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What NAFTA Without Canada Would Mean


The North American Free Trade Agreement's governed how Canada, Mexico and the U.S. do business with each other since 1994 until now. Mexico and the U.S. struck a deal last month, but Canada and the U.S. have not been able to agree. There is a deadline tomorrow imposed by the Trump administration to renegotiate it. President Trump is threatening to push ahead with an agreement that excludes Canada - to say the least, a longtime U.S. ally and closest trading partner.

Bruce Heyman is a former U.S. ambassador to Canada. Mr. Ambassador, thanks so much for being with us.

BRUCE HEYMAN: Good morning, Scott.

SIMON: We expected the administration to publish a draft agreement last night. That didn't happen, and reports are because Mexico is pushing to include Canada. How do you read events now?

HEYMAN: Well, I think we're in a very intense period. The deadline in our lives - a deadline really forces outcomes. And in this particular case, the Canadians are really scrambling to try to become a part of the deal that the U.S. has already struck with Mexico. You know, the prime minister's been on the phone, not only with the president-elect of Mexico over the last few days, but also called all of his leading bankers in most of the financial institutions in Canada, and his negotiating team are on the hotline with - from Ottawa to Washington, having intense negotiations to try to finalize what they would characterize as a win-win-win deal for Canada, for Mexico and the United States.

SIMON: What does Canada want that, so far, the U.S. hasn't agreed to?

HEYMAN: So there are a couple of things. First of all, between the two countries, if we have a dispute and we disagree in a way something's handled in trade, the Canadians have appreciated a provision that exists in the existing NAFTA, which causes an independent body to resolve those disputes. The U.S. wants to get rid of that. It's called Chapter 19. It's a chapter within existing NAFTA. But the Canadians would really like to see this independent body. And they almost didn't participate in the first NAFTA agreement without it.

The second thing they want is that the U.S. has imposed steel and aluminum tariffs and are now threatening automobile tariffs on the basis of national security. And the Canadians are saying, hey, if we enter into this deal, I want assurances that you're not going to go ahead next week and begin imposing other duties on the basis of national security, which make no sense with the U.S.-Canada relationship. And the Canadians have been very upset about that.

SIMON: Well, in the minute and half we have left, it could be particularly important in the automotive sector - couldn't it? - because a lot of what we consider to be U.S.-made cars, in fact, are made, or at least partially, made in Canada, aren't they?

HEYMAN: Yeah. In fact, if a car is assembled in Canada and shipped to the United States, Americans should realize that about 50 percent of the content of that car is American-made. A carburetor could cross the border up to eight times during the manufacturing process. We have a completely integrated manufacturing process in the automobile industry.

And here, we have something very amazing. We have the labor unions - the head of the AFL-CIO; the industry - head of the automobile manufacturers - each of them; and we have the U.S. Chamber of Commerce, all coming together and agreeing that auto tariffs would be bad for not only Canada, but also U.S. jobs. And it would be bad for the U.S.-Canada relationship overall. And so I think that there are a lot of people that do not want to see us go down that road. And it would be very detrimental economically.

SIMON: So one last yes or no question - do you see an agreement?

HEYMAN: I'm the eternal optimist. You know, President Obama said once to me he's a congenital optimist, so I'll go with that.


HEYMAN: It's too important. The U.S.-Canada relationship's just too important.

SIMON: Former U.S. ambassador to Canada Bruce Heyman, thanks so much.

HEYMAN: Thank you.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.