NAFTA renegotiations and support for Canada-China FTA

ABSTRACT

Do renegotiations of existing free trade agreements (FTAs) increase mass support for other FTAs, and if so, how? The media and scholars have suggested that the recent uptick in support for a Canada-China FTA can be attributed in part to NAFTA renegotiations, based on trends in public opinion polls. In this article, I present a formal test of this causal claim. I identify two interrelated causal mechanisms (distribution of benefits from cooperation and market threat) linking NAFTA renegotiations as a causal variable to explain support for a Canada-China FTA. I evaluate these causal mechanisms using new data from a survey experiment carried out during NAFTA renegotiations. The results provide support for both causal mechanisms and are consistent with existing notions about why Canadians have recently increased their support for a trade deal with China. Policy implications are discussed following the analysis.

RÉSUMÉ

Les renégociations des accords de libre-échange (ALE) existants augmentent-elles le soutien massif à d'autres ALE, et si oui, comment ? En se basant sur les tendances des sondages d'opinions, les médias et les universitaires ont suggéré que le récent renforcement du soutien à un ALE entre le Canada et la Chine peut être associé en partie aux renégociations de l'ALENA. Dans cet article, je présente un test formel de cette revendication causale. J'identifie deux mécanismes de causalité interdépendants (distribution des bénéfices de la coopération et menace des marchés) reliant les renégociations de l'ALENA, comme une variable causale, pour expliquer le soutien à un ALE entre le Canada et la Chine. J'évalue ces mécanismes de causalité en m'inspirant de nouvelles données issues d'une expérience d'enquête conduite lors des renégociations de l'ALENA. Les résultats viennent étayer l'intérêt pour les deux mécanismes de causalité et sont conformes aux notions existantes des raisons pour lesquelles les Canadiens ont récemment solidifié leur soutien à un accord commercial avec la Chine. Les implications politiques sont traitées à la suite de cette analyse.

KEYWORDS:

• Canada-China FTA
• NAFTA renegotiations
• USMCA
• protectionism
• relative gains
• public opinion

Introduction

For decades, Canada and the US have shared a common interest in international trade, with both countries making open markets a cornerstone of foreign policy. The two countries first institutionalized these interests in 1988 with the signing of the Canada–US Free Trade Agreement (CUSFTA) and later strengthened their commitments by establishing the North American Free Trade Agreement (NAFTA) with Mexico. However, beginning with the US Presidential race in 2015–2016 and continuing to present, trade policy coming from the US has grown increasingly protectionist: pulling out of the Trans-Pacific Partnership (TPP), renegotiating NAFTA, and imposing tariffs that violate the “most-favoured-nation” (MFN) rules of the WTO. Together, these policy decisions are signposts that the US has, at least momentarily, withdrawn its support for the same institutions it initially cultivated.

Concurrent with NAFTA renegotiations, public opinion polls show that Canadians have become more supportive than in the past of establishing new trade deals with other countries. Scholars, the media, and policymakers have suggested that these trends are causally linked–that is, Canadians are becoming more favorable to new free trade agreements (FTAs) in response to NAFTA renegotiations and growing US protectionism.¹ Some also suggest that Canadians may be more willing to support new trade agreements with less traditional trading partners like China in hopes of diversifying trade relations.

Did NAFTA renegotiations increase mass support in Canada for a Canada-China FTA? Possibly. However, there are alternative explanations specifically related to China (and not the US) that may also explain the increased support for Canada-China FTA talks. The most obvious alternative explanation is the continued growth of the Chinese economy. The size of the Chinese market alone presents a strong incentive for improved trade relations between Canada and the second largest economy in the world. The Chinese market is steadily expanding, creating more international business for foreign exporters selling their goods to Chinese consumers and cutting costs for intermediary inputs in production. As such, perhaps voters support the potential Canada-China FTA because they recognize the growing importance of the Chinese market.

A distinct but related alternative explanation is the Chinese government's active role in global trade and signing new trade deals. For comparison, Canada was actively involved in only three formal FTA negotiations in 2018, while China engaged in twelve formal FTA talks with 27 countries.² Based on public consultations with Canadian stakeholders, the Government of Canada released a report stating: “[T]here is some urgency to delineating the future of Canada’s engagement with China; some of our global competitors are forging ahead with, or already have, preferential trade agreements with China.”³ Admittedly, most voters are likely unaware of the specifics related to China's ongoing trade talks with other countries, but the growth of the Chinese market combined with the Chinese government's active role in foreign economic policy may signal to Canadian voters the growing importance of trade ties with China.

With these alternative explanations in mind, substantiating the causal relationship between NAFTA renegotiations and support for a Canada-China FTA requires formal testing that goes beyond associations in public opinion polls.

This article draws from the literature on trade and international negotiations and proposes two causal mechanisms that may explain the link between NAFTA renegotiations and support for China. First, the perceived distribution of the benefits from a renegotiated NAFTA is likely to influence support for potential agreements with other countries. Second, renegotiations may be viewed as a protectionist maneuver threatening Canada's access to the American market, and thereby raising the value of potential outside trade deals.

