Worried about the surprise fall in the Canadian economy, which was expected to go up in January (the most recent month reported) but instead went down?

Much worse could be in store. A new threat to Canada’s economic well-being is developing in the United States, matching an equivalent threat in Canada. And it all involves trade.

NAFTA, the North American Free Trade Agreement, has been good for Canada, spectacularly so. Now it is under attack on both sides of the border. As the U.S. political season heats up, American politicians are sounding more like Canada’s anti-trade left --albeit without the negative language Canadian protectionists so often direct at the United States.

First, the facts on our trade with the United States -- and they may surprise many Canadians, given the attacks on NAFTA in Canada. About 30 percent of all merchandise produced in Canada is sold to the United States. Our U.S. trade surplus alone equals about 10 percent of our total economy.

Prior to NAFTA, Canada’s U.S. merchandise surplus equaled just 2 or 3 percent of the economy. Before the Free Trade Agreement (FTA) of the late 1980s, Canada often ran a deficit with the United States. This hardly fits the picture promoted by Canada’s left of Canada as victim of these trade agreements. Gains from U.S. trade have enabled Canadians to buy increased volumes of fancy French wine, Pakistani textiles, and Asian electronics.

U.S. exporters might not be so happy as Canadian companies and workers. Since NAFTA, American products have substantially declined as a percentage of our imports.

Anti-trade rhetoric in the United States is boiling to the surface. It has become just as vehement as Canadian anti-trade rhetoric. Let’s look at what’s happening to the U.S. trade debate starting with the media and using CNN as an example.

CNN, looking more and more like CBC, is parading hothead nationalists across its screens to attack free trade and globalization. One of its most prominent newscasts, Lou Dobbs Tonight, carries a regular anti-trade segment, Exporting America.

In the political marketplace, too, anti-trade rhetoric has become commonplace. Democratic presidential candidate John Kerry says he will review all trade agreements, including NAFTA, within 120 days of taking office.

Kerry, also, plans a new tax regime to punish companies that “outsource” U.S. production. More U.S. production is “outsourced” to Canada than any other nation. Expect attacks too on “unfair wages” in Canada. Bad economic policy has left Canadians less productive than Americans. We are only competitive because our wages are lower. Low-paid Canadians are already being accused of stealing jobs, just like the low-paid Mexicans and Chinese.

While Kerry is relatively moderate, the left of the Democratic Party is just as anxious to quit NAFTA as the left in Canada. Any nation can withdraw on six months notice. Like Canada’s left, the “Democratic wing of the Democratic Party” attacks trade agreements as an assault on “national sovereignty.”

George W. Bush campaigned as a free trader in 2000, but his actions have left room for concern. He imposed steel tariffs, now withdrawn, for largely political reasons. He also boosted farm subsidies, something much attacked in Canada. At the time, then Prime Minister Chrétien called them “stupid”. You would never know from the Canadian media that Canadian and U.S. subsidies are at roughly the same level, both well below European subsidies.

NAFTA and thus Canadian prosperity might do better under Bush than Kerry. But anti-trade diatribes on both sides of the political aisle in the United States, and on both sides of the U.S.-Canada border, are a dangerous sign.

Falling exports to the United States were partially responsible for Canada’s economic weakness in January. That, in turn, was related to the rise of the Canadian dollar, making Canadian exports more expensive.

If the Canadian dollar reverses course, U.S. politicians may well start attacking Canada for currency manipulation as they are attacking China. But this would be small potatoes if anti-trade sentiments continue to rise in the United States and is translated into anti-trade policy.