New trade relationship with U.S. may be outside the NAFTA framework: MacNaughton

CALGARY _ Canada may step outside the three-way North American Free Trade Agreement in new talks with the protectionist Trump administration, says Canada’s ambassador to the United States.

The federal government has already had preliminary discussions with members of President Donald Trump’s transition team and more talks are in the offing, David MacNaughton says.

It is vital to have a good economic relationship with the U.S., and while some matters may be dealt with inside the controversial Canada-U.S.-Mexico agreement, which Trump has promised to revisit, others may be better handled outside it, he added.

“It’s essential that we get a better Canada-U.S. trade and economic and security relationship,” MacNaughton said on the eve of a two-day federal cabinet retreat in Calgary.

“Whether that’s within an overall NAFTA arrangement, part of that is going to depend on obviously what Mexico’s reaction is to what they put on the table.

“We will co-operate on trilateral matters when it’s in our interest and we’ll be looking to do things that are in our interest bilaterally. Some of them may be within NAFTA and some of them may not be.”

MacNaughton is briefing that cabinet on the incoming Trump administration. Trump, meanwhile, was expected to sign an order Monday indicating officially that the U.S. wants to renegotiate NAFTA.

Trump has promised a new trade relationship with the world focusing on American interests, but MacNaughton said he doesn’t think Canada is a focus of that.

“They are principally focused on the countries that have large trade deficits with them.”

Canada-U.S. trade is roughly in balance, he said. The U.S. sells more manufactured goods to Canada than Canada does in return.

He said Canada is that largest trading partner for 35 states. “I think we’ve got a lot of leverage.”

The danger is that Canada becomes “collateral damage” as Washington aims at what it sees as predatory trading partners, he warned.