Canada, Mexico agreed to discuss NAFTA with Trump before making public comments

Prime Minister Justin Trudeau welcomes Mexican President Enrique Pena Nieto to the North American Leaders' Summit in Ottawa, Wednesday June 29, 2016. Canada and Mexico discussed reaching out to US president-elect Donald Trump about reworking NAFTA before publicly doing so. Fred Chartrand/The Canadian Press

OTTAWA – Canada and Mexico reached out to each other while preparing similar public messages last week about working with Donald Trump before the two American neighbours both declared themselves willing to talk with the U.S. about NAFTA.

Two federal sources say the two governments spoke by phone prior to Canada’s public comments about NAFTA the day after the U.S. election – comments that were followed by a similar statement later in the week from Mexico.

READ MORE: Canada plans to hold talks with US, Mexico over trade deals: Bill Morneau

The leaders of the two countries also chatted – Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto spoke later in the week after their governments had discussed their intentions on trade.

“I don’t think anyone was surprised,” one Canadian official said of the announcement last Wednesday.

Story continues below advertisement

Every trade deal can be improved, so if the next president wants to discuss reopening NAFTA, Canada is ready to come to the table, David MacNaughton, Canada’s ambassador to the U.S., told a briefing the day after the vote.

WATCH: Trudeau, Trump have had talks about renegotiating NAFTA

Click to play video: 'Trudeau, Trump have had talks about renegotiating NAFTA'
Trudeau, Trump have had talks about renegotiating NAFTA

He even suggested a possible improvement: adding softwood lumber to the agreement, so that the countries don’t continue re-litigating the issue every few years.

Softwood is one of several issues a Trump administration would want to adjust in the North American Free Trade Agreement, according to a purported transition memo obtained by CNN.

Financial news and insights delivered to your email every Saturday.

Others reportedly include currency manipulation, lumber, country-of-origin labelling and environmental and safety standards. On Day 1 of his presidency, Trump would inform Canada and Mexico of his intention to change NAFTA – or have it cancelled, CNN described the document as saying.

Story continues below advertisement

Canada and Mexico didn’t wait. The day after Canada’s announcement, Mexico’s foreign minister said her government was ready to sit down and discuss NAFTA, its merits and possible ways to modernize it – without renegotiating it entirely.

READ MORE: Republican Congress will protect NAFTA: former governor, White House aide

The snap announcement caught some off-guard. Interim Conservative leader Rona Ambrose criticized the move, accusing the government of jumping the gun. Others suggested the rush to the table had weakened Canada’s negotiating position.

But Canadian officials said it was carefully considered.

The first thing it does, according to two sources, is remove some of the drama from an early conversation. One official pointed out that NAFTA has been adjusted multiple times over the years with little drama or tension.

In 2009, more liberalized rules of origin were introduced for agricultural, industrial, mineral fuel and oil products. In 2001, changes were made to the dispute-settlement process. In 2004, it was adjusted to allow easier entry for actuaries and plant pathologists.

WATCH: Presidential debate: Trump calls NAFTA ‘the worst trade deal maybe ever signed, anywhere’ 
Click to play video: 'Presidential debate: Trump calls NAFTA ‘the worst trade deal maybe ever signed, anywhere’'
Presidential debate: Trump calls NAFTA ‘the worst trade deal maybe ever signed, anywhere’

Canada has been hoping for years to modernize the visa rules – NAFTA allows easier access to visas for a list of professions that is now out of date, with almost no references to occupations related to the digital economy.

Story continues below advertisement

“The idea that we would say, ‘No, we’re not going to talk,’ is unrealistic,” one official said.

“We’re always looking to improve agreements… (We’re always asking): ‘How do you make trade work for regular people?”‘

He said Canada wanted to avoid an unnecessary first fight – why antagonize, he said, the most important foreign partner without even sitting down to consider improvements that might benefit workers?

A concern about negotiating with Trump is his frequently articulated view on negotiation and trade: a zero-sum view of winners versus losers where – in his own words while writing about business deals – the goal was to crush the competition.

Yet the Canadian move was praised at a panel the other day in Washington. All three panellists at an event at Johns Hopkins University on the election effects on Canada-U.S. relations said it was wise.

WATCH: Trudeau expects ‘respect’ as Canada now prepares to ‘work’ with President-elect Trump 
Click to play video: 'Trudeau expects ‘respect’ as Canada now prepares to ‘work’ with President-elect Trump'
Trudeau expects ‘respect’ as Canada now prepares to ‘work’ with President-elect Trump

“The right thing to do is exactly what the prime minister has done. That is to initiate discussion, to engage, right at the beginning,” said Charles Doran, director of Canadian studies at the school.

Story continues below advertisement

“It’s very important for Canada to get started with that conversation early. I think that was very smart.”

Dan Restrepo, a former adviser to President Barack Obama, said one challenge is figuring out what Trump wants – he never specified it during his regular campaign rants against NAFTA.

READ MORE: Could Donald Trump pull the plug on NAFTA? It’s not as easy as he says

Canada needs to build a good relationship with the incoming president, which could give it leverage in other international discussions, he said: “Engage, engage, engage.”

“I think both governments have been wise in saying that they are open to (talking NAFTA),” said Restrepo, the former principal adviser to Obama for Canada, Latin America and the Caribbean.

“I think there is value in sitting down and even seeing what that conversation looks like.”

Sponsored content