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The Council calls for major changes to NAFTA & an open and transparent renegotiation process

The Council of Canadians says that 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.

POLITICO reports, “President-elect Donald Trump plans to move quickly [on its] trade policies, according to an internal transition team document… Within the first 100 days, his administration will drop out of the Trans-Pacific Partnership (TPP) trade deal and 100 days after that it could withdraw from [NAFTA] unless certain demands are met, according to the described policy roadmap. …The detailed 21-page roadmap features a summary and rationale for the plan and is interspersed with quotes of policy promises Trump made on the campaign trail.”

Toronto Star national affairs columnist Thomas Walkom comments, “Donald Trump says he’ll tear up NAFTA if he can’t renegotiate a better deal. That has spooked Canadians. …[But] even without NAFTA, goods could continue to flow tariff-free back and forth across the Canada-U. S. border. That’s because the original Canada-U.S. Free Agreement of 1989, which eliminated most of these tariffs, has never been repealed. It was superseded by NAFTA in 1994. But it continues to exist. And should NAFTA be axed, it will automatically come into play again.”

Walkom highlights that the original FTA doesn’t include the controversial Chapter 11 investor-state dispute settlement (ISDS) provision.

He adds, “What can we do? First, take Trump seriously. He promised to renegotiate or scrap NAFTA. We should assume he means it. He is not likely to give the back of his hand to the working people of America’s rust belt who assured his victory. And he can do so unilaterally — even if free-traders in the new, Republican-dominated Congress object. As the New York Times reported earlier this year, U.S. presidents may have to win Congressional approval to pass new trade deals. But thanks to a series of laws passed over the 20th century, they need no such approval to scrap or override existing trade deals.”

While we would welcome the end of NAFTA’s ISDS provision, we are less sanguine about falling back to the Canada-US FTA.

Maude Barlow has written, “One of the most egregious aspects of the Canada-US Free Trade Agreement was that it wiped out the long-standing Canadian policy that sufficient supplies to serve Canadian needs had to be guaranteed before exports were granted. Most important, the FTA, and NAFTA after it, placed strict limits on the ability of our government to curtail energy exports in times of Canadian need or for environmental purposes. 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.”

The Canadian ambassador to the United States David MacNaughton now states that the Trudeau government would be “happy” to renegotiate NAFTA with the Trump administration. But MacNaughton sticks to the line that NAFTA has brought “economic prosperity to the continent” and refuses to disclose details of what Canada would seek in an updated agreement.

Barlow counters, “Since NAFTA came into force on January 1, 1994, we’ve seen the loss of well over half a million manufacturing jobs in Canada, the net loss of 1 million jobs in the United States, and the displacement of millions of Mexican farmers. Employment trends suggest part-time precarious jobs with fewer benefits, while the income disparity in all three countries continues to grow.”

She also notes, “NAFTA was the first trade deal among developed countries to include an investor-state provision. It grants investors of the continent the right to sue one another’s governments without first pursuing legal action through the country’s legal system.
Before NAFTA, ISDS provisions were only negotiated between developed and undeveloped countries. As a result of NAFTA’s ISDS challenges, Canada is now the most sued developed country in the world. NAFTA give transnational corporations incredible new rights to impose their will on governments. But they are probably just the tip of the iceberg because many new laws or changes to laws never come to light because of the ‘chill effect’ of prior restraint. The Canadian government adopted a new policy soon after NAFTA was adopted whereby all new laws and any changes to existing laws have to be vetted by trade experts to ensure they could not be challenged under ISDS rules.”

In her new book Boiling Point, Barlow highlights, “The federal government should remove all references to water in all existing and upcoming trade and investment agreements as a good, a service or an investment, unless to allow for the specific protection or exclusion of water. As well, no trade or investment treaty agreement should contain ISDS in any form. Removing all references to water as a good from NAFTA would end the debate on whether the federal and provincial bans on water exports are sufficient, as it would remove any potential for a NAFTA challenge. Removing water as a service would help protect water as an essential public service. Removing it as an investment and excluding ISDS provisions would make it much harder for foreign corporations to use trade treaties to fight domestic or international rules that protect water.”

There has been no suggestion from the Trudeau government that these provisions – the proportionality clause, ISDS, or water – are on its agenda to be removed from NAFTA. And Trudeau isn’t likely to support that either given his statement: “The challenge is once you reopen it a little bit, they all tend to unravel, and it’s too important for both of our economies to continue to have a strong trading relationship.” There has also been no suggestion by the government of any kind of transparent and accountable public process, and no signal of public consultations.

NAFTA is unacceptable and the Trudeau government’s approach to its renegotiation is also unacceptable.