Understanding the relationship between renegotiations and trade attitudes has several important implications for scholars and foreign policymakers. International relations scholars have traditionally focused on individual-level factors (e.g. personal self-interest, values, worldview) to explain support for trade policies. Evidence of a causal relationship between perceptions of NAFTA renegotiations and support for other FTAs may attract more scholarly attention to the role of external factors in shaping domestic trade preferences. For policymakers, this causal linkage suggests that protectionist policies by traditional trade partners may present opportunities for states to diversify their FTA portfolios, with voters more accepting of trade deals with less-traditional trade partners than what prior conventional wisdom may have dictated.

This study uses a survey experiment to evaluate the role of NAFTA renegotiations in influencing trade attitudes among Canadian respondents. The experiment systematically varies whether respondents are primed to think about the distribution of the benefits and protectionist threats in the context of NAFTA renegotiations. In the analysis section, I assess the effect of the priming on three outcomes of interest: (1) support for a potential Canada-China FTA; (2) support for the new NAFTA deal; and (3) support for FTAs in general. The analysis also includes a broad range of control variables to account for potential confounding and alternative explanations such as general attitudes toward trade policy, political ideology, party ID, education level, and gender.

In previewing the findings, the results from the survey experiment provide preliminary evidence showing support for both causal mechanisms. Canadian respondents are more likely to support a trade deal with China when primed to think of US protectionism or when primed to think that the US stands to benefit more from the NAFTA renegotiations. However, these treatments have no statistically significant effect on increasing the respondents’ support for trade deals in general. In other words, Canadians are not becoming more free-trade oriented because of the renegotiations. Instead, the results suggest that Canadians are thinking strategically about trade policy, substituting one major trade deal (Canada-China FTA) for another (NAFTA). Concerning supporting the new NAFTA deal, the results show that Canadian support only increases when respondents expect that Canada stands to benefit more than its NAFTA partners.

Explaining the linkage between NAFTA renegotiations and support for Canada-China FTA

Since President Trump took office in 2016, scholars, the media, and policymakers in Canada have suggested that there may be a causal link, not merely correlation, between NAFTA renegotiations spurred by American protectionist sentiment and a recent increase in favorability toward the Canada-China FTA. Landriault and Minard (2018) note this point succinctly: “Support for a Canada/China FTA seems to be driven by fears that the United States will radically alter the terms of NAFTA by fundamentally reengineering the agreement, to the detriment of Canada.” However, without rigorous empirical testing, these interpretations remain suggestive at best.

Do renegotiations of existing free trade agreements (FTAs) increase mass support for other FTAs, and if so, how? The proposed thesis that NAFTA renegotiations increase Canadian support for a China FTA stands in sharp contrast to much of the existing literature. International relations scholars studying attitudes toward trade have traditionally focused on individual-level characteristics such as personal self-interest (Scheve and Slaughter 2001), values (Wolfe and Mendelsohn 2005, Mansfield and Mutz 2009), and the context of domestic politics to explain individual-level support for trade policies (Bennett 2004).

Taking the proposed thesis seriously, this article explores two interrelated causal mechanisms linking NAFTA renegotiations and support for a Canada-China FTA.

First, when NAFTA renegotiations are perceived as disproportionately benefiting other countries more than Canada, Canadian citizens will place a higher value on the Canada-China FTA. Second, the prospect that their current access to the American market will be curtailed leads individuals to place a higher value on the Canada-China FTA. The remainder of this section discusses each of these causal mechanisms in the context of international negotiations and outside options.

International negotiations and outside options

In developing a theoretical link between NAFTA renegotiations and support for a Canada-China FTA, one must first consider the purpose of trade negotiations. During international negotiations, states seek to agree upon a mutually acceptable set of rules and regulations that makes all parties better off. These rules also define the distribution of the benefits for the parties involved. New agreements shift the distribution of benefits from those obtained under non-cooperation to a restructured distribution of benefits defined by the cooperative framework. Similarly, renegotiated agreements may potentially re-alter the relative payoffs from trade cooperation.

The important difference between initial negotiations and renegotiations is the position of the status quo. In initial negotiations, failure to reach an agreement leaves negotiating states in the status quo of no-agreement. Therefore, states are not expected to be worse off from failed a trade negotiation than the initial starting position of no-agreement. In contrast, a failed renegotiation potentially could lead to one of two outcomes: (1) status quo of maintaining existing agreement or (2) collapse of the existing agreement and reverting parties to the prior state of no-agreement (e.g. pre-NAFTA tariffs).⁴ Moreover, even if states successfully renegotiate an agreement, the outcome of the renegotiations could leave all states better off than the original agreement, worse off than the original agreement but better than no agreement, or equally well off as the original agreement. While it is theoretically possible to imagine a scenario where renegotiations produce worse outcomes than non-cooperation, such a scenario would likely collapse the agreement because it would disincentive states to join.

During negotiations, states always have outside options at their disposal, regardless of whether states are negotiating a new agreement or renegotiating an existing one. Outside options are alternatives to the negotiated agreement, such as no-agreement or agreements with other states. Important to the discussion on renegotiation and support for other agreements, like a trade deal with China, is the relationship between the value of a negotiated agreement and the value of outside options. From a negotiation analysis perspective, these values are understood in relative terms. In other words, the relative value of a negotiated agreement depends on the value of outside options and the relative value of an outside option depends on the value of the negotiated agreement. Negotiators are more likely to reach a mutually acceptable agreement when the value of a negotiated agreement increases relative to the value of outside options (i.e. no-agreement or agreements with other parties). Likewise, the relative value of outside options can increase or decrease depending on the expected outcome from a negotiated agreement. This relationship also explains why highly-valued outside options give states greater bargaining power in negotiations because they can be used to leverage better terms of an agreement.

In the context of NAFTA renegotiations, Canada has several outside options, including a no-NAFTA-deal and FTAs with other countries. Among the outside options, trade talks with China have stood out in the public's eye. Why China? There could be many reasons for this, such as public cues from politicians, the media, and the fact that China represents the third largest market in the world outside of the US and the EU. Moreover, it is worth noting that Canada has already signed agreements with the first two (NAFTA in 1994 and CETA in 2017). To the extent that individuals perceive other FTAs including a Canada-China FTA as an outside option, the question then becomes, what increases (or decreases) the value of these outside options? The characteristics of trade renegotiations offer at least two interrelated explanations linking NAFTA renegotiations and support for China. The first explanation is about the distribution of benefits and can be applied to initial and renegotiations. The second explanation is unique to renegotiations, and that is threatening the status quo of the existing arrangements established under NAFTA and curtailing access to the American market.

Distribution of benefits from cooperation

The distribution of the benefits of international cooperation is a familiar topic to students of international relations. In particular, one of the most well-known debates in international relations is over absolute versus relative gains from cooperation (Keohane and Axelrod 1985, Grieco 1988, Mearsheimer 1994). Liberal institutionalists argue that states are willing to cooperate when they can maximize their own absolute gains (Keohane 1984). Realists argue that, even when a state is satisfied that an agreement will benefit them in absolute terms and that their partner will comply, they still have incentives not to reach a deal if they expect the negotiated agreement will disproportionately benefit their partner more than themselves (Grieco 1988). As such, liberal institutionalists and realists agree that absolute gains are a pre-requisite for cooperation, but realists additionally emphasize that relative gains can stymie cooperation.

Although the discussion over the distribution of benefits has been traditionally understood as a scholarly debate between academics, recent public opinion research on trade demonstrates that the relative gains from trading arrangements have a more significant effect on individual-level attitudes than absolute gains. Mutz and Kim (2017) apply an in-group-versus-out-group framework to trade attitudes and find that there is a tendency among the mass public “to favor the national in-group relative to other countries so as to maximize the relative advantage for one's own country.” To put it another way, people will make choices to maximize the difference between the extent of in-group and out-group benefits (relative gains) rather than maximizing the extent of in-group benefit (absolute gains).

During renegotiations, the public's expectations of the relative benefits from a new NAFTA is likely to influence their perceived value of the agreement as well as the relative value of outside options, like a potential trade deal with China. If the public perceives NAFTA negotiations as benefiting Canada less than its NAFTA partners, then the expectation is that the relative value of outside options will increase as a result. Inversely, if the renegotiated NAFTA is expected to benefit Canada relatively more than its partners, the relative value of the new NAFTA increases. The reasonable assumption here is that all partners will obtain absolute gains from the agreement. If countries were worse off from cooperating, then realists and liberal institutionalists alike would not expect any of the negotiating states to sign onto the agreement. I draw two formal hypotheses about Canadian support for FTAs from this logic of distributed benefits.⁵

• Hyp1: A negotiated NAFTA that benefits Canada more than its trading partners will receive more support than a negotiated agreement that does not.

• Hyp2: A negotiated NAFTA that benefits Canada less than its trading partners will increase support for other FTAs.

A protectionist threat to the status quo

As mentioned earlier, one of the unique characteristics of renegotiations is the status quo. The status quo during initial trade negotiations is no-agreement and the utility obtained from non-cooperation. However, the status-quo during renegotiations is the existing agreement and the benefits derived from the agreement (i.e. current trading arrangements under the NAFTA established in 1994).

NAFTA renegotiations threatened the status quo because the explicit threat by the US was that if the trade partners could not settle on a new agreement, then the US would withdraw its original commitment to the 1994 version of NAFTA. Moreover, the Trump Administration's “America First” foreign policy consistently fueled the belief that the purpose of NAFTA renegotiations would be about protecting the US market and not a shift toward greater trade liberalization.

If the public understands NAFTA renegotiations as a threat to Canada's access to the American market, then the value of outside options, like a trade deal with China, is likely to increase. Indeed, the US market is vital to the Canadian market, and no other country in the world could fully substitute it. However, new trade deals with other countries could help offset some potential market loss while decreasing Canada's dependence on the US through greater market diversification. This leads to a third hypothesis:

• Hyp3: American protectionist sentiment will increase public support for other FTAs.

Having identified two causal mechanisms linking NAFTA renegotiations to support for Canada-China FTA, the next section describes the research design using survey experiments to test these hypotheses.

Research design

To test the causal linkage between NAFTA renegotiations and support for Canada-China FTA, I use newly collected data from a population-based survey experiment based on NAFTA renegotiations. In the study, respondents were asked to read and agree to a consent form before starting the questionnaire. Following the consent form, respondents completed a short battery of questions measuring socio-demographics, political ideology, and anti-American sentiment. Next, respondents were asked to read one of six randomly assigned short vignettes about NAFTA renegotiations. Following the vignettes, respondents answered several follow-up attitudinal questions measuring their level of support for trade agreements.

Before discussing the details of the research design, it is worth noting a key strength of conducting survey experiments in social science research. By systematically altering stimulus in the survey experiment, researchers have more control over causal ordering and causal identification compared to observational data from standard survey questionnaires. As mentioned earlier, the media and scholars have made causal statements linking NAFTA renegotiations to rising support for a China FTA. However, as we know, statistical association does not imply causality. For example, let us assume there is a negative correlation between support for a new NAFTA and support for Canada-China FTA. In other words, individuals who report less support for a new NAFTA tend to report higher levels of support for Canada-China FTA. It is unclear what is causing what in this case. Potentially, attitudes toward a new NAFTA might be the cause that is influencing rising support for Canada-China FTA. That is the widely held belief. However, it could also be the case that increasing support for Canada-China FTA is the causal variable lowering support for NAFTA. Mitigating this threat of reverse causality is one of the benefits of experimental designs. Conversely, and not to be glossed over, a trade-off when using survey experiments is the lack of realism in experimental settings and the external validity of the results (Barabas and Jerit 2010).

Treatment and control vignettes

I developed a vignette treatment-control design with the two proposed causal mechanisms in mind. The randomized control group received the following vignette that provided respondents with four pieces of information related to Canada’s ongoing trade negotiations: (1) the purpose of trade agreements, (2) a neutral reason as to the cause of NAFTA renegotiations (trade imbalances), (3) expected benefits from the agreement, and (4) notification that the Government of Canada is considering trade talks with other countries, including China. The control vignette was purposively written in a neutral way, meaning it does not explicitly identify the US as threatening protectionist measures, nor does it invoke beliefs about relative gains. The control group serves as the reference category in the empirical analysis.

Control (Neutral) Vignette: As you may have heard, Canada, the US, and Mexico are currently renegotiating NAFTA, a free trade agreement between the three countries designed to reduce protectionist barriers to trade (like tariffs). NAFTA renegotiations began in response to trade imbalances between the three countries. NAFTA renegotiations are expected to be completed this year but several roadblocks remain. Though the final details are still being negotiated, trade experts expect that the agreement will economically benefit all three countries more than the original NAFTA. The Canadian government is also presently considering formal trade negotiations with other countries, including China. Experts expect that if a free trade agreement is signed between Canada and China, both countries will obtain substantial economic benefits.

The first set of treatments, which I refer to as the “relative gains treatments,” were written to test for concerns over the distribution of the benefits from the renegotiated agreement. The only difference between the control vignette and the relative gains treatments is that I include an additional sentence about one country gaining more benefits in the relative gains vignettes. There are two versions of the relative gains treatment, one stating that the US will benefit relatively more and the other stating that Canada will relatively benefit more.⁶

Relative Gains - Treatment Vignettes: As you may have heard. Though the final details are still being negotiated, trade experts make two key predictions about how the new agreement will impact the three countries.

• o First, the new agreement will economically benefit all three countries more than the original NAFTA.

• o Second, [the US/Canada] stands to gain the most from the agreement, with [Canada/US] and Mexico gaining relatively less benefits.

  The Canadian government is also presently … 

The second treatment was written to test for concerns over protectionist threats. I altered the neutral vignette in two ways to invoke concerns of protectionism. First, I change the cause of the renegotiations from “trade imbalances” to “growing protectionist sentiment in the US.” Second, I attribute the roadblocks in negotiations to “protectionist rhetoric coming from the US administration.”

Protectionist Threat - Treatment Vignette: As you may have heard. NAFTA renegotiations began in response to growing protectionist sentiment in the US. NAFTA renegotiations are expected to be completed this year but the protectionist rhetoric coming from the US administration is causing roadblocks … 

And finally, I combined the relative gains treatments with the protectionist treatment to check for interactive effects between the two types of treatments. In total, the control and five treatments were randomly assigned to respondents.

