Trudeau needs to change NAFTA to protect Canadian water

Maude Barlow, National Chair of the Council of Canadians, criticizes Canadian Prime Minister Justin Trudeau for avoiding any confrontation with US President Trump on the issue of water and NAFTA.

Barlow has just issued a report called: Water For Sale: How Free Trade And Investment Agreements Threaten Environmental Protection Of Water And Promote The Commodification Of The World’s Water. The report looks at the trade threats posed to global water supplies by different trade agreements including NAFTA. Barlow notes:

“NAFTA rules that already trump domestic water protections could be made far worse with the upcoming renegotiation of the deal. Trump is attacking water protections in the U.S., locking in deregulation in ways that would make it very hard for future presidents to undo. Trudeau is doing the same here by not restoring the Navigable Waters Protection Act, despite his promise to do so. These realities, combined with Trump and Trudeau’s refusal to remove Chapter 11 from NAFTA, put water protection in the crosshairs.”

The World Health Organization(WHO) recently issued a dire warning that almost 2 billion people are drinking water contaminated with faeces. The contamination puts people at risk of contracting cholera, dysentery, typhoid and polio according to Maria Neira who heads WHO`s public health department. She added: "Contaminated drinking-water is estimated to cause more than 500,000 diarrhoeal deaths each year and is a major factor in several neglected tropical diseases, including intestinal worms, schistosomiasis and trachoma," While on average countries had increased funding for improving access to safe water and sanitation, still 80 percent said that they still did not have enough financing to reach nationally-set targets.

Modern trade free trade and investment agreements contain sections that undermine laws and regulations that protect water. Water must be removed às a commodity to be traded in all such agreements to protect it, Barlow argues that that the investor-state dispute settlement (ISDS) must be removed from NAFTA and other trade agreements. ``People and their governments must be given the right to restrict trade from places or in conditions where water and local communities have been harmed. Foreign investors must return to using the domestic courts of the countries in which they are operating and with whom they have a dispute. The political moment to have this debate has arrived.” However, Trudeau does not even seem to be bringing the matter up. The mainstream media is unlikely to discuss the matter either,

In trade deals, corporations would like to see water considered to be a commodity to be traded. It can also be treated as a service allowing for privatization of services that provide water. It is also treated as an investment. All of these descriptions allow water to be subject to clauses in an agreement that challenge water protection laws. Barlow argues that water should specifically be excluded from such provisions.

Wikipedia describes the ISDS provisions as follows:Investor-state dispute settlement (ISDS) or investment court system (ICS) is a system through which individual companies can sue countries for alleged discriminatory practices. The practice was made widely known through the Philip Morris v. Uruguay case, where the tobacco company Philip Morris sued Uruguay after having enacted strict laws aimed at promoting public health.

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. Chapter 11 of NAFTA contains ISDS provisions,

The provisions allow one NAFTA party in Canada, US, or Mexico) to bring charges directly against the government of another NAFTA party before an international tribunal avoiding local courts. There is no other situation in international law where private parties are able to sue a state without showing the domestic courts are not independent or reliable, A sample of a case brought against Canada is S.D.. Myers versus Canada that the company won:S.D. Myers v. Canada Between 1995 and 1997 the Canadian government banned the export of toxic PCB waste, in order to comply with its obligations under the Basel Convention, of which the United States is not a party. Waste treatment company S.D. Myers then sued the Canadian government under NAFTA Chapter 11 for $20 million in damages. The claim was upheld by a NAFTA Tribunal in 2000.

The renegotiation should take place through a transparent process with all stakeholders involved not just corporations and politicians. Consultation with the public on the issues is also important. Another important part of the NAFTA agreement that needs to be deleted is the proportionality clause as discussed in a recent Digital Journal article.

Trump targets Canada's dairy farmers under NAFTA

U.S. President Donald Trump promised, during a visit to Wisconsin a cheese-making state that he will defend U.S. dairy farmers who claim they are being hurt by Canadian protectionist trade policies.

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Under the present NAFTA agreement Canada's dairy sector enjoys protection by high tariffs. There are also production controls that ensure the prices for products are sufficient for farmers to make a living. The Canadian dairy system is not a free-market system but involves supply management by the Canadian Dairy Commission(CDC):

The Canadian Dairy Commission (French: Commission canadienne du lait) is a Canadian government Crown corporation created in 1966 under the Canadian Dairy Commission Act (1966–1967). According to the Act, CDC is mandated to "provide efficient producers of milk and cream with the opportunity to obtain a fair return for their labour and investment, and to provide consumers of dairy products with a continuous and adequate supply of dairy products of high quality."The CDC also chairs the Canadian Milk Supply Management Committee that coordinates industrial milk supply in Canada. The Minister of Agriculture and Agri-food is responsible for the CDC. The U.S. and some other countries hate the system since global companies want a purely market-based system in keeping with neoliberal policies in the interests of global corporations.

