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February 8, 2018

Trudeau on NAFTA: Canada Won’t Cave, No Deal’s Better Than a Bad Deal

“Trade is a bit of a tricky issue,” Canadian Prime Minister Justin Trudeau told Institute of Politics (IOP) Director David Axelrod on Wednesday. “It’s one of those things we know contributes to growth, but trade on its own doesn’t ensure everyone benefits.”

At an event to celebrate the fifth anniversary of the IOP, Trudeau stressed the importance of renewing a “modernized” version of the North American Free Trade Agreement (NAFTA) that he said would encourage growth while protecting the interests of Canadian, Mexican, and U.S. citizens.

The prime minister’s defense of the trade deal is timely. President Donald Trump has repeatedly threatened to pull out of the $1.2 trillion agreement and has argued that he could use a new deal to finance a U.S.-Mexico border wall. Meanwhile, at the World Economic Forum in Davos, Trudeau announced a revised Trans-Pacific Partnership (TPP), a new trade deal between Canada and 10 other countries, after Trump withdrew from the original TPP a year ago.

The deal, he said, would “have to make sure that the benefits of trade don’t just go to the 1 percent, or to big companies, but actually impact positively on citizens, on workers, and ensure protections for things like environment and indigenous peoples and all those things that people now expect.”

Trudeau first delivered off-the-cuff remarks to a packed Mandel Hall (tickets for the event sold out within 30 minutes) and then sat down with Axelrod to answer questions that students had sent in before the event.

Emphasizing the economic growth generated by NAFTA, Trudeau cited statistics for job growth within Illinois and across the United States, especially in the agricultural sector. “We know there are tremendous benefits, and perhaps the biggest one is over the past 25 years NAFTA’s been in place, the American economy has added 33 million net new jobs, which is almost the entire population of Canada.”

Still, he said, “we will not be pushed into accepting any old deal, and no deal might very well be better for Canada than a bad deal.”

When Axelrod pushed him on what might constitute “red lines” on NAFTA, Trudeau was reluctant to give specifics, instead gesturing broadly at labor rights and ensuring that workers feel the benefits of a deal.

“The challenge we have is not trade deal versus no trade deal. It’s how do we make sure we’re benefiting citizens and workers who don’t feel like they’ve been properly supported or cared for.”

UChicago Student Action (UCSA) is skeptical of Trudeau’s commitment to fight for ambitious labor standards, however. Several UCSA members gathered outside the Reynolds Club, with a coalition of labor groups and The People’s Lobby, to protest the event.

Trudeau made sure to include Mexico in the discussion, saying that raising Mexican labor standards under NAFTA would be a boon for the American economy, reducing the incentive for companies to export jobs to Mexico, and producing a consumer base that could purchase products from Canada and the U.S.

Patrick Quinn (A.B. ’17) said after the event that he appreciated Trudeau’s nod to Mexican interests.

“Justin Trudeau is trying to be a liberal Western leader who brings people together, at a time when everyone’s inclination is to get more and more divided, from all sides of the political spectrum,” Quinn said. “What impressed me the most was his taking in the considerations of Mexico. People forget sometimes that it’s a three-way partnership, and for him to step up and be the leader, not just for Canada but for the whole pro-trade movement, is pretty symbolic of the role he’s trying to play in North America.”

Trudeau also spoke at length about economic disillusionment and a “generalized sense of anxiety” he’s observed in both Canada and the United States. For the prime minister, the potential that the next generation might be the first to see shrinking opportunities and economic decline “is a cause to question everything about the social contract, the contract we create within our societies. And the stability of those societies.”

In Western developed economies, he said, there has been growth, but with heavily skewed benefits. “The promise that was sometimes explicitly, sometimes implicitly stated in that was that growth would be good for everyone. And that’s where it broke down…. Economies got richer but the middle class, hardworking families and people, started to see some parts of society do really well, and others stall, and even fall behind. And that led to an anxiety and fear that started to erode the trust we have in our system.”

Trudeau drew a parallel between his appeal to Canadian voters concerned with economic stagnation and Trump’s appeal to Rust Belt voters.

“Standing up for Canadian values, and having a constructive relation with the president, doesn’t have to be a direct contradiction, because there are lots of things on which we can find common ground. He got elected on the promise to make America work for people who have been left out, which is not entirely dissimilar from the commitment I made to try to help the middle class in Canada.”

“Broadly constructed, yes,” Axelrod conceded, tongue-in-cheek.

Pivoting to immigration, the prime minister at times seemed to conflate his pitch for the free flow of capital with liberal immigration policy and refugee programs.

“With trade—with freer movement of goods and, indeed, people—across borders, and the sharing of challenging ideas, the disruption of industries that come from the to and fro of a freer world and marketplace, you end up getting a diversity of people, and ideas and solutions,” he said.

Asked by Axelrod about Canada’s merit-based immigration system, Trudeau said that it works well in combination with a robust, non-merit-based refugee program.

“There are going to be 60 million displaced persons around the world in the coming years, so no country can accept them all, but if everyone does a little bit more, we make a significant dent in the problem,” Trudeau said.

Third-year Maya Jones said after the event that she appreciated Axelrod’s insistence when Trudeau attempted to avoid hardball questions. “Every time Trudeau would try to sidestep, Axelrod kept pushing, saying, ‘But what specifically do you mean? What are specific policies?’ I thought it was good he didn’t let him get away with just vaguely talking about Canadian values.”

Patrick Hanly, a graduate student pursuing an M.B.A. at Booth and an M.P.P. at Harris, took a different view of Trudeau’s restrained responses. “It was fun to see how political Axelrod wanted to make it, and how diplomatically Trudeau responded,” Hanly said. “Trudeau’s playing a bigger game than talking at the University of Chicago.”

After Chicago, Trudeau will go on to San Francisco to meet Amazon’s Jeff Bezos, and to Los Angeles, where the Canadian Liberal Party leader will speak at the Ronald Reagan Presidential Foundation and Institute.

The event was streamed live.

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