Aluminum & NAFTA Negotiations – a New Era of Global Trade?

• Author: Michael Woods and Gordon LaFortune
• Date: July 12, 2018

Since the summer of 2017 Canada, Mexico and the United States have been negotiating with the objective of agreeing on a revised NAFTA—sometimes called NAFTA 2.0. Most observers take the view that the talks have not gone well to date. The U.S. Administration is now signaling that it wants to take a hiatus until after the Congressional mid-term negotiations in November. This, in spite of renewed pushes from Canada and the newly elected Mexican President’s calls to accelerate the talks. It seems that the parties cannot even agree on the timetable, and it has grown increasingly clear that there is a large gap between the U.S. position and that of its two NAFTA partners.

At this point, we are no longer heading towards unchartered waters with its incumbent uncertainty with respect to the U.S. 2017 demand for a “Revised NAFTA”— we are there and arguably have been there for some time. When observers look back on 2018 in the context of the Canada-U.S. trade relationship they may note the irony that the souring of relations spiked with tensions over aluminum and steel and the application of relatively obscure domestic trade regulations by the U.S. Administration with respect to the “national security” of the United States. The U.S. president landed at Bagotville, Québec on the morning of June 8th and left less than 24 hours later. He was invited as the leader of the largest and most powerful member of the select club of the world’s economic powers. He seemed content to limit his role at the G7 Summit to that of unhappy and distracted guest whose major objective goal was to play to the anger and discontent of his political base back home.

Aluminum – ironically, Canada`s Royal Canadian Air Force base in Bagotville was built during WW II and expanded during the Cold War at least partially in response to U.S. pressure with respect to the need to defend the free world’s largest aluminum smelter in nearby Arvida (now part of Jonquière). The Saguenay easily provided the ideal combined energy and transportation elements to supply the United States’ industrial machine. The two countries viewed national interest through a similar lens. The importance of the joint defense of North America led to NORAD. Canada (thriving under the umbrella of the world`s most powerful nation) and the United States (having full military access to Canada`s sovereign air space) were happy with the pact.

Some argue that for the United States, free trade with Canada was the first step in building...