After reading the vignette, respondents answered three survey questions asking their level of support for NAFTA, Canada-China FTA, and FTAs with other countries. I use the responses to these three questions as the outcomes of interest in the statistical analysis. The exact wording of the questions is bulleted below. Responses to these support questions range from “Strongly support” to “Strongly oppose.” I then code the responses on a 3-point scale: oppose (−1), neither support nor oppose (0), and support (1). The ordering of the three questions was randomized to avoid bias associated with satisficing and priming.

• Support for Canada-China FTA: Do you support or oppose the Canadian government signing a free trade agreement with China?

• Support for New NAFTA: Do you support or oppose the Canadian government signing the renegotiated NAFTA?

• Support for New FTAs: Generally speaking, do you support or oppose the Canadian government in signing new free trade agreements with other countries?

Based on Hyp 1, the expectation is that individuals who receive the relative gains treatment stating that Canada stands to benefit the most from renegotiations are more likely to support the new NAFTA. Likewise, the expectation is that individuals who receive the relative gains treatment stating that the US stands to benefit the most from renegotiations are more likely to support other FTAs including China (Hyp 2). And, finally, as a test of Hyp 3, I expect individuals who receive the protectionist treatment to support other FTAs including China. The comparison group for each of these hypotheses is the control group who received the neutral vignette.

The survey contained several pre-treatment survey questions to control for with-in group heterogeneity and to account for other factors related to support for FTAs. The survey questions can be found in the supplemental material and include respondents’ general attitudes toward free trade, their education level, gender, age, provincial residency, left-right ideology, attention to the news, interest in politics, confidence in Trump, confidence in Trudeau, favourability of US, and favourability of China.

Data collection and descriptive statistics

A sample of 1355 survey respondents was recruited by AskingCanadians, a third-party online panel provider. AskingCanadians has a database of metrics on its pool of respondents and uses the data to ensure that only Canadian residents residing in Canada who are 18 years age or older would receive an invitation to take the survey. A total of 1,100 respondents took the survey in English and the remaining 255 in French. Of the 1355 respondents recruited, 1158 answered all survey questions. AskingCanadians provides general population samples using a quota-based sampling method matching provincial, age, and gender with percentages based on the national census.

Because this survey experiment was purposely designed around an ongoing, publicly-salient event, that is NAFTA renegotiations, the context and timing of conducting the survey require some further elaboration. NAFTA renegotiations began on 16 August 2017, and concluded on 30 September 2018, with the survey conducted towards the end of renegotiations. The English version of the survey was conducted online between July 27 and 3 August 2018, and the French version of the survey was conducted a month later (September 6–18). The lag time between the two waves of data collection was due to translating the survey from English to French.

As an important consideration for all survey research, the timing of when the surveys were conducted may have influenced the results. Given the tumultuous ups-and-downs in trade talks, expectations surrounding the new trade deal were far from certain, and more importantly, it is reasonable to assume that the mass public did not have full information about the negotiated agreement. During the period of data collection, NAFTA renegotiations were still ongoing, and a mutually acceptable deal was far from certain. In June 2018, two months before fielding the survey, the US imposed tariffs on steel and aluminum, ending temporary exemptions for Canada, Mexico, and the European Union. Mexico and Canada followed up with retaliatory sanctions shortly thereafter. Then, when the survey was conducted in late July, Mexico and the US sidelined Canada and began bilateral talks focusing on automotive content rules.

A second concern relates to the political context of when the survey was conducted. Although international trade is generally considered a low-salient issue among voters (Mendelsohn, Wolfe, and Parkin 2002, Guisinger 2009), NAFTA renegotiated was a main-stage issue among Canadian voters in 2017 and 2018. Recent research has demonstrated that experimental manipulations on highly salient policy issues may produce null results due to external frames (e.g. the media) and stable pre-existing beliefs about the specific issue (Bechtel et al. 2015). As a result, the expectation is that the “noisy” context of when the survey was conducted will likely bias the results downward. In other words, the high salience environment makes finding positive results for the proposed hypotheses harder, not easier.

Table 1 presents the descriptive statistics for all variables used in the analysis. All three FTA support variables have a mean value above zero, indicating that the average of all respondents in the sample lean toward supporting FTAs (New FTAs = 0.77, Canada-China = 0.44, New NAFTA = 0.65).⁷ This free-trade leaning attitude is consistent with the broader literature on Canadian trade preferences (Wolfe and Mendelsohn 2005, Tuxhorn 2018). Although not exact, the population-based sample generally aligns with Statistics Canada's population estimates for 2018 in terms of regional, gender, and age representation.⁸

Table 1. Descriptive statistics (survey experiment).

