Skip to main content

International Business Morneau, Poloz 'positive' about NAFTA talks after meeting with U.S. Treasury secretary

U.S. Secretary of the Treasury Steven Mnuchin takes pictures before a news conference during a G7 for Financial ministers, in the southern Italian city of Bari, Italy May 13, 2017.

Canadian delegates at a Group of Seven meeting in Italy said meetings with U.S. Treasury secretary Steven Mnuchin left them cautiously optimistic that a new North American free-trade agreement deal with the United States will not inflict extensive trade damage on Canada.

The view taken by Finance Minister Bill Morneau, and Stephen Poloz, governor of the Bank of Canada, came even though Mr. Mnuchin, a former Goldman Sachs banker, warned that any new trade deal would have to take American interests at heart.

"We don't want to be protectionist, but we reserve our right to be protectionist to the extent that we believe trade is not free and fair," he told reporters on Saturday, shortly after the wind-up of the two-day meeting of G7 finance ministers and central bankers in the southern Italian city of Bari.

Story continues below advertisement

Rita Trichur: Why re-opening NAFTA would be good for Canada

NAFTA, dairy and softwood: What's going on with Trump? A guide to the trade file

Mr. Mnuchin, 54, held bilateral meetings with Mr. Morneau and Mr. Poloz, where trade was a hot topic, even though global trade and protectionism were not on the official G7 agenda in Bari – the Italian hosts had promoted an "inclusive growth" theme.

Mr. Mnuchin said that Senate approval Thursday of President Donald Trump's choice for the new U.S. trade representative, lawyer Robert Lighthizer, would allow NAFTA negotiations to start in earnest. The Americans can now officially open the NAFTA file with 90-days notice. Assuming they do so this month, negotiations would likely start after the summer holidays.

"We obviously have to wait to start the formal negotiations," Mr. Mnuchin said. "I think, as you know, there were discussions about the President potentially terminating NAFTA. He decided not to do that. He wants to renegotiate it and I think that there's going to be something that's going to be a win-win for all three countries."

He added that NAFTA "is an old agreement, it needs to be looked at. There are things that need to be changed, but Mexico and Canada are two very important trading partners, and I am hopeful that we can fix the agreement in a way that is good for us and we can move forward. I know both of them are looking to that as well."

In an interview on Friday, Mr. Morneau said his meeting with Mr. Mnuchin left him with a "positive sense" of what can be achieved in the fresh trade talks. "We'll be looking on ways to improve on what has been successful," he said. [The Americans are] very constructive with us on those discussions. You'll see, of course, flash points in the media. But behind the scenes, it's a constructive discussion on how we can make improvements."

Story continues below advertisement

Mr. Poloz had a similar view. "My limited visibility leaves with me a sense of constructive optimism," he told The Globe and Mail on Saturday. "There's a strong undercurrent of reality that we do business together, and we do so within a trade architecture."

Mr. Trump rattled the trading world shortly after he took office in January by pulling the United States out of the Trans-Pacific Partnership with Japan, Australia, Singapore and other Pacific Rim countries. He threatened to scrap NAFTA, calling it "the worst trade deal," and made it clear that the United States would not negotiate a trans-Atlantic deal similar to CETA, the trade deal recently negotiated between the Canada and the European Union.

In March, however, Mr. Trump backed down on his threat to pull out of NAFTA, vowing instead to renegotiate it. Since then, Mr. Trump seems to have opened up to the prospect of creating new trade deals. Evidence of an apparent pro-trade stance came on Friday, when the United States and China agreed to open the vast Chinese market to U.S. credit ratings agencies, credit card companies, and shipments of American beef and liquefied natural gas. In return, China will get the right to open Chinese banks in the United States.

Mr. Morneau said the NAFTA talks' potential flash points would include trade in softwood lumber and diafiltered (unfiltered) milk along with labour mobility and trading rules governing the digital economy. "All these things will be important," he said.

Mr. Poloz said that uncertainty about NAFTA's future has damaged capital investment in Canada, since export-oriented companies do not know what access they will have to the U.S. market. "Looking at the non-energy sector, there is definitely an undercurrent of caution," he said. " I wouldn't say that investment has stopped, but it's definitely very slow. It's less than it would be if there were certainty [on trade]."

In Bari, the G7 finance ministers signed a watered-down pledge on global trade, saying only that they are "working to strengthen the contribution of trade to our economies."

Story continues below advertisement

Essentially the same language was used in March, at the Group of 20 meeting in Germany, where there was no explicit vow to avoid protectionism.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter