Canada Should Avoid Broad Concessions in Trade Talks with US

As trade tensions between Canada and the US escalate, many are calling for Ottawa to make concessions to reach a deal. However, former principal negotiator of the Canada-US free trade agreement Andrei Sulzenko argues that this approach is misguided.

The current talks involve a long list of concessions from Canada, which Sulzenko believes should be narrowed down to short-term fixes that can be easily undone if necessary. One such 'get' for Canada would be eliminating the punitive steel and aluminum tariffs imposed in the name of US national security.

Sulzenko suggests that the US has a real incentive to trade away these tariffs because they hurt their economy more than they help it. In fact, U.S. steel tariffs are estimated to kill 10 downstream manufacturing jobs for every steelworker job created or saved; and U.S. aluminum smelting capacity is well below domestic market demand.

A possible solution would be a tariff-quota arrangement similar to the one Canada made with China for autos. This would involve agreeing on a politically tolerable level of imports, subject to no or low tariffs, and imposing higher tariffs on imports that exceed this quota.