Variable	Obs	Mean	Std. Dev.	Min	Max
Support Canada-China FTA	1,210	0.441	0.776	−1	1
Support New NAFTA	1,210	0.588	0.657	−1	1
Support New FTAs	1,210	0.778	0.496	−1	1
Decrease Import Restrictions	1,208	3.263	1.004	1	5
Liberal Party	1,210	0.307	0.462	0	1
Conservative Party	1,210	0.274	0.446	0	1
NDP	1,210	0.121	0.326	0	1
Right Leaning Ideology	1,175	5.031	2.106	0	10
Follows News	1,209	6.321	2.069	1	8
Follows Politics	1,210	3.594	1.079	1	5
Confidence in Canadian P.M.	1,202	5.878	2.769	0	10
Confidence in US President	1,201	2.057	2.385	0	10
Favour US	1,205	2.291	0.901	1	4
Favour China	1,206	2.259	0.762	1	4
Education Level	1,207	4.332	1.389	1	6
Female	1,205	0.463	0.499	0	1
Age (18–29)	1,226	0.135	0.341	0	1
Age (30–45)	1,208	0.293	0.455	0	1
Age (46–65)	1,208	0.413	0.493	0	1
Age (65+)	1,208	0.160	0.367	0	1
Atlantic Provinces	1,210	0.070	0.256	0	1
Prairie Provinces	1,210	0.201	0.401	0	1
British Columbia	1,210	0.171	0.377	0	1
Quebec	1,210	0.169	0.375	0	1
Ontario	1,210	0.384	0.486	0	1

Empirical analysis & results

The three support FTA measures are trichotomous measures, where oppose = −1, neither support nor oppose = 0, and support = 1. Each support FTA measure is treated as a dependent variable and modeled separately.⁹ Given the ordinal scaling of the measures, I estimate all models using ordered-logistic regressions. Each model includes all treatment conditions as well as all covariates listed in the descriptive table. The neutral vignette (control group) serves as the reference category in the models.

Table 2 presents the results of the full models from the statistical analysis.¹⁰ In the table, the first column reports the results from modeling Support Canada-China FTA, the second column reports the results from Support New NAFTA model, and the third column reports the results from Support NEW FTAs (in general) model. The table includes the coefficient estimates, standard errors, and level of statistical significance for each of the independent variables. Positive coefficients indicate that the given independent variable increases support for the FTA measure, and negative coefficients indicate a decrease in support.

Table 2. Support for FTAs.

	Canada-China FTA	New NAFTA	New FTAs (in general)
Treatments
US benefits	0.542*	−0.126	0.313
	(0.227)	(0.223)	(0.294)
CAN benefits	0.322	0.493*	0.358
	(0.218)	(0.236)	(0.288)
Protectionism	0.477*	0.199	0.355
	(0.220)	(0.229)	(0.288)
US benefits & protectionism	0.501*	−0.302	0.387
	(0.218)	(0.218)	(0.288)
CAN benefits & protectionism	0.508*	0.149	0.169
	(0.219)	(0.224)	(0.276)
Covariates
Decrease import restrictions	0.441**	0.295**	0.496**
	(0.068)	(0.068)	(0.088)
Liberal party	0.735**	0.550**	0.711**
	(0.183)	(0.181)	(0.237)
Conservative party	0.718**	0.707**	1.248**
	(0.200)	(0.204)	(0.268)
NDP	0.275	0.137	0.631*
	(0.212)	(0.215)	(0.279)
Right leaning ideology	0.106**	0.053	0.034
	(0.040)	(0.039)	(0.053)
Follows news	0.007	0.091*	0.146**
	(0.039)	(0.038)	(0.046)
Follows politics	0.073	0.075	0.322**
	(0.075)	(0.074)	(0.095)
Confidence in Canadian P.M.	0.128**	0.111**	0.162**
	(0.029)	(0.029)	(0.037)
Confidence in U.S. President	−0.128**	−0.010	−0.111*
	(0.035)	(0.036)	(0.046)
Favour US	−0.181^+	0.239*	0.029
	(0.097)	(0.095)	(0.128)
Favour China	1.081**	0.006	0.478**
	(0.100)	(0.091)	(0.122)
Education	−0.083	0.023	0.002
	(0.051)	(0.049)	(0.064)
Female	−0.438**	−0.259^+	−0.513**
	(0.136)	(0.136)	(0.179)
Age (30–45)	−0.303	−0.072	−0.248
	(0.210)	(0.210)	(0.262)
Age (46–65)	0.266	0.136	0.018
	(0.212)	(0.210)	(0.266)
Age (65+)	−0.187	0.085	0.051
	(0.256)	(0.258)	(0.353)
Atlantic Provinces	0.418	−0.480^+	0.307
	(0.277)	(0.258)	(0.360)
Prairie Provinces	0.379*	0.102	0.558*
	(0.182)	(0.190)	(0.256)
British Columbia	0.158	−0.174	−0.006
	(0.189)	(0.192)	(0.245)
Quebec	0.205	−0.113	−0.116
	(0.197)	(0.197)	(0.246)
N	1158	1158	1158
Log-likelihood	−911.428	−868.592	−528.409
Model χ^2	307.786**	142.092**	215.399**
Pseudo R^2 (Nagelkerke)	0.144	0.076	0.169

Entries report the coefficient estimates from ordered-logistic regressions with standard errors (in parentheses). Statistical significance denoted as: ⁺p < 0.10; *p < 0.05; **p < 0.01. Cut points are omitted for space considerations.