Trump said in Kenosha, Wisconsin: "We’re also going to stand up for our dairy farmers. Because in Canada some very unfair things have happened to our dairy farmers and others.” While Trump did not detail his concerns he said that his administration would call the Canadian government led by PM Justin Trudeau to ask for an explanation. The explanation is that there would be no NAFTA without protections for aspects of the economy that are supply-managed such as dairy products. Negotiators worry about the political fallout from any attempt to do away with the system. The system is described here:In total, there are about 17,000 Canadian farms that operate under Supply Management; this is about 8 percent of all farms in Canada. The dairy industry is the largest of the three supply-managed industries in Canada, with 11,280 farmers operating in 2016 [6]. There are about 2,700 poultry farmers, and fewer than 1,000 egg farmers. Dairy is the largest industry of the supply-managed industries, but it is also Canada's third largest agricultural commodity in terms of farm cash receipts, making it a significant commodity for Canada [7].

Trump again threatened to eliminate the North American Free Trade Agreement (NAFTA) if it cannot be changed in the way he wishes. Trump said: "It's another typical one-sided deal against the United States and it's not going to be happening for long." Trump naturally emphasizes negative effects of NAFTA on U.S. workers but it has had negative effects in Mexico and Canada as well. The appended video from 2006 shows some of those effects. If NAFTA is reopened for negotiation then Mexico and Canada should demand changes — not just the United States.

Some of the demands that Canada should make are listed by the Council of Canadians: "... if the North American Free Trade Agreement (NAFTA) is to be renegotiated, then it must be fundamentally changed, meaning at minimum its investor-state dispute settlement (ISDS), energy proportionality, and water as a good, service and investment provisions must be removed. We also argue that the negotiation process must be done in an accountable and transparent way that includes public consultations." The proportionality provisions prevent the Canadian government from ensuring that there are sufficient supplies of goods to supply Canadians before exports of those goods are allowed. The proportionality provisions apply to oil and gas:

"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."

So far there has been complete silence as to what changes the Trudeau government is seeking in NAFTA. Neither the U.S. nor Canadian government have suggested that the negotiation process be transparent and accountable, or that there will be any public consultations. Usually trade deals are held behind closed doors with mainly government and corporate representatives taking part.

Critique of NAFTA

This is from the Star. This is just an excerpt showing some of the issues around NAFTA. Other important issues such as water and sharing resources are not mentioned.

It will be interesting to watch how a Clinton or Obama administration would try to reform the environmental and labour side accords. The side agreements represent the high-water mark of environmental and labour protection in a free-trade agreement. Both have proven largely ineffective.

They work on the principle of national treatment with each nation establishing its own level of environmental and labour protection. Both have a dispute settlement mechanism which is triggered by a "persistent pattern of failure" of a NAFTA party to enforce its laws. There have been no proceedings brought in 13 years with respect to the environmental dispute settlement mechanism, and the claims brought under the labour side accord by Mexican workers oppressed by a corrupt labour relations sector have shown that its dispute settlement mechanism is ineffective.

The softwood lumber dispute wound its way to a settlement in 2006 that resulted from the breakdown in the NAFTA dispute settlement mechanism. The U.S. refused to abide by a final determination by an extraordinary challenge committee that found that the American softwood lumber industry had not been injured by Canadian exports. According to NAFTA, this should have been the end of the dispute and roughly $5 billion in interim duties collected by the U.S. government should have been returned. Canada found itself having to turn to the U.S. courts to enforce the NAFTA determination, which confirms the mechanism failed. The most objectional aspect of the settlement, however, is the fact that Canada was forced to pay "damages" to the Coalition for Fair Lumber Imports of $500 million for distribution to its members.

International trade law is not a damages remedy, and this settlement undermines the NAFTA binational panel process.

Finally, there is a growing concern over foreign sovereign investment funds set up by foreign governments in Asia and the Middle East that are holding excessive amounts of American dollars. Great concern has been expressed in the West over the political motives of buying up "Western" companies and their competence to manage them. This challenges the concept that foreign investment is unambiguously good for an economy, which has been the guiding principle of trade liberalization since the 1980s.

This principle has guided the negotiation of more than 2,000 bilateral investment treaties offering protection to foreign investment largely in developing countries.



