The Art of the Trumpian Deal

"We're starting negotiations with Canada, pretty much immediately. If they'd like to negotiate fairly, we'll do that."
"If not, the easiest thing we can do is to tariff their cars coming in ... It could end in one day and we take in a lot of money the following day."
"This is a tremendous thing. They used to call it NAFTA, we're gonna call it the United States-Mexico trade agreement. We'll get rid of the name NAFTA, has a bad connotation because the United States was hurt very badly by NAFTA for many years."
"It's an incredible deal [the U.S.-Mexico agreement], it's an incredible deal for both parties.We'll start negotiating with Canada relatively soon."
U.S. President Donald J. Trump

"This [protecting of intellectual property] would require a significant overhaul of Canadian intellectual property law." 
"These provisions ... are at odds with the Canadian government's commitment to modern intellectual property laws that adequately balance the interests of all stakeholders [as with adding years of patent protection from generic drug competition]."
Michael Geist, intellectual property expert, University of Ottawa

Canadian Foreign Affairs Minister Chrystia Freeland arrives at the Office Of The United States Trade Representative, Tuesday, Aug. 28, 2018, in Washington.Andrew Harnik / ASSOCIATED PRESS

The simple fact is, negotiating a fair and mutually useful agreement on free trade with the three partners representing two supplicants and one powerful bully, the prospect of fairness becomes a lost cause. When the balance of power is held unevenly it represents a big stick to wallop the weaker links in a three-way deal with. Where the U.S. yielded in some areas in the original NAFTA agreement, that time is long gone; now the reality is that the one with that big stick is prepared to use it, as a very effective 'negotiating' device.

Beginning with the unexpected U.S. tariffs on steel and aluminum, and going on, in Canada's case, to target lumber, along with other vulnerable items, even if it ends up hurting American consumers as much as it does Canadian producers. Donald Trump may wax threatening about fairness, when he demands that Canada's Supply Management System be dropped -- an antiquated, anti-consumer farm monopoly that should be rethought -- but it has been repeatedly and pointedly observed that the U.S. has its own farm subsidies more than equal to Canada's.

None of the three major political parties in Canada is prepared to submit on the demand to dissolve supply management; there's too much political interest, as in danger, at stake, in the form of critical votes from a well-oiled lobby group. The Dairy Farmers of Canada, as an example, is not above using the threat of political boycott for any party that seriously considers abolishing the dairy supply management. Its threatening overtures ensures that none of the parties would dare speak to the issue in a conciliatory tone to NAFTA.

At the just-concluded Conservative Party of Canada's annual conference a briefing book produced by the Dairy Farmers of Canada was discovered by the press amplifying the extent of their influence, as when it warns that "Members of the Conservative Party of Canada have sent a clear signal that they do not support Canadian farmers" and "Canadians will remember the position taken by Conservatives today". There was no clear signal, no committed position, not even a discussion on the agenda relating to supply management; the issue was deftly set aside; dead in the water.

But had it not been, and the conference had that debate with a majority deciding that their party would do well to scrap supply management, the little book of instructions cautioned the Conservative Leader not to forget the power vested in his position: "The powers of the Leader are far-reaching in preventing a policy from being in the party platform. DFC has been told by the Leader's office that he will exercise this power ... regardless of the outcome at convention." There's the lobby telling the party how it will act; the party indebted to the vote.

Well, Justin Trudeau has an interesting decision to make. The Liberal Party is firm that this is a non-negotiable issue. And "Canada will not be pushed around". If the farm lobby cannot depend on the Liberals, they can't depend on any party. Oh, yes, of course, the New Democrats; and how likely are they to form government -- heaven forfend. It is a desperate situation when a three-party agreement deliberately cuts out one of the three. Six weeks of negotiations took place between the U.S. and Mexico, Canada clearly informed its presence not only unneeded but unwanted.

The idea being, as senior U.S. trade negotiator Robert Lighthizer noted confidently, to strike an agreement with the slightly more malleable Mexican negotiators and when it's done, allow Canada to enter the negotiations with the knowledge that the U.S. is prepared to conclude a bilateral deal without Canada, and leave Canada out entirely, if they feel the need to do so. Canada cannot afford not to sign on to a renewal of NAFTA; the U.S. represents its trade lifeboat; the U.S. doesn't need trade, Canada does. This is indeed the proverbial rock and a hard place.

Accede to U.S. demands that supply management be dissolved to please Trump, and the Liberals limp, defeated into the October 2019 election. Refuse to drop supply management and retain the dignity of making one's own sovereign decisions over the value placed in Canadian-made internal agreements -- almost all other nations, including the U.S. commit to agricultural subsidies of some sort, to ensure self-reliance on national self-sufficiency of the necessities of life-sustenance -- and the Liberals eat humble pie while the Canadian economy tumbles and the voting public takes its revenge.

No sleeping easy in Ottawa for the next five days, the time-frame the U.S. has given Canada to make up its mind whether it is serious about concluding a deal with its Mexican and U.S. free trade partners. This is one very large lemon to suck on.

United States Trade Representative Robert Lighthizer leaves the Office Of The United States Trade Representative, Tuesday, Aug. 28, 2018, to walk to the Eisenhower Executive Office Building, in Washington, ahead of Canadian Foreign Affairs Minister Chrystia Freeland. Canada, America’s longtime ally and No. 2 trading partner, was left out of a proposed deal Trump just reached with Mexico and is scrambling to keep its place in the regional free-trade bloc. Andrew Harnik / ASSOCIATED PRESS