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Get ready for long haul on NAFTA talks, panel says

U.S. President Donald Trump sits during a meeting with Republican Congressional leadership at the White House in Washington, U.S., June 6, 2017.

JOSHUA ROBERTS/REUTERS

Now that President Donald Trump has turned trade from a Wall Street issue to a Main Street concern, long-time economic and trade analyst Laura Dawson says Canadian industry must join government officials in fanning across U.S. communities to remind politicians of Canada's importance on a local level.

"We really need to see Canadian businesses in particular going to Gary, Indiana, into Buffalo, to Seattle, all the border communities, and reminding folks in their home districts that … the Canadian economic relationship is vital to your livelihood," said Dr. Dawson, director of the Canada Institute at the D.C.-based Wilson Center think tank, at a Wednesday-morning panel discussing the North American free-trade agreement at The Globe and Mail Centre in Toronto.

After months of teasing by Mr. Trump – who campaigned on a promise to rip up NAFTA and strike a deal better aligned with American interests – the U.S. government last month pulled the trigger on a clause in the agreement that would open it up for renegotiation in 90 days. Wednesday's Globe Talks panel came as the Canadian Chamber of Commerce met with its U.S. and Mexican counterparts in Washington to plot the launch of the North American Economic Alliance, a platform they'll use to protect the countries' common interests.

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Read more: The countdown to NAFTA talks has begun. What's going on? A guide to the trade file

With the official announcement of the alliance Wednesday morning, and with Canada's position at the NAFTA negotiating table soon to be clarified, opportunities are arising to lobby American politicians at a grassroots level to remind them of Canada's importance to local economies.

Dr. Dawson joined Dan Ciuriak, director and principal of Ciuriak Consulting Inc.; Michael Kergin, strategic adviser for international affairs at Bennett Jones; Joanna Slater, The Globe's U.S. correspondent; and moderator Barrie McKenna, The Globe's national business correspondent.

Mr. Kergin, a former Canadian ambassador to the U.S., said that despite the tumult emanating almost daily from the White House, "we still have a pretty functioning democracy [in the U.S.] in terms of peoples' ability to influence their House members and the Senate."

Given the federal government's claim that Canada is the most important foreign market for 35 U.S. states, Canadian industry and governments have plenty of opportunity to get in front of those U.S. politicians, but it'll take a lot of work. "It's not instant coffee – it's something that has to brew," Mr. Kergin said.

Throughout Mr. Trump's campaign and presidency, local job losses from trade relationships have become a sore spot for U.S. voters, but Mr. Ciuriak said that's a red herring, one that Canada can easily argue against. Thorough analysis, he said, indicates that globalization is "a small factor" versus the combined power of low interest rates and technological development. "If you lower the carrying cost of capital to zero in our economy, workers compete with machines for jobs," said Mr. Ciuriak, former deputy chief economist with the Department of Foreign Affairs and International Trade.

Mr. Kergin noted that Mr. Trump's oft-swinging mind could make negotiations rocky when they begin later this summer.

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"You might start to get a bit of consensus developing in a negotiation – thinking that Congress is going to push in one direction, and some of the contours of the agreement start to come out," he said. "And all of a sudden Trump comes out and undercuts the negotiators entirely, saying 'This is a bad deal.' "

But the complex nature of the negotiations, Dr. Dawson said, might actually prevent such wild swings: "My greatest faith is in the power of bureaucratic inertia."

The sheer size of NAFTA, she said, ensures that it will in fact take much longer than Mr. Trump thinks to get anywhere with renegotiations. "I just don't see any possible way that all of the mechanics and legal requirements of those negotiations can be covered off in four months and actually produce any kind of an agreement – let alone a robust agreement," she said.

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About the Author

Josh O’Kane is a reporter with The Globe and Mail's Report on Business. Since joining the paper in 2011, he has told stories from New Brunswick to Nairobi. More

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