Based on the proposed causal mechanisms, the expectation is that those who received a protectionist treatment or a treatment stating that the US will benefit more from NAFTA are more likely to support other FTAs including China, obtaining a positive coefficient. Additionally, respondents who receive a treatment stating that Canada will benefit more from NAFTA will be more likely to support the New NAFTA deal.

Starting with the main outcome variable of interest, Support for Canada-China FTA (column 1), the US benefits more treatment obtains a positive coefficient (0.542) and statistically significant at the 0.05 level. In terms of predicted probability, the treatment increased support for a Canada-China FTA by 9.3% over the control group.¹¹ The protectionist treatment also obtained a statistically significant positive coefficient (0.477), with an estimated 8.7% increase in the predicted probability of support. Moreover, the protectionist treatment, when combined with either of the relative gains treatments, also led to a statistically significant increase in support for a Canada-China FTA. Depending on the treatment, the estimated increase in the predicted probability that respondents support an FTA with China ranges from 8.3% to 9.3%. Overall, these results conform with the existing notions that NAFTA renegotiations spurred public support for a potential Canada-China FTA deal.

Moving on to the second outcome variable Support for New NAFTA (column 2), Canada Benefits More (0.493) is the only treatment that is statistically different from the control group. This result is consistent with the first hypothesis; respondents who expect Canada to benefit more from the NAFTA are more likely to support the renegotiated agreement (8.6% increase in predicted probability) than the control group that received information about the absolute gains from the deal but not information explaining the distribution of the benefits.

Finally, for the third outcome variable, Support New FTAs (in general) (column 3), it is worth noting that the treatments (US Benefits More & Protectionism) are not statistically different from the control group. All treatments obtain positive coefficients, much like the Canada-China FTA model, but the smaller, statistically insignificant coefficients indicate that the treatments were less effective at influencing attitudes about FTAs in general. Why does the Canada-China FTA get a boost in support from NAFTA renegotiations and not other FTAs? One interpretation for this difference is that through the media and political cues, the public has been primed to think of trade relations with China as a substitute for the US-centric trade model. An alternative and perhaps just as reasonable interpretation could be that the treatments are leading individuals to think more broadly about global strategy and future shifts in power when threatened by protectionism and adverse relative gains.

Additionally, socio-demographics (respondent’s age, sex, education level), province of residence, party ID, attention to politics and the news, and political ideology are included in the models along with several attitudinal metrics measuring support for trade openness (decrease import restrictions), favourability toward the US and China, and confidence in political leaders (Canadian PM and US President). For statistical purposes, it is important to note that the additional factors are considered pre-treatment covariates because the survey questions were asked before respondents were randomly assigned a vignette.

Notably, several control variables produce similar results with the existing literature on trade preferences and substantially increased model fit for all three models.¹² As expected, respondents who support decreased import restrictions, a standard measure of support for trade openness, are more likely to support all three FTA measures than those who do not (Bennett 2004). Respondents who affiliate themselves with the Liberal and Conservative federal parties tend to support trade deals more than those who support other parties. Although respondents who self-identify as more right-leaning are no more likely to support NAFTA or FTAs in general than their left counterparts, they are more likely to support a Canada-China FTA. Similarly, when the newly minted NAFTA was still a contested issue, Rankin (2004) and Bennett (2004) also found a difference between the right and left, where the right was more supportive of the deal. Respondents who have confidence in the Prime Minister are more likely to support FTAs while respondents who have confidence in the US President are less likely to support a Canada-China FTA and other FTAs in general. Lastly, and consistent with the trade preference literature, female respondents are less supportive of all forms of FTAs. Scholars have found that there is a gender divide over macro-economic policies (Gidengil 1995, Mansfield, Mutz, and Silver 2015, Guisinger 2016).

Discussion

The recent protectionism and pro-isolationist sentiment arising in developed states have created unease in the international trading system, leading some scholars to question whether “the idea of globalization is going into reverse” (Turok et al. 2017, Turok and Hatfield 2018). Yet, at least in Canada, scholars have offered an alternative view. Instead of protectionist attitudes spreading across borders, individuals may be more accepting of trade deals involving less-traditional trade partners because of protectionism abroad. In the context of NAFTA renegotiations, Landriault and Minard (2018) argued that “[I]f American protectionist sentiments materialize in a remodeled NAFTA, it is likely that Canadians will support closer ties with China.” This article extends their discussion by proposing relative gains and protectionist threat as two causal mechanisms linking NAFTA renegotiations and support for a Canada-China FTA. The findings offer support for both mechanisms: individuals are more likely to support a trade deal with China when primed to think that the US will benefit more from the newly negotiated NAFTA and when primed to think about US protectionism.

