How NAFTA Fools the People
Why it’s time to pull the plug on this trade agrement
Senators Obama and Clinton’s
comments about renegotiating
NAFTA have sparked a flurry
of responses from Canadian
politicians and pundits. After
years of grudging acceptance,
NAFTA’s future is suddenly less clear as
the U.S. democratic frontrunners questionned
the trade agreement’s benefits
for U.S. citizens.
With very few exceptions this commentary
reveals how successful the
spin doctors have been in spreading the
myths about the benefits of this free
trade agreement for Canada. Even those
who decry the price Canada has paid –
most notably in abandoning control of
energy and probably water resources –
still assume there was a quid pro quo for
these concessions. Unfortunately, Canada
got much less in the free trade bargain
than most assume, as the following
exposé of NAFTA mythology shows.
Myth #1:
NAFTA gives Canadians
secure aces to U.S. markets.
Canada failed to achieve this key
goal and central rationale for negotiating
a free trade agreement with the
United States. The reality is that, unlike
World Trade Organization (WTO)
rules, NAFTA imposes no substantial
constraint on U.S. unilateralism when
it comes to denying Canadian exports
tariff-free access to U.S. markets.
Under NAFTA, all Canada is entitled
to insist on is that U.S. countervail
and anti-dumping duty laws – which
U.S. Congress is free to revise without
Canada’s consent no matter how unfair
the result – are applied properly to
Canadian exports. Ongoing softwood
lumber disputes have shown that even
that modest right is virtually meaningless.
The myth of secure market access
is the most profound and enduring of
all misrepresentations about NAFTA.
How NAFTA Fools the People
Why it’s time to pull the plug on this trade agrement
Myth #2: NAFTA is responsible
for the substantial growth in
Canada-U.S. trade that has taken
place over the past 14 years.
Growth in Canada-U.S. trade
is happening at very close to the same
rate as similar increases in U.S. trade
with other trading partners with which
it has no free trade agreement. While it
is hard to pinpoint accurately, the most
important factors underlying growth
in bilateral trade have been the relatively
cheap Canadian dollar, publicly
funded health care (as a form of subsidy
to manufacturers), and the insatiable
U.S. appetite for oil, gas and other
resources – all of which have nothing to
do with NAFTA. For those who doubt
the importance of a cheap dollar to
Canadian export trade, you need only
observe the carnage to the manufacturing
sector that has occurred since the
sharp increase in the loonie’s value, free
trade or no free trade.
Myth #3: While some tinkering
may be needed, NAFTA provides
a sound bas is for Canada-U.S.
economic relations.
NAFTA has been almost entirely
superseded by the WTO and offers no
significant advantage for Canada when
compared with that multilateral trade
regime. Indeed the opposite is true,
because in addition to capitulating to
U.S. unilateralism when it comes
to countervail and anti-dumping
duty laws, the two other features
that distinguish NAFTA and WTO
rules also fundamentally undercut
Canadian interests. The first are
NAFTA rules that lock us into serving
U.S. energy demands, even ahead of our
own, and the second are NAFTA investment
rules that allow U.S. corporations
to challenge Canadian laws, including
those relating to the environment and
public services.
Myth #4: Because Canada’s
economy is so dependent on
Canada-U.S. trade we simply have
to acept trade on whatever terms
the U.S. is willing to offer.
Canada has considerable leverage
in bilateral trade relationships with
the U.S. In part, this comes from the
integrated nature of our manufacturing
and resource economies. More important,
however, is the growing appetite
U.S. consumers have for Canadian oil
and gas in a world where offshore supplies
have become increasingly unreliable.
The global market for energy, and
other resource commodities is a seller’s
market, and the only commodity that
seems to be in short supply in Canada
is political leadership with the integrity
and courage to protect our national
interest.
We should welcome the interest U.S.
Democratic candidates showed in
renegotiating NAFTA. It may make
Canadians decide that we don’t need
NAFTA after all.
Steven Shrybman is a partner at Sack
Goldblatt Mitchell, practising trade and
public interest law, and a member of the
Council of Canadians’ board of directors. A
version of this article originally appeared
in The Hill Times and is reprinted with the
author’s permission.
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Photo: Council of Canadians board member
Steven Shrybman
