minister Mark Carney and Canada-U.S. Trade Minister Dominic LeBlanc leave a news conference about Canada\u2019s response to new U.S. tariffs on Parliament Hill in Ottawa on Aug. 22.<\/p>\n
But I can\u2019t help but wonder if the recent turn of events in Canada-U.S. trade relations will resemble those of October 1987. That\u2019s when Canada chose to return to the free trade negotiations and eventually cobble together a deal with the Ronald Reagan administration.<\/p>\n
Does that mean that a final trade agreement will eventually be hammered out between the two sides today? I don\u2019t know for sure. But there\u2019s a pretty good chance that it will if what happened in 1987 is any guide.<\/p>\n
The intense bilateral negotiations of the mid-1980s \u2014 like those of the past couple of weeks \u2014 favoured the Americans because they knew that Canada wanted a bilateral free trade agreement (FTA) more than the U.S. did. And they milked that for whatever it was worth and got Canada to make a host of concessions up front on energy, foreign investment and cultural protections \u2014 not unlike what they did to the Carney government.<\/p>\n
The Canadian side, just like the recent set of trade negotiations, had very little leverage at its disposal (or at least a willingness to use whatever purchase that it had) back in the 1980s. Clearly, the U.S. side was playing us over the last few months just like they did 40 years ago.<\/p>\n
It is worth highlighting that the U.S. negotiating team, under the able leadership of Peter Murphy, had correctly predicted that the Canadians would make a big deal of Simon Reisman (Canada\u2019s chief trade negotiator) publicly walking away from the bargaining table in late September 1987. They also rightly predicted that Canada was all hat and no cattle \u2014 that it was little more than a PR stunt and a feeble bluff. They saw Reisman\u2019s move coming a mile away and simply waited patiently knowing that the Canadians would come crawling back to the trade negotiations.<\/p>\n
When Brian Mulroney\u2019s Progressive Conservative government did return to the negotiations, there was some positive movement on the U.S. side. But it was very minimal, in my view. And, at the very last minute, just before U.S. trade negotiating authority was about to expire, the Americans grudgingly agreed to a less than adequate dispute-settlement mechanism.<\/p>\n
It was not, however, the holy grail that Mulroney had promised the Canadian public \u2014 namely, a means of circumventing harmful U.S. trade remedy protections (i.e., countervailing duties and safeguard provisions) and thus \u201csecure access\u201d to the U.S. marketplace.<\/p>\n
Basically, the binding dispute settlement panels would have to base their administrative rulings on U.S. and Canadian trade law. And that is precisely why Canada is in the mess that it finds itself today \u2014 having to contend with Sections 232, 338 and 301 of U.S. trade law.<\/p>\n
It is instructive to note that the only reason Canada was able to get even a flawed dispute settlement regime was because the Americans had a free trader in the White House. More important, Mulroney\u2019s close personal relationship with President Reagan was utilized to secure those bilateral trade panels.<\/p>\n
Still, it wasn\u2019t the best deal for Canada, when you consider all the gains and losses of the FTA negotiations.<\/p>\n
Carney\u2019s government shouldn\u2019t make the same mistake that Mulroney made back in 1987. He simply wasn\u2019t prepared to play hardball with the U.S. by withholding access to Canada\u2019s natural resources as the club to extract concessions from our American friends.<\/p>\n
I believe that Canada would have been in a much stronger bargaining position today if we had brought out the heavy artillery or the
\n\u201cnuclear option\u201d 18 months ago.<\/p>\n