The Cato Institute -- which was co-founded by billionaire Charles Koch on "the principles of individual liberty, limited government, free markets and peace" -- is calling on the Trump administration to support the Trudeau government's proposal to have a US-Canada-Mexico regulatory cooperation council integrated into NAFTA 2.0.
Regulatory cooperation can involve "harmonizing" or "aligning" regulations in areas as diverse as genetically modified foods, resource extraction project approvals, water protection rules relating to toxic mining waste, pesticide residue levels in food, pharmaceutical drug approvals, and crash-testing standards for seat belts and built-in child booster seats.
World Trade Online recently reported, "The Canadian government is pushing for stronger regulatory cooperation provisions during the second round of NAFTA renegotiation talks, hoping to move beyond the US.-Canada Regulatory Cooperation Council established by the Obama and Harper governments in 2011, according to Canadian stakeholders. Canada is looking to include in NAFTA requirements for a regulatory cooperation council that is led at the political level, meets regularly and establishes agendas for future outcomes."
The Washington, DC-based Friends of the Earth highlights, "Canadian negotiators have pushed for 'regulatory review' language that threatens sensible food, biotechnology, and other environmental regulations." Our ally Bill Waren, their senior trade analyst, has cautioned, "Regulatory review based on the failed Trans Pacific Partnership and the harmful [Canada-European Union Comprehensive Economic and Trade Agreement] deals will stymie new public interest regulations before they can be proposed to the public."
Now in this blog post, Inu Manak, a visiting scholar at the Cato Institute, comments, "As I’ve written with my colleagues in a recent working paper, a chapter on regulatory cooperation would be beneficial to an upgraded NAFTA." She argues, "As traditional tariff barriers have decreased over time, many of the remaining trade frictions take the form of so-called non-tariff barriers."
Manak also notes, "[CETA] includes a separate chapter on regulatory cooperation (Chapter 21), which sets up a forum that will meet annually to discuss these issues. In general, the CETA seems to institutionalize much of what has already been happening with the US-Canada [Regulatory Cooperation Council], though it goes beyond it in a few areas, for instance, by allowing the participation of other trading partners in certain discussions, pending agreement of both parties. ...The CETA chapter on regulatory cooperation, though not perfect, is a step in the right direction for the NAFTA countries to move forward in this area."
The Council of Canadians has opposed this provision in CETA.
We have highlighted that CETA establishes a mechanism in which Canada and the European Union can "discuss and attempt to prevent or resolve" non-tariff barriers relating to agricultural exports, while the US-EU Transatlantic Trade and Investment Partnership (TTIP) could include a Sanitary and Phytosanitary committee to review whether food safety measures are the "least trade restrictive" and "equivalent". Both these "regulatory cooperation" processes would be a means for corporate interests to push against food standards that reject genetically modified and chlorinated foods.
Furthermore, in October 2014, author-activist Murray Dobbin wrote in the Tyee.ca, "CETA places an absolute value on the ease with which corporations can get approval of their projects. It demands that parties ensure 'that licensing and qualification procedures are as simple as possible and do not unduly complicate or delay the supply of a service or the pursuit of any other economic activity.' ...Requiring that oil and gas companies do environmental assessments, archaeological studies or get approvals from different levels of government is clearly a process that could be made simpler by doing away with these requirements altogether. Obligations to consult with the public and First Nations certainly complicate the regulatory process and cause delays."
In May, the Canadian Press reported, "Canada is already working with the US to eliminate red tape on products." This despite US President Donald Trump's executive order that federal agencies have to cut two existing regulations for every new regulation they implement. CNBC has even reported, "Trump has said he wants to gut as much as 75 percent of all government regulations throughout his time in office."
One example of this is Trump repealing the Stream Protection Rule this past February. The rule had been intended to protect almost 10,000 kilometres of streams and 52,000 acres of forests in the US. It would have prohibited surface mining within 30 metres of streams. Bloomberg notes, "It was meant to stop the practice of dumping mining waste in streams and valleys during mountaintop mining." After signing the order, Trump stated, "In eliminating this rule I am continuing to keep my promise to the American people to get rid of wasteful regulations."
Most Canadians would reject this, but the Mining Association of Canada has released a report citing that regulatory delays and uncertainty as reasons mining investments could move outside the country. And the Canadian Association of Petroleum Producers has warned, "We're keenly aware of the importance of a level playing field where investment can flow over the border quite freely."
It should also be remembered that regulatory co-operation was a key part of the failed Canada-US-Mexico Security and Prosperity Partnership (SPP) talks. When the SPP talks were launched back in 2005, Canada's stricter regulations on pesticide residue levels on fruits and vegetables were identified as "barriers to trade".
The Council of Canadians rejects the attack on public interest protections through the mechanism of trade agreement disciplines.