Published on: 09:46AM Feb 13, 2009
When President Obama visits Canada next week, the weather is bound to be cold--and his diplomatic reception may be a bit chilly too.
That’s because Washington could be on the verge of sparking a trade war with our closest economic partner. Canadians are anxious about protectionism in the economic stimulus bill. They’re bracing for it like a bitter blast of wind from the Arctic.
Even more controversial is Obama’s promise to renegotiate the North American Free Trade Agreement. On the campaign trail last year, he actually threatened to quit the trade pact: “I think we should use the hammer of a potential opt-out,” he said shortly before the Ohio primary.
The story of “Mr. Obama Goes to Ottawa” will receive adoring treatment from much of the media as America’s first black president embarks on his trip to Canada, a traditional courtesy call for a new U.S. president.
Behind the scenes, however, the private conversations between Obama and Prime Minister Stephen Harper will be full of intrigue, and perhaps even worthy of an Oscar for high political drama. Obama, for his part, would be wise to use the trip as an occasion to renounce his threat to withdraw from NAFTA.
Last year, two-way trade with Canada was worth about $600 billion. No other country approached this level of economic activity with the United States. Even the combined totals of our trade with Mexico and Japan are worth less than our exchanges with Canada. Roughly 18 percent of U.S. foreign trade involves buying and selling goods and services with Canadians.
This is a relationship we don’t want to wreck, especially during the challenges of a global economic downturn. Right now, in fact, Obama should look for ways to increase trade with our reliable friends and not to depress it.
Fortunately, when it comes to his most flamboyant anti-trade rhetoric, Obama might not have meant what he said. During the primaries last year, Austan Goolsbee, Obama’s top economics advisor, assured Canadian officials that his boss’s fulminations against NAFTA “should be viewed as more about political positioning than a clear articulation of policy plans.” When the Associated Press obtained a memo that revealed the contents of this closed-door conversation, it set off a minor political controversy.
Later, after securing the Democratic presidential nomination, the public Obama began to sound more like the private Obama. He declared his commitment to the fundamental importance of trade and even suggested that his earlier statements, uttered in the midst of a hard-fought campaign, did not represent his true views.
Nowadays, Obama and members of his administration are more likely to discuss their belief that NAFTA needs improvement in the areas of environmental quality and labor rights. There is talk of having the governments of the United States, Canada, and Mexico form a “consultative group” on the trade pact, which could serve as a forerunner to a fundamental renegotiation.
Nobody truly expects him to take the reckless step of quitting NAFTA, though at least one of his potential nominations raised fears: Obama originally offered the job of U.S. Trade Representative to Xavier Becerra, a congressman who thinks NAFTA was a bad idea. When Becerra declined, he turned to Ron Kirk, the former mayor of Dallas, who supports the agreement.
The major threat to NAFTA isn’t that Obama will push for the United States to withdraw from it unilaterally. Instead, it’s that his administration and Congress will chip away at its foundation, piece by piece.
The “Buy American” clauses in the economic stimulus bill are a perfect example of this harmful approach: They’re not only bad for American workers, consumers and taxpayers, but they almost certainly violate the terms of NAFTA because they build brand-new obstacles for Canadians to participate in the U.S. economy. They may inspire Canada to retaliate, perhaps with its own “Buy Canadian” rules that hurt American exporters. This is how trade wars begin - human nature on a much grander scale.
Obama won the presidential election for many reasons, including his promise to restore the image of the United States abroad. Now his first foreign trip as commander-in-chief requires him to thaw a relationship that suddenly has turned a little frostier than necessary.
Terry Wanzek grows corn, soybeans, and wheat on his family farm in North Dakota.
Mr. Wanzek serves as a North Dakota Senator and board member of Truth About Trade and Technology (www.truthabouttrade.org)