NAFTA is a failure

By Ryan McGreal
January 02, 2006
The reason [a country] chooses to [sign a treaty or join an international organization] is that the expected benefits outweigh the loss of sovereignty experienced. If the expectation is not realized, a country can terminate its membership.

-- Bill Graham, Canada at the WTO: Towards a Millennium Agenda, A Citizen's Guide to the World Trade Organization and to the Committee's June 1999 Report, The Standing Committee on Foreign Affairs and International Trade, June 1999, p. 7

The United States flat-out refuses meet its obligations under FTA and NAFTA, and Prime Minister Stephen Harper has admitted as much. Canada compromised its sovereignty for a lie.

When the Brian Mulroney government's FTA negotiations were leaked to the public in the mid-1980s, the government went into damage control mode, seeking to limit discourse as much as possible and present the initiative as - get ready - a way to resolve issues like the the softwood lumber dispute.

Canada abrogated many prerogatives of its sovereignty and a large swath of national interest to get that deal with America. The bait was open access to American markets - not only for trade but also for investment, since, as economist (and later politician) Jacques Parizeau explained, "concentration of assets has brought about a few groups that now find the Canadian 'pond' a bit small for them and therefore tend to go to the United States" (Jacques Parizeau, "Corporate Concentration & Changes in the Regulation of Financial Institutions," R. S. Khemani et al, Eds., Mergers, Corporate Concentration and Power in Canada, Institute for Research on Public Policy, Halifax, 1988, p. 383) - and a guarantee against American protectionism via the mutual promise to abide by FTA rules and a binding dispute settlement mechanism.

Stephen Harper's softwood deal directly abrogates NAFTA. Even though repeated NAFTA panels have ruled on Canada's behalf, the US government simply refused to accept the NAFTA rulings that it is not allowed to tax Canadian lumber. Harper's "deal" essentially legitimizes America's refusal to follow the rules it helped draft, under the excuse that by accepting this, we're just being realistic.

Canada gave up very, very much to get its FTA/NAFTA: control over our energy and water, control over the form that foreign investment takes in Canada (since NAFTA, nearly all foreign investment has been either short term speculation or wholesale purchase of Canadian firms, not FDI as promised), control over taxation and spending, control over whether and how public services are provided (NAFTA includes a clause stating that if a public service - say, health care - is delivered privately for profit, it reverts automatically to the private sector and comes under NAFTA rules), and control over investment flows.

In exchange, we were supposed to get a guarantee of good faith from our "partner" to the south, a guarantee that the United States has never honoured. Harper's "deal" is an admission that NAFTA is a failure. The sleeping elephant can still twitch whenever it pleases.

As Gordon Ritchie, Canada's principal negotiator for the original FTA, later wrote, "The American position was simple: if you want to sell in our markets, you have to play by our rules. If our rules give our own producers an enormous home advantage, that is just too bad. It would be unthinkable, politically, for us to propose that we change any of these laws in any respect just to accomodate Canada." (Gordon Ritchie, Wrestling with the Elephant, McFarlane Walter & Ross, Toronto, 1997, p. 84)

Amazingly, even this understates the issue. NAFTA is a treaty between Canada, the United States, and Mexico. According to the US Constitution, treaties have the force of domestic law, meaning America's tax on Canadian softwood is illegal even according to America's rules.

Instead of holding the US accountable for its criminal activity, Harper has given America a get out of jail free card. We can be sure America will now happily use that card in perpetuity.

Ryan also operates a personal web site here.

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