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Op-Ed: Three key changes Canada should demand in NAFTA negotiations

The Council of Canadians has been pressing for the Canadian government to demand key changes in the agreement; but so far there is no sign from the government that it will make the issues brought up a priority. Here are three key changes needed in the treaty according to the Council.

First, the investor-state dispute settlement provisions (ISDS). Chapter 11 of the treaty allows corporations to sue governments that adopt policies restricting corporate profits. These provisions need to go. Chapter 11 has been used to challenge governments when laws protecting people’s health and the environment impact negatively on corporate profits. The Council claims: “For years we have seen the ravages of NAFTA – the Chapter 11 corporate lawsuits that have cost Canada millions of dollars and eroded our environmental and public policy, hollowed out manufacturing towns and hundreds of thousands of people put out of work, and greater inequality in Canada, the U.S. and Mexico.”

Secondly, the agreement needs to remove any references to water, as a good, service, or investment. If this is not done Canada’s water supplies could be open to bulk water exports and increased privatization. The U.S. could see Canadian water as a means to rehydrate some parched U.S. states.

Lastly, and perhaps most important, is the elimination of the proportionality clause. Richard Heinberg said of the clause: Proportionality is “unique in all of the world’s treaties,” writes Richard Heinberg, a noted California energy expert. Cyndee Todgham Cherniak, a Toronto trade lawyer, says the energy chapter is unique for a trade agreement. There are only three free trade agreements in the world that have energy chapters, and the other two don’t have NAFTA-like proportionality clauses.

It’s unclear how many other countries the U.S. has tried to impose an energy proportional sharing chapter on, but it is clear none has bitten. Heinberg concludes that “Canada has every reason to repudiate the proportionality clause, and to do so unilaterally and immediately.” The clause requires that if the government of any member of the agreement cuts energy available for export to another country it must cut the supply to the same extent domestically. In other words we cannot give preference to Canadians when supplying them from their own resources.

The Trump administration has already given notice of its objectives in the upcoming NAFTA negotiations. It had to do so because the “fast-track” legislation in the U.S. requires that the government give 30 days notice of its negotiating objectives to Congress so that it has time to give feedback. The “fast-track” legislation will also require that the Congress either vote in favor or against the agreement with no amendments allowed or voting just on specific provisions. Not any of the three key provisions just explained are mentioned as needing any change.

Five of the more than 100 negotiating objectives listed by the Trump administration are: 1) the abolition of the Chapter 19 state-to-state investment dispute resolution system. The U.S. has consistently lost challenges under the provisions. 2) the ability for American companies to bid on public procurement in Canada and Mexico, while maintaining ‘Buy American’ provisions in the U.S. The Canadians and Mexicans could demand reciprocal rights. 3) fewer restrictions on U.S. telecommunications companies potentially buying Canadian telecom companies like Rogers, Bell, and Telus, 4) stricter ‘rules of origin’ requirements that would likely impact the Canadian auto sector, and 5) more market access for U.S. agricultural products which could translate into an undermining the Canadian supply management system for dairy, poultry and eggs.

The listed aims seem to fit in well with Trump’s avowed America First policy but fits in mostly with corporate interests, placing them above those of all others, including workers’ rights and concern for the environment. Under Canadian law, Trudeau is under no obligation to make public what his team’s negotiating objectives are. While campaigning for the 2015 federal election Trudeau promised transparency in trade negotiations. What we have so far is the usual positive rhetorical flourishes as a substitute for any specific policies or objectives. Foreign Affairs Minister Chrystia Freeland said: “We welcome the opportunity to modernize NAFTA to reflect new realities — and to integrate progressive, free and fair approaches to trade and investment. When negotiations begin, we will be ready to work with our partners to modernize NAFTA, while defending Canada’s national interest and standing up for our values.”

A discussion of NAFTA and a link to the actual text of the agreement can be found here. The government has asked for comments on the NAFTA agreement. There have been numerous written comments so far. The Canadian Centre for Policy Alternatives(CCPA) presentation in the introduction says: “.. Scott Sinclair, Stuart Trew and Hadrian Mertins-Kirkwood point out how NAFTA has failed to live up to its promise with respect to job and productivity growth, and clearly has not shielded Canada from unilateral U.S. trade actions that hurt Canadian exports. If NAFTA renegotiation is to have any chance of improving the welfare of all North Americans, they argue, it must be inclusive, transformative and forward-looking — focused on today’s real challenges, including climate change, the changing nature of work, stagnant welfare gains and unacceptable levels of inequality in all three North American countries. NAFTA should be renegotiated so that it helps us achieve the sustainable and equitable society we want, not to uphold an uninspiring and untenable status quo.”

U.S. Trade Representative Robert Lighthizer has announced that the initial talks will take place on August 16-20 in Washington DC. John Melle, assistant U.S. trade representative for the Western Hemisphere will be the chief U.S. negotiator. The announcement came after a meeting of mid-level officials from all three countries on Monday. Will the Trudeau administration now tell the Canadian people what Canada’s objectives and priorities are and ensure that the negotiating process is transparent as he promised?

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