Wilbur Ross, the US Commerce Secretary working on the recognition of NAFTA, says there could be big changes coming to the trade pact.
Ross says concessions will be necessary, even for Canada.
Speaking to Bloomberg, Ross said “The Mexicans know, the Canadians know, everybody knows, times are different. We are going to have new trade relations with people. And they all know they’re going to have to make concessions. The only question is what’s the magnitude, and what’s the form of the concessions.”
Ross also said he hopes negotiations don’t take more than a year.
Changes to reflect modern economy
Ross envisions entirely new chapters being added to NAFTA, including a focus on the digital economy, as well as auto parts. That could have a big impact for the Canadian auto sector. With the US considering a Border Adjusted Tax – which would tax imports to the US – there is concern in Canada that our auto industry will be damaged by the increased costs such a system would impose.
Ross didn’t clear up the issue in his interview, saying only “You need to be mindful also of the supply chains that have developed (for auto parts). And to the degree that a transition, a geographic transition, is needed, that takes some time.”
Canada is likely to seek exemptions from any Border Adjusted Tax, but those exemptions – if granted – would likely come with a cost. Time will tell what that cost will be, but we can expect the US to drive a hard bargain.
Canada could take steps now to strengthen our economy
While there is uncertainty about the form NAFTA will take in the future, there are two steps the government should take in their next budget to strengthen our economy.
First, eliminate the carbon tax. The carbon tax will weaken our entire economy, driving up the cost of living and reducing Canadians spending power, which will have a negative impact on the entire economic system. Cancelling the carbon tax will prevent us from imposing a self-inflicted economic wound upon ourselves.
Second, bring in a big middle class tax cut. Without a strong middle-class, a country has no future. In the past 20 years, the number of Canadians who consider themselves part of the middle class has declined from over 50% to under 40%. Our middle class is being buried by taxes and fees, and being forced to go further and further into debt just to maintain a decent standard of living. Meanwhile, government continues to grow, as more of our money is taken from our pockets and put in the hands of politicians.
Revitalizing the middle class would be a huge boost to the economy, and the best way to do that is to bring in a massive middle class tax cut. How to pay for it?
Simple. The government should find savings within itself for once, rather than digging into the savings of the Canadian people.
Unfortunately, Justin Trudeau seems unlikely to do any of this. Instead, he is doubling down on his ideological agenda to make the federal government even more bloated, more controlling, and more expensive – all at the expense of Canadians.
That doesn’t bode well for our economy in a world of growing financial instability.
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