Alberta exporters are sharpening their focus on what happens should the United States drop out of the North American Free Trade Agreement (NAFTA).
Trade officials have been meeting in the U.S. capital for stripped-down discussions since mid-December on some of the deal’s less volatile trade issues in an effort to salvage the free trade agreement.
For Alberta, striking a deal to preserve NAFTA is crucial. According to the provincial government, Alberta’s merchandise exports to the U.S. have averaged nearly $90 billion a year over the past five years.
The biggest chunk of those are attributable to the province’s oil and gas sector — an industry that a recent analysis by BMO Capital Markets deemed to have “low sensitivity” to NAFTA termination.
But petroleum producers aren’t the only ones tied to U.S. trade.
The U.S. is Alberta’s largest trading partner for agriculture and food products. The province also does billions of dollars in trade in plastics, machinery and organic chemicals.
But there is rising speculation President Donald Trump plans to withdraw the U.S. from NAFTA, with leading investment bank Goldman Sachs the latest to suggest such an outcome is likely – and some industry officials believe it’s prudent to begin planning for what the future looks like without the 23-year-old trade deal.
“You have to imagine what is the worst-case scenario,” said John Masswohl, director of government and international relations for the Canadian Cattlemen’s Association.
“Mr. Trump has said that he intends to withdraw from the NAFTA if he doesn’t get what he wants, and so far we haven’t seen anything to indicate that that’s a bluff. We have to take that seriously.”