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A Strategy for a new NAFTA

Posted on February 08 by

Much is being written about NAFTA as the U.S., Canada and Mexico renegotiate this trade agreement. With so much conflicting information, viewpoints and theories, I decided to do my own research and reach my own conclusions which culminate in four suggestions that could bring a fresh look to NAFTA.

The motivation for a North American free trade zone began with President Ronald Reagan in 1979. In 1988 Canada and the U.S. signed the Canada-U.S. Free Trade Agreement (FTA) and shortly after that Mexican President Carlos Salinas approached President George Bush for a similar agreement. Then Canada’s Brian Mulroney feared the advantages Canada gained through FTA would be undermined by a U.S.-Mexico bilateral agreement and asked to join the talks. The result was the NAFTA agreement in 1994.

Most economic analysis says NAFTA has been beneficial to the North American economies and the average citizen. But a small minority of workers in industries exposed to trade competition have been harmed.

The present challenge is that the U.S. thinks it has not benefited as much as Canada and Mexico. In the international sphere of things, updating a 24-year-old agreement should be looked upon as an opportunity and not a problem. In business partnerships, a balanced WIN-WIN agreement is key to a successful and lasting partnership, so why not revisit this agreement with a fresh look and make it better for the next 24 years?

Here are four key points:

1) Too much talk about the NAFTA renegotiation in Canada is specifically concerned with Donald Trump. I believe it would be better to change our attitude and think of NAFTA as a U.S.-Canada-Mexico subject, and not a Trump-Trudeau subject.

2) The challenges that the U.S. has with Mexico are greater and different than those with Canada. The U.S. challenges with Mexico not only include trade, but also immigration and drug trafficking while U.S. challenges with Canada are mostly trade-related.

It would be better for each country to represents its side and not appear to partner with another country to gain strength in the negotiation. Any real or perceived move to have Canada side with Mexico is counter-productive. We should enter the negotiation to update the mutual benefits we have with each country. First, let each country negotiate successfully a bilateral agreement that reflect the realities of their own relationship on trade. Then, you can review a three-part agreement. This is the only way to achieve a WIN-WIN for all three parties.

3) The history of friendship and cooperation between the U.S. and Canada is strong. We don’t need to partner with others to deal with the Americans. We have gone to war together twice to protect our freedom and shared values. Also, we have a common history rich with exceptional stories of brotherhood that go beyond business and money.

Two incidents come to mind. The first happened in 1979 with the Iran hostage crisis when Canadian passports were issued to six U.S. diplomats to help them escape from Iran. The second example was 9/11 when Gander, Newfoundland people welcomed U.S. travelers and offered them shelter, food and warmth during a difficult time. This was not orchestrated by politicians or governments, but by simple people who didn’t care about borders.

4) Who are America’s best friends? Canada, the U.K., Australia, Israel and Mexico should all be at the top of the list. I don’t think the U.S. would want to damage its relationship with its best friends.

A fresh look with a positive attitude and a WIN-WIN mentality is all what is needed.

Hugh Latif, of Hugh Latif & Associates in Vaughan, Ontario is a management consultant who helps mid-size, private companies with strategy, succession, advisory boards and HR. He is author of a new book, Maverick Leadership; available from hughlatif.com and amazon.com/ca and Kindle.

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