North American Free Trade Agreement (NAFTA)

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Action Alert

The Canadian government holds up NAFTA as an example of how free trade deals are unambiguously good for us. Trade increased threefold under the deal, they say, and this is supposed to end the debate. NAFTA’s supporters don’t mention the inconvenient realities. For example, income inequality has worsened considerably in Canada, Mexico and the United States in the past 20 years. Manufacturing jobs have disappeared across the region, leading to a greater economic dependence in Canada on raw resource exports (and in Mexico on punishingly low wages). NAFTA also contained investment rules that stop us from requiring companies to process those resources before they export them. The old cliché of Canada as hewers of wood and drawers of water (or perhaps tar sands) is unfortunately truer now than it was before NAFTA and prior Canada-U.S. Free Trade Agreement.

Possibly the most anti-democratic legacy of NAFTA is its investment chapter (Chapter 11), which protects U.S. and Mexican corporations in Canada from all kinds of public policies that could get in the way of profits. There have been about 20 investor lawsuits filed by U.S. firms under NAFTA, many of them challenging environmental policies such as a ban on trade in gasoline containing the suspected neurotoxin MMT. These lawsuits are heard in private by a three-person panel of paid arbitrators whose decisions are final and binding. Canada has paid more than $160 million in fines already and is facing another $4-5-billion worth of NAFTA lawsuits, including one from Lone Pine Resources, which is seeking $250-million compensation for Quebec’s publicly supported moratorium on fracking in the St. Lawrence River Valley.