An adviser to U.S. President Donald Trump is assuring Canadians that renegotiating NAFTA will pose little risk to the Canadian economy, despite the president’s big talk on his protectionist agenda.
“Canada has been a great partner of the United States for as long as anyone can remember,” said Stephen Schwarzman, the billionaire co-founder of a private equity giant who was tapped to chair the President’s Strategic and Policy Forum.
“Things should go well for Canada in terms of any discussions with the United States.”
READ MORE: Donald Trump adviser says Canada is well positioned in any trade renegotiations
Despite the comforting words, it is difficult to get a clear picture of what might happen when the talks on NAFTA begin – but there’s no reason to expect the worst, experts are saying.
“What would a negotiation look like? I don’t know,” said Walid Hejazi, associate professor at the University of Toronto’s Rotman School of Management.
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Mark Warner, a Canadian and American trade lawyer, said Canadians should be careful to not “exaggerate the threat,” since a lot of the statements on trade and NAFTA Trump made throughout the election campaign had no mention of Canada.
“Some of his statements sound threatening, but we need to see how much is bluster, what Congress can do to stop him and what courts can do to stop him,” Warner said in a telephone interview Monday.
Last week, for example, just as Trump was taking part in a glut of inauguration events, a Republican senator from Utah introduced a bill that would force all trade decisions taken by the president to receive congressional approval.
WATCH: U.S. Commerce nominee Wilbur Ross says NAFTA is Trump’s first trade priority
In introducing his bill, Mike Lee said any sudden hikes in tariffs could “wreak havoc” on a slew of small- and medium-sized business in Utah that rely on imports.
Since Trump’s election in November, the Canadian government has maintained an air of confidence in public, leaning hard on the historical relationship and sheer size of trade between the two countries.
If Canada is not a target, as Schwarzman said in Calgary Monday, renegotiating an agreement of which it is a part still opens the country up for concessions.
READ MORE: Donald Trump plans talks with Justin Trudeau to renegotiate NAFTA
“The risk of opening a trade deal is that everything’s on the table,” Warner said. “If talks are opened up, there’s no way of isolating a few items.”
And, for Canada, there are both pros and cons to that.
Two markets the United States might look to renegotiate include softwood lumber and dairy, Warner said.
As it stands, U.S. producers complain that Canadian lumber is subsidized and have asked to have duties imposed on softwood lumber.
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Similarly, dairy in Canada is heavily regulated through supply management, and imports are controlled through tariff rate quotas.
On the flip side, however, an updated NAFTA agreement could improve labour standards, better protect the environment, and allow Canada to renegotiate the requirement forcing it to sell a certain amount of oil to the U.S., Warner said.
WATCH: Freeland calls ‘NAFTA a very good trade deal’ for Canada
Another big area of concern is the difficulty workers often encounter trying to cross the border for work, he said.
READ MORE: President Trump could pose ‘unprecedented’ challenges to Canada’s economy
International businesses have complained about an out-of-date visa system that creates unnecessary red tape when employees travel across the border for work. Adding new, digital-economy jobs to the list of professions eligible for easy-access visas under NAFTA would go a long way to easing those struggles, he said.
Canada’s ambassador to the U.S., David McNaughton, has said Canada might like to look at changing the means by which professional visas are granted, describing it as a potential change that is mutually beneficial.
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As Warner pointed out, the digital economy did not exist when NAFTA came into force on Jan. 1, 1994. In fact, the agreement makes almost no mention of computers.
“Given it’s a 23-year-old deal, it’s fair to ask whether the world has changed enough to warrant a look,” U of T’s Hejazi said Monday.
One noteworthy person who goes beyond that sentiment, who says outright that the deal is out of date, is Mickey Kantor, who was among the trade agreement’s original negotiators for the U.S.
Though he remains an ardent supporter of the pact, he admitted at a recent symposium in Washington that NAFTA – as well as other agreements signed in the 1990s – were tailored to an economy that no longer exists.
With files from The Canadian Press
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