Trudeau urged to lay out Canada’s NAFTA objectives

theglobeandmail.com
By STEVEN CHASE, ADRIAN MORROW AND KELLY CRYDERMAN
July 19, 2017

The Trudeau government is facing increased pressure to spell out what Canada hopes to achieve from the renegotiation of the North American free-trade agreement requested by the Trump administration.

Both major opposition parties in the Commons asked the Trudeau government Tuesday to appear before a parliamentary committee as soon as possible to explain Canada’s negotiating objectives.

The United States on Monday released a sweeping list of more than 100 negotiating objectives for NAFTA to overhaul the accord in that country’s favour.

The demands included scrapping the Chapter 19 dispute resolution panels Canada fought hard to secure in trade talks decades ago and that have ruled in Canada’s favour in the past.

Derek Burney, a former Canadian ambassador to the United States who helped negotiate the Canada-U.S. free-trade agreement in the 1980s, said he’s worried there is too much “America first” rhetoric coming from Washington and insufficient talk of how Canada and Mexico would profit from an overhaul of NAFTA.

“If there is no common goal of mutual benefit coming from the top, and it is about unilateral concessions by Canada - and Mexico - then it is not really a negotiation,” he said.

Mr. Burney called on the federal government to justify to Canadians exactly how this redrafting of NAFTA will help this country and lay out what Ottawa wants to achieve from the talks.

He said the lobbying blitz the Trudeau government and Canadian premiers conducted to build allies among U.S. governors is a good start but Canada needs to be upfront about what it will, and will not, negotiate. “What is the substance of our negotiating position? What are the things we are hearing that we are prepared to negotiate on? Don’t you think Canadians want to hear that?” Mr. Burney said.

Conservative trade critic Gerry Ritz wrote the clerk of the international trade committee asking MPs be allowed to question Foreign Affairs Minister Chrystia Freeland, International Trade Minister Francois-Philippe Champagne, Finance Minister Bill Morneau and chief NAFTA negotiator Steve Verheul.

The NDP also requested the same hearings. A government official said the Liberals would appear before the committee. The committee of MPs meets Friday to try to set hearing dates.

Under Chapter 19, when one country slaps anti-dumping and countervailing duties on products from another country, the duties can be appealed to the panel rather than to the court system in the country that imposed the penalties. The chapter has been invoked over the years to deal with disputes on everything from softwood lumber to pork to magnesium to beer to cement.

For Canada, Chapter 19 was a way to appeal American attempts to slap duties on Canadian goods without having to appeal to the U.S. court system. For some Americans, however, the entire concept was a ceding of U.S. sovereignty.

U.S. uneasiness with the panels turned to anger after major NAFTA rulings went against Washington. A series of Chapter 19 panels in the early 1990s and mid-2000s found in Canada’s favour on the softwood dispute. In the early 1990s case, the United States’s complaints were exacerbated by the fact that panel decisions broke down on national lines, with Canadian members of the panels ruling in Ottawa’s favour and Americans going for the U.S. Critics contended the panels failed to properly apply the relevant U.S. laws.

The push to scrap the panels has the enthusiastic backing of the U.S. lumber lobby. “The Chapter 19 system is unconstitutional, unworkable in practice, and for decades has seriously undermined the enforcement of U.S. law against unfair trade practices by Canada and Mexico, to the detriment of U.S. industries and workers,” Zoltan van Heyningen of the U.S. Lumber Coalition said in a statement.

Ottawa, meanwhile, indicated it would put up a fight to keep the arbitration panels.

“We think it’s critical to have some kind of a dispute resolution mechanism incorporated - it was in 1994, and it continues to be,” David MacNaughton, Canada’s ambassador to the United States told reporters at a premiers’ conference in Edmonton.

Elliot Feldman, a Washington-based trade lawyer who is representing Canadian lumber industry interests in the current softwood battle, said Chapter 19 is necessary for Canadian goods to have access to the American market.

He said there are problems with Chapter 19, but the governments should look to fix the system and improve it rather than throwing it out. For instance, he said, neither Canada nor the United States has maintained standing rosters of potential panel members, meaning it is a more arbitrary process when panellists have to be chosen to hear a dispute. Mr. Feldman said panellists should also be better paid and properly vetted to ensure they have expertise in trade law.

“Chapter 19 has to be, intellectually, the thing Canada cannot give up,” he said. “But it also has to be fixed.”

Mr. Burney said the Americans should be forced to better justify why Chapter 19 is so injurious to U.S. business. “We should not let them get away with unilaterally announcing they will do away with it,” he said.

Meanwhile, NAFTA was front-and-centre in discussions at the summer meeting of Canada’s premiers in Edmonton.

Saskatchewan Premier Brad Wall said Ottawa has done a good job in preparing for major trade talks with the United States, including its engagement with the Trump administration and state offices. However, Mr. Wall said Canada should be prepared for a trade war if negotiations go off the rails. He said Canada should quietly prepare a list of trade areas where it could take some retaliatory measures - if need be.

“Let’s walk softly and carry a big list,” he told reporters Tuesday. “Just know what it is, and understand that we need to be prepared - for something that we don’t want to see happen.”

Earlier in the day, Quebec Premier Philippe Couillard predicted NAFTA talks would drag on for years given the broad list of American objectives. He added there are still many unknowns, including “to what extent does the U.S. want to have an agreement on softwood [lumber] before starting negotiations on NAFTA?”

The premiers emphasized they want to continue their active role in courting a broad range of American lawmakers as part of the Canadian push to highlight the benefits of NAFTA.