"What if?" A memo analyzing future NAFTA scenarios

February 7, 2018

 

The Greater Vancouver Board of Trade's President and CEO, Iain Black, participated in a pre-NAFTA delegation on January 22 in Montreal that brought together the leaders of chambers of commerce from across Canada, the U.S. and Mexico.

The delegation resulted in a joint declaration from 25 chambers of commerce urging the three countries to agree on an updated NAFTA.  

Together with the Edmonton Chamber of Commerce, the Greater Vancouver Board of Trade prepared a "What If?" memo for the Canadian chambers in attendance which outlines the potential economic consequences if NAFTA were to collapse.

Key Highlights 

  • In the event of a U.S. withdrawal from NAFTA, Canada-U.S. trade would likely revert to the WTO tariff rules, and NAFTA would remain in force between Canada and Mexico.
     
  • Overall, a U.S. withdrawal from NAFTA could lead to a decline in Canadian GDP of up to 1%,1 a loss of up to 125,0002 Canadian jobs, and a decrease in Canadian exports by U.S. $20 billion.3 Trilateral trade would decrease by U.S. $120 billion.4
     
  • The most vulnerable sectors of the economy appear to be the automotive sector, freight carriers and metals. Central Canada and the Prairies, particularly Calgary, Winnipeg, and Toronto, are likely to be the most impacted by a NAFTA disruption.
     
  • B.C. is most likely to be the least impacted region in Canada due to diversified exports markets, and may offer a model for other parts of the country.

Read the full memo

1. Porter, D. (2017, Nov). The Day After NAFTA: Economic Impact Analysis. From BMO Capital Markets Economics http://economics.bmocapitalmarkets.com

2. Porter, D. (2017, Nov). The Day After NAFTA: Economic Impact Analysis. From BMO Capital Markets Economics http://economics.bmocapitalmarkets.com

3. Ciuriak, D., Ciuriak, L., Dadkhan, A., & Xiao, J. (2017, Nov). The NAFTA Renegotiation: What if the US Walks Away. From C.D. Howe Institute https://www.cdhowe.org/sites/default/files/attachments/research_papers/mixed/Working%20Paper%201128%20web.pdf

4. Ciuriak, D., Ciuriak, L., Dadkhan, A., & Xiao, J. (2017, Nov). The NAFTA Renegotiation: What if the US Walks Away. From C.D. Howe Institute https://www.cdhowe.org/sites/default/files/attachments/research_papers/mixed/Working%20Paper%201128%20web.pdf