MARK TWAIN once said that "history doesn't repeat itself but it rhymes." The concerns expressed over these funds are reminiscent of Pierre Trudeau's Foreign Investment Review Act. FIRA was enacted in 1973 when foreign ownership was "a matter of national concern." Undertakings were required when takeovers occurred with respect to such things as maintaining employment levels, sourcing local products and services, and undertaking research and development spending in Canada. FIRA was eventually replaced by the Canada Investment Act, which embraced the principle of intrinsic benign nature of foreign investment.

It is ironic that after almost 25 years of trade liberalization and investment protection, the "Western" world has become concerned over investment from the developing world. If this concern is to be taken seriously, what is the principled difference between investment from sovereign investment funds and other forms of foreign investment?

Where does this leave us? Our major trading partner is threatening NAFTA and thickening the border, the NAFTA dispute settlement mechanism has been discredited and the guiding principle of foreign investment underlying NAFTA has been challenged. Notwithstanding all of this, nothing much is likely to change. It is unlikely that NAFTA will be renegotiated but the labour and environmental side accords may be strengthened. This is something that Canada should welcome. Effective labour and environmental agreements will provide an experiment as to how these issues may be dealt with in international trade agreements.



Chuck Gastle is a principal of Bennett Gastle P.C., a litigation and trade boutique, and an adjunct professor in international law at Osgoode Hall Law School.

Murdoch Martyn practises international trade litigation and holds his master's degree in international trade law.

Please don't throw us out of the NAFTA patch

Some of these effects seem more related to Globalisation than NAFTA per se. There is a flight of jobs from developed to underdeveloped countries outside North America.
The analogy seems a bit skewed as well. Brer Rabbit asked not be thrown into the briar patch because he wanted to be thrown into it, but surely Canadians and Americans who insist that NAFTA is great and that the last thing we want is out do not want out of NAFTA or NAFTA re-opened.


Please don't throw us outta the NAFTA patch
>by Rick Salutin
March 7, 2008
What's with the NAFTA panic attacks some Canadians are having? They can't really believe the Americans would pull out of their big trade deal with us and Mexico. Maybe it's strategy on their part, like that trickster Brer Rabbit. Brer Fox traps Brer Rabbit and is carrying him to the cook pot. "Do anything to me," pleads the rabbit, "but don't throw me into the briar patch." So the fox does. But don't throw us out of the NAFTA patch. Right. If only.

Can anyone honestly think little Mexico and puny Canada fooled the mighty, rich, ruthless U.S. into doing something it didn't understand? It was their idea to start with! Then they got Brian Mulroney's government and the CEOs of U.S. branch companies here to push it through. What did they gain?

How about 63 per cent of our oil, 56 per cent of our natural gas, and our powerlessness to cut back on those amounts even if every Canadian is freezing to death? What were we supposed to get? "Guaranteed access" to the U.S. market based on a "dispute settlement mechanism." Only there never was a dispute settlement mechanism. Just an Alice-in-Wonderland clause where each country gets to decide if it's applying its own laws properly when there's a complaint. Et voilà, softwood lumber.

Then why are there threats and gripes in the U.S.? Because it hasn't been good for everyone. An Ohio union leader told journalist JoAnn Wypijewski, "Who said there was going to be a giant sucking sound? They made a fool of him, but he was absolutely right." He means Ross Perot, in 1992, predicting the jobs effect of NAFTA if it went through. He said U.S. industrial jobs would move to places with lower wages and desperate people — like Mexico. But hey, Ohio, don't blame us. The sucking sound starts up here, passes through the U.S. to Mexico, then to even grimmer spots beyond.

Whole plants in Southern Ontario shipped themselves to the southern U.S. Take Nortel, once Canada's poster child for the superior employment that trade deals such as NAFTA would bring. It chugged public funding, then under the trade deals began shedding jobs — from more than 85,000, mostly Canadian, to about 30,000. Its Canadian work force is down to 6,800. This week, it said it would cut more North American jobs while adding them in China, India, Mexico and other "lower-cost regions." Flush.

So was NAFTA a bad deal? Yes. Was it a good deal? Yes. What's going on? It's all about who it's good for and who it's bad for. For this, you need to think a bit in terms of social class, which got harder when John Edwards dropped out of the Democratic race. He talked about those things.

Take Canada. According to economist Bruce Campbell, under NAFTA, the Big Three auto makers shrank their work force here by more than 50 per cent and increased revenues by 70 per cent. Employment declined in manufacturing and rose in the lower-paid service sector. Wages haven't grown at all since the original free-trade deal in 1988. That's a first.

