In 1989 when then Prime Minister Brian Mulroney signed the U.S.-Canada Trade Agreement and subsequently when NAFTA was implemented in 1994, I was concerned it would erode the sovereignty of Canada.
Decades later, I still don’t like foreign companies successfully suing our government when a public policy negatively affects their profitability. But overall Canada has prospered under NAFTA and the trade dispute mechanism has protected Canadian sovereignty.
The unintended consequence of NAFTA was the ease and profitability for Canadian companies to focus almost solely on the North American market. Now we are re-negotiating NAFTA with two men, the American President and his chief negotiator, Robert Lighhtizer, each with no understanding that negotiation means give and take.
Our NAFTA team headed by Chrystia Freeland faces what I call the “Chamberlain dilemma”. To appease Adolf Hitler and avert war in 1937, then British Prime Minister, Neville Chamberlain, signed the Munich Agreement to give Germany Czechoslovakia. He chose to save Britain and sacrifice their friend, Czechoslovakia. Unfortunately, we know the rest of the story.
Winston Churchill, on the other hand was prophetic when he said, “England has been offered a choice between war and shame. She has chosen shame we get war.”
If we give on the ‘big asks’, Canada will be profoundly changed. Two areas under negotiation are critical. First the ‘big ask’ to remove Chapter 19, an independent tribunal that rules on trade disputes, in favour of American courts.
Over the years, American corporations lose most tribunal cases simply because they break the rules! What an advantage to have your misbehaviour adjudicated by friendly courts with judges who are adulterated by politics, self-interest and money.
The second ‘big ask’ is around the rules of copyright. The Americans want extended terms on copyright and punitive fines and jail terms for violators. If our negotiators aren’t extremely careful, the Intellectual Property (IP) clause could usurp our Canadian laws and once again make us subservient to American courts. Because IP is the future of international trade and the Canadian judicial system is far superior, it is imperative we keep sovereignty over copyright laws.
Canada seems to be playing their cards wisely. Stay at the table, stay calm, don’t bad mouth the “bad mouther”, don’t show fear, continue to court American stakeholders who understand the value of NAFTA and stand firm on the non-negotiables.
This strategy by Canada (and Mexico) forces the U.S. negotiators to make the next move—either negotiate in good faith or move to cancel NAFTA.
Cancellation will hurt many individual Americans and communities.
Ironically, the vast majority of states that have Canada as their number one trading partner vote Republican. Alas, the power of foolery and ignorance!
Losing NAFTA initially would take a huge bite out of Canada’s economy, but there are many other trading options. Falling under the courts of a foreign nation with suspect jurisprudence is an irreversible erosion of sovereignty.
The negotiators from Canada have no crystal ball, but I believe they have more of Churchill’s prophetic insights than Chamberlain’s wishful naivety.
by B.P. Schimke