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02/03/2017

What will Trump want from Canada on NAFTA?

Expert predicts changes to agreement could lead to improvements for Canada
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Wondering what the Americans might want from Canada in a renegotiation of the North American Free Trade Agreement? Multiple clues might be embedded in a document published by the U.S. government.

The U.S. publishes an annual list of complaints about trade practices in other countries.

This list was cited in a policy paper written for the Trump campaign by Wilbur Ross and Peter Navarro -- both of whom now have senior administration roles.

Several trade experts interviewed by The Canadian Press agreed the list would form the backbone of the U.S. negotiating position: "That's the starting point right there,'' said Gary Hufbauer of Washington's Peterson Institute for International Economics.

"That's the laundry list."

The U.S. begins its trade negotiations by consulting American companies, seeking their input. And that's what this document is -- input from U.S. companies on unwelcome trade practices from other countries. Its 2016 edition has eight pages on Canada.

Here's a glimpse:

• Cheese and dairy: Canada's regulations on compositional standards restrict access to the Canadian market for U.S. dry milk proteins. The report said Canada limits imports by providing milk components at discounted prices to domestic processors.

• Supply management: Canada limits imports of dairy, chicken, turkey and eggs. The report said U.S. imports above quota levels faced big tariffs -- 245% for cheese, 298% for butter. "(This) inflates the prices Canadians pay for dairy and poultry."

• Wine and liquor: Canadians get taxed on imports of U.S. alcohol upon returning from U.S. trips, the report said. "This inhibits Canadians from purchasing U.S. alcoholic beverages while (travelling)." To boot, most provinces restrict sales of wine, beer, and spirits to provincial liquor boards, which have a monopoly. B.C. and Ontario also have grocery-store restrictions.

• Seeds and grain: Canada's Seeds Act generally prohibits the sale or advertising for sale or import into Canada of various seeds. Also, U.S. wheat and barley exporters struggle to receive a premium grade that indicates use for milling purposes.

Trade lawyer Alan Wolff predicted many issues would wind up on the negotiating table.

While Canada has suggested its preference would be a small, targeted renegotiation of NAFTA, Wolff, a onetime senior U.S. trade negotiator, said the rule of thumb in important negotiations was topics get added over time.

Some may not even involve Canada.

Wolff made one more prediction -- Canadians would like many of the changes: "The net result is likely to be far more positive for Canada-U.S. relations than it is currently. Because it's a chance to improve things."