Productivity has continued to rise, but, in the past, wages always rose "in tandem." Top CEOs in 2005 made 237 times more than the average wage, doubling the gap before NAFTA. Wages as a portion of the economic pie declined while profits rose. The top 0.1 per cent of earners doubled their income to $1,641,000; the bottom 95 per cent saw their share of the pie decline.

As for public goods, such as health care and education, we were told these would thrive under trade deals; but our governments have slashed social programs by 26 per cent. Oh, please don't toss us outta the NAFTA patch.

It's not just here. In the U.S., six out of 10 Republican voters say free trade did harm. Mexicans disapprove of NAFTA 2 to 1, the reverse of 10 years ago, before real experience set in. But we only hear about it from our leaders when an election is on: Chrétien-Martin in 1993, the Democrats now. When it's over — nothing. Try your class analysis on that phenomenon.

Originally published in The Globe and Mail, Rick Salutin's column appears every Friday.

Good idea: Let's Re-open NAFTA

I see that I am not the only one who thinks that re-opening NAFTA would be a great idea! Here is an entry from James' Laxer's blog that gives some of the reasons why Canada should want to open the agreement. This is from Laxer's blog.

Obama and Clinton Have a Point: Let’s Take a Hard Look at NAFTA

Barack Obama and Hillary Clinton have been squabbling over which of them is more serious about standing up to Canada on the shortcomings of the North American Free Trade Agreement. In her last ditch effort to seize victory from the jaws of defeat in Ohio (we’ll know the result tonight), Clinton has been accusing Obama of talking tough to hard hit workers while reassuring Ottawa that he’s only kidding.

Neither of these candidates is remotely pro-Canadian. As a border state senator, Hillary Clinton has been happy to bash Canada for its supposedly lax security whenever that suits her. Not that we should be surprised that the Democratic front runners could care less about Canada. That’s normal, despite the dewy-eyed proclivity of some Canadians to seek salvation from American politicians.

We ought to be thankful though to Obama and Clinton for insisting on the renegotiation of NAFTA if either of them reaches the White House.

Canadians have pressing reasons for taking a hard look at NAFTA.

NAFTA and its predecessor, the Canada-U.S. Free Trade Agreement were negotiated at a time when petroleum prices were much lower than today and the world was much less queasy about petroleum supply than it is now.

When the Mulroney Conservatives negotiated the free trade deals, one of their major objectives was to ensure that no Canadian government could ever again pursue a petroleum policy that did not suit the oil companies, the Conservative government in Alberta and the U.S. administration in Washington. And while they failed miserably at gaining secure access for Canadian exports to the U.S. (witness softwood lumber), they succeeded brilliantly in tying the hands of Ottawa on petroleum.

Under NAFTA, Canada is required to continue exporting petroleum to the United States at a level which must not fall below the average of the past three years. This remarkable commitment stands even should the regions of eastern Canada that rely on imported oil fall short as a consequence of a supply interruption. Not only does Canada have no strategic petroleum reserve---a point driven home by the recent work of the Parkland Institute in Alberta---under the terms of NAFTA Canada must make exports of petroleum to the U.S. a higher priority than meeting the energy needs of Canadians.

From the start, NAFTA has been an “unequal treaty” for Canadians. The Mexicans, also major oil suppliers to the United States, are saddled with no such outrageous commitment, for the simple reason that Mexicans would never have stood for it.

With petroleum shortages now a real threat in the world, Canada needs to renegotiate NAFTA, and if the United States is unwilling to reach a deal that removes the petroleum export commitments as they stand, Ottawa should give notice that Canada will withdraw from the trade deal.

Under the Harper Conservatives and the newly re-elected Stelmach government in Alberta, the highest priority of Canadian economic policy is to increase petroleum exports as rapidly as possible, despite the ruinous environmental consequences, and the disastrous effects of the policy for Canadian industry.

Finance Minister Jim Flaherty has gone to war with Ontario insisting that the province slash its corporate taxes. By promoting the rapid increase in petroleum exports, the Conservatives are directly responsible for driving up the value of the Canadian dollar so quickly that Canadian manufacturing has had no chance to adjust.

The Conservatives have skewed Canadian economic development to the long-run detriment of all Canadians, including Albertans who face the reduction of large regions of their province to a polluted moonscape.

Thanks Barack and Hillary, for putting NAFTA back on the agenda. In our own national election, which can’t come too soon, Canadians ought to put the issue front and centre.

