An economics professor says Canadians need to be wary of any talk by Barack Obama about reopening the North American Free Trade Agreement. David Murrell, a professor at the University of New Brunswick, said Obama’s hints that he could renegotiate NAFTA to help sectors in the U.S. that are losing jobs to Mexico need to be watched. “My fear is that if there is a renegotiation, all kinds of things could be opened up,” Murrell said. That, he said, could lead to “unintended consequences.” He doesn’t know, however, what those consequences might be. But Murrell suspects the financiers and lobbyists behind Obama will nix any talk of protectionism in the short term. Charles Cirtwill, executive vice-president of the Atlantic Institute for Market Studies, agrees. “Talking about renegotiating NAFTA is a lot easier than actually renegotiating NAFTA,” he said. “The last Democratic president said that and he turned out to be an avid free trader.” But there are those who say Obama’s victory in the U.S. election is good news for the Canadian economy. Bank of Montreal chief economist Sherry Cooper said Wednesday the historic victory should help revive consumer confidence and return spending to more normal levels and this, combined with the likelihood of another U.S. fiscal stimulus package, will help Canadian manufacturers. “One of the important effects of the Obama win, as we saw as people poured into the streets (Tuesday) night, is that it improves the feelings of optimism and confidence, which had been at rock-bottom lows in the U.S.,” Cooper said. “That in itself could help restore spending to more normal levels … and a more buoyant U.S. economy means our export markets will improve.” Cooper said she doesn’t believe NAFTA will be renegotiated. And even if it was, any changes “are likely to impact only Mexico because they will deal with the assurance of environmental and labour practices already in force in Canada,” she said. But Paul Ferley, assistant chief economist at Royal Bank, said Obama has indicated he may take a protectionist stance as the U.S. economy struggles. Ferley said this has “very negative implications for Canada, given the extent to which we export to that economy and the extent that the Canadian economy is much more open, much more trade-oriented.” The Obama presidency could affect Canada’s oil industry, as the president-elect has said he will fight America’s “addiction” to dirty oil, which could include crude from Alberta’s oilsands. “The so-called dirty fuel has been a hot-button issue on the campaign trail, and I think it bears watching if an Obama presidency discriminates against imports from the oilsands,” said BMO Capital Markets economist Doug Porter. But Ferley said Obama has also talked about reducing America’s dependence on oil from the Middle East. “I’m inclined to be optimistic,” he said. “Given the U.S. needs for oil, given the vast deposits that are available in the oilsands, I think that reality is hard to ignore.” Ultimately, Cooper said, anything that boosts U.S. consumer confidence – which dropped to its lowest level on record in October – is good for the American, Canadian and global economies. “Anything that would help to shorten and mitigate the U.S. recession of course would be good for Canada and actually more than offset whatever protectionist measures might be coming down the road.” With files from The Canadian Press
