Be prepared to walk away from NAFTA

Canada is a trading nation. As such, we need well-crafted trade agreements. NAFTA is not one of those.

Photo courtesy Council of Canadians

Photo courtesy Council of Canadians

Both candidates for president of the United States have indicated that they would renegotiate or tear up the North American Free Trade Agreement with Canada and Mexico. Both are reflecting the discontent of the American people from the rust belt. They have seen well-paying jobs evaporate, only to materialize in low-wage countries.

There have been few winners of NAFTA, says Gordon Laxer, founding director and former head of the Parkland Institute at the University of Alberta.

“The big winners since 1988 (the year the FTA was signed) have been the global 1 per cent. The big losers have been the lower-income and middle classes in the rich countries. That underlies the populist revolts of Brexit and the presidential candidacies of Donald Trump and Bernie Sanders (Globe and Mail, August 31, 2016).”

Canadians aren’t happy with NAFTA either. An Angus Reid poll revealed that one-third want it renegotiated, one-third are unsure or want it done away, and only one-third want it left as is or expanded.

Canadians have reason to be unhappy. As taxpayers, we have paid $190 million to foreign corporations to settle lawsuits. Under NAFTA, Canada has been sued 39 times mainly over our environmental protection laws. The U.S. has never lost a case.

Disputes are settled, not by judges but by secret tribunals run by exorbitantly paid corporate lawyers who decide what Canadian laws have hurt U.S. corporate interests here.

Then there is the “Mexican exemption.” Mexico wisely refused to agree to the NAFTA clause that required countries to supply the U.S. with the same proportion of energy as in the previous three years –even if it hurts the exporting country.

Unlike Mexico, Canada is not exempt from this so-called proportionality rule. In the event of a sudden loss in our energy production, Canada would have to supply the U.S. even if it meant that we did without. What makes this clause worse is that the U.S. keeps 700 million barrels in the Strategic Petroleum Reserve in case of an emergency, while Canada has none.

What Canada supposed to get in exchange was unlimited access to U.S. markets. In other words, we would have free access in times of plenty in exchange for compulsory supply in times of dearth.

Except we don’t even have that now. The agreement to unlimited access was broken when President Obama stopped TransCanada’s Keystone XL pipeline.

It never crossed the minds of the Canadian negotiators of NAFTA that easy oil would run out and that the difficult tar-sands oil would be priced out of global markets. It never occurred to them that Canada would be burdened with CO2 emissions that would be produced from exported oil.

Canada is a trading nation and the world wants what we produce. We don’t have to settle for a second-class trade agreement. Laxer concludes:

“NAFTA is flawed and outdated. Two of its rules hurt Canada. We must be ready to negotiate hard and to walk away if necessary, using the six-month exit clause.”

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