What should the Trudeau government do next in the escalating trade war with the Trump administration over NAFTA?
The Trump administration -- opposed to Canada's supply management system (viewed by it as a 270 per cent tariff on its milk exports) and wanting a 'sunset clause' (that would automatically kill the deal unless all three countries agreed to renew it every five years) - has imposed a 25 per cent tariff on steel and a 10 per cent tariff on aluminum tariff exports from Canada into the United States.
The Trudeau government has pledged to hit back with $16.6 billion of tariffs on steel, aluminum and other products, including maple syrup, beer kegs and whiskies, soup, boats, toilet paper, and playing cards starting on July 1.
Then following the G7 summit, US president Donald Trump tweeted a threat about imposing tariffs on automobiles. CBC reports, "Ottawa is preparing for a 'worst case scenario': the Trump administration making good on its threat to impose 25 per cent tariffs on imported vehicles and auto parts. ...Analysts are looking at a range of options, which sources say could include placing even more retaliatory tariffs on American products. ...In the meantime, Canada will continue to lobby the Trump administration for an exemption from the steel and aluminum tariffs."
While Prime Minister Justin Trudeau is winning some sympathy and support given Trump's tariffs and insults, we remain dismayed that his government continues to back the Chapter 11 investor-state dispute settlement provision (that allows transnationals to sue governments for lost future profits relating to public interest laws), energy proportionality (which would prevent us from meeting our Paris Agreement commitments), and water as a good, service and investment in NAFTA (which is a fundamental obstacle to furthering the implementation of the human right to water in this country).
Now, University of Ottawa professor Amir Attaran argues against continued symmetrical retaliatory tariffs in response to Trump-imposed tariffs, but rather for a much stronger, bolder response.
Attaran writes, "If we are not to let the bully win, Canada must find an asymmetrical way to retaliate in this trade war. One that destroys American resolve, but spares us - or even benefits us. But how? There are several ways, but Canada should consider - and threaten - expropriating American pharmaceutical patents."
He adds, "Thanks to an obscure twist of world trade law, doing so is perfectly legal, too. In the years since NAFTA, developments in international law have made expropriation of pharmaceutical patents easier and less risky than ever. Between 1998 and 2005, at the height of the HIV/AIDS crisis, the World Trade Organization cobbled together special rules making it lawful to 'compulsory license' - or, essentially, expropriate - pharmaceutical patents. The rules allow Canada’s government to authorize Canadian companies to copy patented drugs controlled by U.S. companies."
Notably, the Trump administration has already raised the issue of pharmaceutical drugs in the renegotiation of NAFTA.
CBC has reported, "The U.S. signalled its desire to use trade deals to change the way drug prices are set abroad, in an effort to have other countries shoulder more of the costs of pharma research. The U.S. has specifically complained about Canadian pricing policies." And Politico has reported, "Trump wants Americans to get lower prices for medicines - and the rest of the world may pay for it. His 'America First' message on drugs at home, coupled with pro-pharmaceutical industry policies abroad, could lead to higher costs for patients around the world - without making drugs more affordable for those in the U.S."
Our allies Steve Morgan (University of British Columbia) and Ruth Lopert (George Washington University) have also previously sounded the alarm that the Trump administration could push "NAFTA provisions that would prevent implementation of an equitable and sustainable universal pharmacare system."
The Council of Canadians calls for bold vision and real action from the Trudeau government with respect to trade justice.