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Trump’s political descent could take NAFTA down with him

The greatest threat to Canada's economy is not contained in the list of demands that Washington released Monday for renegotiating the North American free-trade agreement. Those terms are not that dire.

The greatest threat comes from a wounded Donald Trump, whose presidency is unravelling.

Mr. Trump could attempt to unilaterally terminate NAFTA, to solidify support among his true believers as the crisis surrounding his presidency worsens.

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Read more: What the U.S. wants from NAFTA talks

Related: NAFTA and Canada: A guide to the trade file and what it could mean for you

Fortunately, Congress will have the final say, which is one reason Prime Minister Justin Trudeau's entire government is working flat out to win support for NAFTA on the Hill and in state capitals. That support could be Canada's last, best defence should this rogue President attempt the nuclear trade option.

The terms released by the office of the United States Trade Representative suggest the Americans are looking for greater market access in the areas of agriculture, financial services and telecommunications.

There are possible red flags around rules of origin and trade remedies. Other concerns will no doubt emerge during negotiations. But another challenge may involve keeping the President onside during the negotiating process.

Mr. Trump has already threatened once to simply withdraw the United States from NAFTA: in April, as he was approaching the symbolic 100-day mark in his presidency. Mr. Trudeau and Mexican President Enrique Peña Nieto personally appealed to Mr. Trump to give negotiations a chance. It worked.

Now, with the release of the American trade objectives, talks can begin in August. Meanwhile, the Trump presidency is going south.

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The President insists no one on his campaign team colluded with Russia to undermine Hillary Clinton. Except we now know that Donald Trump Jr., son-in-law Jared Kushner and the campaign manager at the time met with a Russian lawyer in June, 2016, for the express purpose of doing just that. And then they lied about it.

Special counsel Robert Mueller is gathering evidence on what the President knows, and when he knew it.

Hopes for dismantling Obamacare are on hold, while Arizona Senator John McCain recovers from an operation. No one can say whether Republicans will be able to overcome opposition within their own ranks to pass a bill that, in any case, is deeply unpopular with a public that has come to like Obamacare.

The impasse over the health care bill is blocking Republican plans for a big tax cut. The Mexican wall isn't being built, there's no federal budget and international relations are testy at best.

In the history of polling, no president has been this unpopular six months into his presidency. Mr. Trump has accomplished next-to-bupkis.

If things continue to go this badly, it isn't hard to imagine the embattled President declaring that the NAFTA talks are going nowhere and he is terminating the agreement to protect American jobs. At least he could say he had done something.

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Could he do it? "Yes and no," said Christopher Sands, a scholar at the School of Advanced International Studies at Johns Hopkins University.

While the President may terminate American participation in NAFTA, with six months notice, dismantling the actual laws and regulations that make up NAFTA would be problematic without Congressional support. "We could end up with a very messy result," Mr. Sands believes.

"This is new constitutional territory," said Carlo Dade, director of the Trade and Investment Centre at the Canada West Foundation. "The United States has never withdrawn from an agreement before."

Meanwhile, Congress would be under enormous pressure to preserve NAFTA from governors fearful of the economic consequences for their states. Business lobbyists would be pounding on the door.

This is why Mr. Trudeau's cabinet ministers spend so much time on the Hill and in state capitals working to convince stakeholders that NAFTA has been as good for the United States as it has been for Canada. Think of it as an insurance policy, in case Mr. Trump goes off the rails.

But a lot could go wrong, including Congressional gridlock. Better that the negotiating teams conclude a new agreement that modernizes and improves NAFTA, while leaving the free-trade essentials intact.

Vice-President Mike Pence last week promised the new agreement would be a "win-win-win" for the United States, Canada and Mexico. Here's hoping he can convince his President to go along.

Video: Trudeau urges ‘thinner border’ in speech to U.S. governors (The Canadian Press)
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About the Author

John Ibbitson started at The Globe in 1999 and has been Queen's Park columnist and Ottawa political affairs correspondent.Most recently, he was a correspondent and columnist in Washington, where he wrote Open and Shut: Why America has Barack Obama and Canada has Stephen Harper. He returned to Ottawa as bureau chief in 2009. More


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