Friday, December 2, 2016

With Trump win of US presidency Canada has an opportunity to renegotiate NAFTA

Donald Trump during his campaign vowed he would renegotiate the North American Free Trade Act (NAFTA). This provides a golden opportunity for Canada to alter some features of the agreement that should be changed.

Trudeau has said he was quite willing to discuss NAFTA with Trump. Trump said that he meant to move quickly on trade policies, according to an internal transition team document. The document claims he would drop out of the Trans-Pacific Partnership (TTP) unless certain demands were met. Within a hundred days of doing that the US could withdraw from NAFTA also unless his demands were met,
Even if Trump did pull out of NAFTA, the 1989 Canada-US agreement of 1989 removed most tariffs so trade would continue to flow. One benefit of NAFTA failing would be that Chapter 11 of the deal, the investor-state dispute settlement section (ISDS) would be gone. ISDS provisions allow corporations to sue governments before special tribunals. Opponents argue that investor claims that certain laws or regulations negatively impacted profits and were discriminatory could inhibit countries from passing strict environmental, health laws or labour or human rights. An early case involved Philip Morris and Uruguay that challenged Uruguay's strict laws governing smoking. Philip Morris lost. Another case involved the Canadian company Methanex that sued California: as noted by Wikipedia, the "Methanex Corporation challenged California's plan to eliminate methyl tertiary butyl ether (MTBE) from gasoline on grounds of water pollution prevention, claiming protection under Chapter 11 of NAFTA and demanding $970 million in compensation from the state."Methanex lost. However, the danger still remains of corporations winning as they often do, especially if based in the US: ISDS has been criticized because the United States has never lost any of its ISDS cases, and that the system is biased to favor American companies and American trade over other Western countries, and Western countries over the rest of the world. Soon after NAFTA was adopted, the Canadian government adopted a policy whereby all new laws and any changes to existing laws have to be vetted by trade experts to ensure they could not be challenged under ISDS rules. The elimination of Chapter 11 would be one giant step forward in renegotiating NAFTA.
NAFTA puts strict limitations on the ability of the Canadian government to reduce energy exports to meet Canadian needs or for environmental reasons: "The deals say that Canada must maintain at least the same level of oil and gas exports to the United States as it had supplied for the past thirty-six months. Only if Canadian consumption is cut proportionately, and then only in times of crisis, could the Canadian government claim jurisdiction over its own energy resources."
While Canadian Ambassador to the U.S., David MacNaughton says that the Liberal government would be glad to renegotiate NAFTA with the U.S. Trump administration, he refuses to disclose what Canada would be seeking in such a renegotiation. McNaughton claims that NAFTA has brought prosperity to the continent. Perhaps for international corporations. Maude Barlow, head of the Council of Canadians, counters: “Since NAFTA came into force on January 1, 1994, we've seen the loss of well over half a million manufacturing jobs in Canada, the net loss of one million jobs in the United States, and the displacement of millions of Mexican farmers. Employment trends suggest part-time precarious jobs with fewer benefits, while the income disparity in all three countries continues to grow."
Many analysts see NAFTA as posing a danger to the Canadian water supply. Maude Barlow writes: "The federal government should remove all references to water in all existing and upcoming trade and investment agreements as a good, a service or an investment, unless to allow for the specific protection or exclusion of water....Removing all references to water as a good from NAFTA would end the debate on whether the federal and provincial bans on water exports are sufficient, as it would remove any potential for a NAFTA challenge. Removing water as a service would help protect water as an essential public service. Removing it as an investment and excluding ISDS provisions would make it much harder for foreign corporations to use trade treaties to fight domestic or international rules that protect water."
The process of negotiating trade agreements is secretive and behind closed doors. There is little transparency, no public consultations, and no processes taking place in public. The Liberal government has given no indication it wants to change the process and has not said which aspects of the agreement it wants to renegotiate. Trudeau said: "The challenge is once you reopen it a little bit, they all tend to unravel, and it's too important for both of our economies to continue to have a strong trading relationship." Only by keeping public pressure on Trudeau for specific reforms are we likely to see Trudeau press for any progressive changes in the trade agreement. Every attempt will be made to retain a NAFTA that gives more power to global corporations. For further analysis, see the appended 1993 interview with Noam Chomsky on NAFTA.

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