NAFTA talks expected to begin as early as August

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Prime Minister Justin Trudeau urged a gathering of U.S. governors to help prevent a resurgence of protectionism – what he called "politically tempting shortcuts" – as Canada girds for a potentially bruising renegotiation of the North American free-trade agreement, expected to begin as early as next month.

Canadian officials believe NAFTA talks could start within days, or at most weeks, of August 16, which is the first day that the Trump administration is legally permitted to begin the discussions.

The Globe and Mail has learned that the United States has requested the first set of negotiations take place either in Detroit or Pittsburgh, both highly symbolic choices because they're in the "Rust Belt," a region that U.S. President Donald Trump has said has suffered from unfair trade. But no decision on location has yet been reached.

Mr. Trudeau is the first sitting Canadian Prime Minister to attend the twice-yearly National Governors Association meetings, where he tried Friday to build as many allies as possible while Canada awaits Mr. Trump's demands for redrawing NAFTA to tilt the accord more in favour of U.S. interests.

The Prime Minister said Friday he looks forward to renegotiating NAFTA "as soon as possible," and that while he has not been notified by officials on where the talks will be held, Canada is ready to begin.

The United States is expected to release its official negotiating objectives for NAFTA on Monday. Mr. Trudeau said he would not be publicly responding when the U.S. list is published.

The Trump administration has sent mixed signals on how sizable a NAFTA rewrite it wants. In the 2016 election campaign, Mr. Trump vowed to tear up the deal if he didn't get a better arrangement for American workers. In early 2017, he assured Mr. Trudeau he in fact was only seeking tweaks to the deal.

In a letter to Congress in March, the Trump administration suggested it would seek cross-the-board changes to the landmark NAFTA accord that governs crossborder trade in North America, including new levies on foreign goods, the removal of a dispute settlement mechanism and a rollback of exemptions for Canada and Mexico when Washington imposes duties to slow down a flood of imports.

On Friday in Rhode Island, vice-president Mike Pence assured Canada that the NAFTA renegotiation would be a "win-win-win" for all three partner countries, including Mexico.

The Trudeau government has conducted a lobbying blitz of U.S. states over the past few months – a conciliatory approach designed to head off protectionist impulses in NAFTA talks – and the Prime Minister's speech to the governors Friday capped off this effort.

The Prime Minister said that Canada and the United States share "our common North American home" and are so interdependent that protectionist measures would threaten not only Canada but the nine million U.S. workers whose jobs depend on trade with Canada.

"To boil this down to one point: Canada is your biggest, best customer – by far," he said. "We're a bigger customer than China, by roughly $152-billion. Bigger than Japan or the U.K. No one else comes close. In fact, Canada buys more from the U.S. than China, Japan and the U.K. combined."

The Prime Minister appealed to the 31 state leaders at the Rhode Island gathering to oppose "more trade barriers, more local-content provisions, more preferential access for home-grown players in government procurement" – warning a retreat to protectionism would backfire.

"Such policies kill growth. And that hurts the very workers these measures are nominally intended to protect. Once we travel down that road, it can quickly become a cycle of tit for tat, a race to the bottom, where all sides lose."

The Prime Minister rewrote a popular analogy of Canada-U.S. relations made famous by his father, Pierre Trudeau, who said living beside the United States was like a mouse sleeping beside an elephant. The mouse could be easily hurt if his massive neighbour rolled over.

"While you, my American friends, may be an elephant, Canada is no mouse. More like a moose – strong and peaceable, but still massively outweighed."

Mr. Trudeau met personally with governors from five states Friday, including Wisconsin, Colorado, Rhode Island, Kentucky and Iowa. He also held a bilateral meeting with the U.S. vice-president.

Wisconsin Governor Scott Walker said he thinks the NAFTA renegotiation could be positive for all member countries and added that he didn't think disagreements over Canada's protectionist dairy market would hurt talks.

He said it's wise for Mr. Trudeau to attend governors' meetings because other countries are doing that.

"I think it's prudent regardless of NAFTA for Canada to be here. Years ago, China started to show up."

U.S. governors repeatedly told journalists Friday that they want to see NAFTA survive and trade with Canada flourish.

Mr. Walker could not identify a particular change he wished to see in NAFTA, saying he's sure it could be improved but his state relies on Canadian trade. "Canada is our number-one trading partner," he said. "We want to ensure our largest market in the world is still accessible."