American voters to have say on NAFTA

It certainly is a great idea to open NAFTA. Open it and throw it in the garbage. NAFTA is not a free trade agreement so much as an agreement that Canada will supply oil and natural resources on sweetheart terms to the U.S. and an agreement that we must share those resources with the U.S. It also challenges our ability to have an independent economic policy that might go counter to corporate interests. The dispute mechanism almost always shafts us with the softwood lumber conflict. No doubt the Americans haven't a clue about all this. The forces that want further integration of the North American market are not about to jettison NAFTA. This is pure rhetoric. Seems to me that at one time the Liberals were going to renegotiate NAFTA! This is from the National Post.

Thursday, February 28, 2008
American voters to have say on NAFTA
Job Losses Mount
Janet Whitman, National Post, With Files From News Services Published: Thursday, February 28, 2008
NEW YORK - Blaming free trade for an exodus of good jobs, about a dozen activists gathered outside Hillary Clinton's senate office here on Tuesday before some were carted off by police.
Similar feelings about free trade are running high across the United States amid a growing belief among many Americans that trade with other countries is hurting the economy.
The sentiment has made free trade -- in particular the nearly 15-year-old North American Free Trade Agreement between the United States, Canada and Mexico -- a front-burner issue for U.S. presidential candidates such as Ms. Clinton.
The New York Senator and rival presidential contender Barack Obama ratcheted up their anti-NAFTA rhetoric during a televised debate on Tuesday night in Cleveland, which has been hit hard by the loss of manufacturing jobs. Each candidate pledged to pull out of the trade agreement unless changes are made to the deal.
Economists interviewed yesterday said they don't believe the Democratic candidates are simply pandering to voters, including blue-collar workers in the Midwest where manufacturing job losses have taken a big toll.
Instead, with the increasing cries against it here, NAFTA will probably end up back on the bargaining table if either Democratic candidate is elected president, economists predicted.
"If you ask who won or lost across North America, it is obvious that NAFTA encouraged and accelerated the redistribution of wealth upward in all three countries," said Jeff Faux, founder of the Economic Policy Institute, a labour-oriented think-tank in Washington, D.C. "How much so is open to debate. But I think most people--even those who think it was a good idea -- acknowledge that NAFTA was oversold."
Beyond agreeing they would like to see tougher labour and environmental safeguards, Ms. Clinton and Mr. Obama have been vague on details about what changes they would seek.
Besides rejigging NAFTA, the two presidential hopefuls have called for a time out in the negotiation of new free trade pacts. Neither candidate is believed to be interested in encircling the country with protectionist walls.
Once in office, they could take the action to "opt out" of NAFTA within six months if Canada and Mexico refuse to strengthen labour and environmental provisions and change an aspect of the agreement that favours corporate interests too much.
The candidates' apparent focus on labour and environmental standards suggests Ms. Clinton and Mr. Obama are mainly concerned about Mexico.
But opening NAFTA up to renegotiation could end up putting any issue on the table.
In Ottawa yesterday, federal Trade Minister David Emerson hinted at that possibility, saying Canada could seek its own list of concessions -- including on the topic of oil.
As part of NAFTA, Canada is forbidden from rationing oil exports to the United States in the event of a supply disruption or global shortage, unless the same cutbacks are forced on Canadians.
"Knowledgeable observers would have to take note of the fact that we are the largest supplier of energy to the U.S. and NAFTA has been the foundation for integrating the North American energy market," Mr. Emerson told reporters.
"When people get below the rhetoric and pick away at the details, they are going to find it's not such a slam-dunk proposition."
Federal Finance Minister Jim Flaherty suggested in comments to reporters yesterday morning that Ms. Clinton and Mr. Obama may not be completely up to speed on the trade agreement.
"NAFTA is of tremendous benefits to Americans, and perhaps the nominees have not had the opportunity to familiarize themselves with the benefits to Americans and the American economy," Mr. Flaherty said in Toronto.
"There's a tendency to say it favours Mexico, or it favours Canada, rather than to recognize the mutual benefits that come out of free trade."
Ms. Clinton and Mr. Obama, once strong supporters of free trade, have changed their views on NAFTA in recent years.
Ms. Clinton, who helped her husband, Bill Clinton, lobby for the ratification of NAFTA while he was president, said she became a critic when she ran for the U.S. Senate in 2000.
Mr. Obama acknowledged that during his Senate campaign in 2004, he had said that NAFTA brought huge benefits to his state of Illinois.
As they started campaigning for president, their rhetoric about NAFTA has become increasingly harsh.
Mr. Obama now says, "I don't think NAFTA has been good for Americans, and I never have."
Ms. Clinton says, "You know, I have been a critic of NAFTA from the very beginning. I didn't have a public position on it because I was part of the [Clinton] administration."
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