Several articles in today's Globe and Mail assume that the US Democratic
Party's desire to renegotiate NAFTA threatens Canada. On the contrary,
Canadians should welcome this initiative.
Senators Clinton and Obama have called for limits on the ability of
foreign investors to directly challenge public policy under NAFTA's
notorious Chapter 11. Canada has been the victim of more such
challenges, and has paid more compensation to foreign investors, than
either the US or Mexico. Removing or limiting Chapter 11 would serve the
public interest in all three countries, especially Canada.
US Democrats also want to bolster NAFTA's labour and environmental
provisions. The current side agreements in these areas are vapid and
unenforceable. Strengthening them would benefit workers in all three
countries.
Trade Minister David Emerson and columnist Lawrence Martin have retorted
that Canadian standards are already as good as, or better than, American
standards. For this reason, Canada should be particularly supportive of
measures that might help prevent "right-to-work" States or Mexico from
creating unfair competitive advantages through lower standards.
NAFTA has served and will serve as a model for other trade deals.
Versions of Chapter 11 have been inserted into many other agreements.
Removing Chapter 11 and introducing meaningful social standards would
not only improve matters in North America. Perhaps more importantly, it
would also set a far better precedent for potential future trade deals
with the rest of the world.
I suppose the Globe's concern arises from statements by Clinton and
Obama that, if Canada and Mexico did not agree to these eminently
sensible proposals, they would withdraw the US from NAFTA. Martin quotes
free-trade negotiator Gordon Ritchie as saying, "Dismantling NAFTA would
measurably affect the competitiveness of our exports to the United
States." However, Steven Chase quotes him as saying, "We could deal with
it just fine. It wouldn't be the end of the world."
As Chase reports, without NAFTA, we would still have free trade with the
US through the CUFTA that preceded NAFTA. The main differences would be
that Chapter 11 would disappear and Canadian exporters might face less
competition from Mexican exporters in the US market.
In theory, the US could also rip-up CUFTA but almost all of the American
outcry has been about trade with Mexico and other low-wage countries.
Canada has essentially had tariff-free access to the US market since
before CUFTA. As long as such access continues, American restrictions on
imports from third countries help Canadian exporters. American
trade-remedy laws can harm Canada, as happened with softwood lumber, but
CUFTA and NAFTA have done little to constrain these laws in any case.
The much-maligned spectre of "American protectionism" promises
significant benefits for Canada: fewer corporate challenges of our
public policies, stronger labour and environmental standards, and less
third-country competition in the US market. As an added bonus, it has
Emerson talking about alternative energy policy options.Progressive Economics Forum
