Defence wins games. Anyone who has ever watched the Stanley Cup Playoffs has heard that mantra to the point of exhaustion. While it might ring true in select sports, the United States-Mexico-Canada Agreement (USMCA), which was announced on September 30, 2018 and replaces the North American Free Trade Agreement (NAFTA), has Canadians questioning the wisdom of defence first tactics.
Make no mistake, Canada was on the defensive from the outset of these negotiations. When the President announced that NAFTA was the “worst trade agreement in history”, Canada was scrambling to demonstrate how the agreement was positive for all three countries’ economies. Canada seemed intent on maintaining the status quo (ever the Canadian characteristic) and keeping our beloved NAFTA intact. But then came the rhetoric and accusations that Canada was intentionally blocking progress. You can still play solid defence and let in a few goals.
This was unconventional defence. Canada wasn’t deploying the trap, we were doing our best to avoid offensive traps and being wrangled into untenable commitments (economically and politically). Our negotiating team did a remarkable job navigating this territory and what emerged was essentially a tweaked NAFTA. A new name does not change the content of the script. Some of the tweaks, however, are rare and intriguing, demonstrating how the new USMCA has more to do with the shift in geopolitics than it does with altering the North American trading landscape.
Many pundits have been writing and warning about the “China clause” found in section 32.10 of the new agreement. Though it is unprecedented in a trade agreement, the rhetoric that has surrounded this provision in recent days needs to be separated from the reality of what it does. Section 32.10 requires all signatories to give 90 days’ notice before starting free trade talks with a “non-market country” and to provide the text of a trade agreement with that country in advance of signature.
Essentially, if Canada wanted to sign a free trade deal with China, the United States and/or Mexico (though the provision came from the former) could invoke this provision and trigger withdrawal from the USMCA. That being said, they don’t have to trigger withdrawal and therefore this provision can be read more as providing transparency to our trading partners than Canada ceding a veto power to another nation over our trading future. In practice, this is not all that dissimilar from NAFTA as it too contained a withdrawal provision upon notice to the other parties (the threat of which is why NAFTA was being re-negotiated in the first place).
In theory, and in a world where the United States has arguably been losing its influence in global commerce and diplomacy, the USMCA can be seen as a western trade deal that cements allies. It presents a united North America to the world where choosing free trade with non-like-minded countries could threaten this unity. While Canada has always preferred to trade directly with its neighbor to the south due to geography and shared history, this agreement ensures we continue to keep the Americans as not only a friend, but best friend. And while it remains true that trade diversification is required for Canada’s continued prosperity, much of our strength in negotiating has always been that Canada has preferential access to the U.S. market. It’s not a bad thing to have a best friend such as the U.S.
On the U.S. side, section 32.10 is their own deployment of trap defence. They are defending their status in the world, and especially in North America. With this agreement, they will continue to ensure they are the dominant force on the continent.
Changing the name of NAFTA to USMCA is more political than anything. Calling it the USMCA allows the President to declare victory and come through on his election promise. He can now say that he was able to “tear up” NAFTA and negotiate a fair deal for Americans. It’s really a branding exercise as most of the agreement remains very similar, if not identical, to NAFTA. And defending the status quo is exactly what Canada had hoped for. We gave up a bit (not much) on dairy to keep almost everything else we liked intact.
As Canadians, we shouldn’t be so weary of our defence first approach after all. It produced a win-win-win situation, something that seemed almost unthinkable at the outset of these negotiations. The mantra seems to ring true: defence continues to win games. So why get in the way of a good victory party.