The findings highlight that trade attitudes may depend on factors external to the individual and even the country. By focusing on how the dynamics in NAFTA renegotiations influence trade attitudes about China, this article contrasts existing studies that have primarily focused on the individuals’ values and interests to explain support for trade. Future research is needed to explore how other external factors, such as international norms and other formal international organizations, can influence domestic attitudes toward foreign economic policies.

Finally, the survey evidence presented in this article provides some insight into the future direction of mass attitudes towards Canada-China trade relations. Despite the newly signed, but still not ratified, United States-Mexico-Canada Agreement (USMCA) leaves NAFTA largely intact, there are changes in the USMCA that may be considered by some as less beneficial for Canada than the original NAFTA. Article 32.10 and Article 34.7 in USMCA particularly stand out in this regard. Article 32.10 allows a party to withdraw from USMCA if another party enters into an FTA with a non-market country (e.g. China). Article 34.7 is a “sunset” clause with termination after 16 years unless each of the parties confirms renewal, potentially shortening investors’ time horizons. If the mass public views such changes as benefiting the US more than Canada and/or reducing Canada’s overall benefits, the current level of support for Canada-China trade relations could become a long-lasting trend rather than a momentary uptick. However, the more recent Canada-China disputes (China blocking Canadian exports of canola seed and the detention of Canadian citizens) could potentially mitigate the positive effect of NAFTA renegotiations on Canadian views toward China.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributors

Kim-Lee Tuxhorn is Assistant Professor of Political Science at the University of Calgary.

ORCID

Kim-Lee Tuxhorn http://orcid.org/0000-0003-0389-5543

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Additional information

Funding

This work was supported by Social Sciences and Humanities Research Council of Canada: [Grant Number 430-2018-00243].

Notes

1 For examples suggesting a causal relationship between NAFTA renegotiations and support for a potential Canada-China FTA see: Asia-Pacific Foundation, 2017. 2017 National opinion poll - Canadian views on engagement with China. Available from: http://www.asiapacific.ca/surveys/national-opinion-polls/2017-national-opinion-poll-canadian-views-engagement-china [Accessed 2 January 2018], (Landriault and Minard 2018), “More than two-thirds of Canadians support a free trade deal with China” National Post. 23 October 2017. Available from: https://nationalpost.com/news/politics/more-than-two-thirds-of-canadians-support-a-free-trade-deal-with-china [Accessed 2 January 2018].

2 These talks include Regional Comprehensive Economic Partnership (RCEP), the China-Japan-ROK FTA, the China-Norway FTA, the China-Sri Lanka FTA, the China-Israel FTA, an updated China-Singapore FTA, and an updated China-New Zealand FTA. Relatedly, the International Monetary Fund adopting the Chinese renminbi (RMB) as a Special Drawing Right (SDR) can further signal to voters the economic importance of the Chinese economy.

3 Government of Canada. 11 November 2017. “Public consultations on a possible Canada-China FTA”. https://international.gc.ca/trade-commerce/consultations/china-chine/report-rapport.aspx?lang=eng#a2 [Accessed 1 December 2018]

4 Although not the primary focus on this article, previous work has highlighted updating, learning, and shifts in power as reasons for renegotiations. See Haftel and Thompson (2018) and Meyer (2010) for more discussion on the causes of renegotiations.

5 The discussion of Mexico's relative gains is omitted here because the US trade policy was Canada's central concern during renegotiations. While the trade flows between Mexico and Canada are not insignificant, the Mexico-Canada side of the NAFTA triangle is overshadowed by US-Canada and US-Mexico bilateral trade flows. For instance, the US market accounted for 46% of Canada’s total imports and 73% of its total exports in 2017. For comparison, the Mexican market accounted for 6.7% of Canada’s total imports and only 2.1% of its total exports in 2017. (Data source: UN Comtrade Database (2019). The year 2017 is the most up-to-date data available in the database.)

6 All vignettes can be found in the supplemental material along with survey questions.

7 For reference, 52.5% of the control group supported a proposed trade deal with China. Similarly, Landriault and Minard (2018) cite an independent poll conducted by Nanos Research in 2017, stating that 54% of respondents supported an FTA with China.

8 For reference, population estimates can be found at Statistics Canada. Population by province: https://www150.statcan.gc.ca/n1/pub/12-581-x/2018000/pop-eng.htm. The Prairies consists of Alberta, Saskatchewan, Manitoba. Population by age and sex: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1710000501

9 The three dependent variables are correlated, with Support for FTA (in general) and Support for Canada-China FTA exhibiting the highest correlation of 0.412.

10 The supplemental material contains the results from using different model specifications, including models with only treatments. Additional diagnostics and model fit measures are reported as well.

11 Predicted probabilities are calculated using Long and Freese’s (2014) SPOST package for categorical dependent variables while holding other variables at their means. The supplemental material contains a predicted probabilities table for all covariates.

12 BIC is a goodness-of-fit measure for maximum likelihood estimators. Models with covariates obtain lower BIC scores, indicating a better fit to the data compared to the treatment only models.