Geneva: US president Donald Trump has ratcheted up pressure on Canada and other trading members, including the European Union, threatening that if they refuse to accept Washington’s trade demands they will risk losing “free military protection", after talks between the US and Canada for revamping the trade deal, which includes Mexico, failed.
The US and Mexico reached a comprehensive deal on 27 August. Mexico agreed to stringent rules of origin provisions, enhanced patent protection norms of 10 years for new drugs, called biologics, and other new drugs, scrapping of dispute settlement resolution mechanism, and the controversial labour standards involving minimum pay of $16 per day.
After securing the agreement with Mexico on its terms, the US piled on the pressure on Canada with its specific demands. Canada, however, found it difficult to agree to some of the US’ demands. Among others, they require Canada to dismantle its dairy board, which manages the supply of dairy and poultry products, particularly in the Quebec region, remove “cultural protection" for Canada’s print and broadcasting sectors, the scrapping of the dispute settlement mechanism for resolving trade and investment disputes in the revamped North America Free Trade Agreement, and stringent norms for patent protection for biologics and other new medicines.
President Trump insisted that the US will not make any concessions during the talks with Canada, according to off-the-record remarks made to Bloomberg on 30 August. The Canadian government found it difficult to agree to the US’ demands once they were reported in domestic media.
Canada’s foreign minister Chrystia Freeland tried to downplay the US’ demands suggesting that “with goodwill and flexibility on all sides, I know we can get there", she said. Canada, however, maintained that it would sign a deal that is good for its people. It will hold another round of talks on Wednesday that would suggest whether Canada will agree to the US’ demands, said an analyst in Geneva, who asked not to be quoted.
Meanwhile, president Trump notified the Congress “of his intent to sign a trade agreement with Mexico and Canada, if it is willing – 90 days from now," US trade representative, ambassador Robert Linghthizer, said on Friday.
Even before the beginning of the crucial negotiations with Canada on 5 September, president Trump began threatening Canada during the weekend. He said in a tweet issued on Saturday that it would be left of the new NAFTA if “fair deals for the US" isn’t reached. “There is no political necessity to keep Canada in the new NAFTA deal, if we don’t to make a fair deal for the US after decades of abuse. Canada will be out. Congress should not interfere with these negotiations or I will simply terminate NAFTA and we will be better off," he threatened, according to The Wall Street Journal on 1 September.
“We shouldn’t have to buy our friends with bad trade deals and free military protection," Trump tweeted on Sunday, making it clear that Canada must fall in line with the specific demands raised by Washington or face the prospect of being excluded from the redesigned North American Free Trade Agreement.
On a separate footing, the US is now considering imposing new tariffs on $200 billion of imports from China on 7 September, following the conclusion of its public hearings with the American companies on China’s theft of intellectual property and forced transfer of technology. Trump also threatened last week to walk out of the WTO setting the ground for an intense trade war that he wants to conduct with each and all.