Silence surrounds trade issues
Toronto Star
Silence surrounds trade issues
By Carol Goar
10 October 2008
The trade landscape in Canada could shift rapidly and radically after next week’s election.
Seven days from now, Canadian negotiators and their counterparts from the European Union meet in Montreal to begin talks on a comprehensive trade agreement covering goods and services, investment, access to jobs and open bidding on all government contracts.
Within the next few months, the United States could serve notice that it wants to renegotiate the North American Free Trade Agreement (NAFTA). Democratic presidential contender Barack Obama promised American voters last spring he would reopen the 15-year-old continental pact to protect their jobs.
Not a word of this has been discussed in the Canadian election campaign.
Most voters aren’t even aware that Ottawa has been laying the groundwork for an all-encompassing economic partnership with the 27-nation European Union for more than a year.
NAFTA has been slightly more visible. It flared onto the radar screen last spring when a senior official in the Prime Minister’s Office - citing a senior Obama adviser - said the Democratic contender’s pledge to rewrite NAFTA was merely political positioning. Obama vehemently denied this.
That got economist Krista Lucenti at the C.D. Howe Institute thinking: What would the reopening of NAFTA mean? Could Canada benefit?
She contacted trade expert Alan Alexandroff at the University of Toronto and senior fellow Gary Clyde Hufbauer at the Peterson Institute for International Economics in Washington and asked them to collaborate on a paper.
It was released late in the campaign, as the spectre of a global financial meltdown loomed. "Free trade is not exactly the favour of the month," Alexandroff observed wryly.
But roiling markets don’t obviate the need to manage Canada’s exposure to outside economic forces. They heighten it.
In that respect, Still Amigos: A Fresh Canada-U.S. Approach to Reviving NAFTA is a useful and well-reasoned document.
Both countries have a strong incentive to fix the continental trade pact, the authors contend. Parts of it don’t work. Problems have arisen since it was enacted. And it has become a lightning rod for protectionist sentiment.
They propose that negotiators begin by addressing three key flaws.
Energy: Under NAFTA, Canada cannot reduce the share of fossil fuels shipped to the U.S. even if its own citizens are facing shortages. Regardless of circumstances, American buyers are entitled to the same proportion they’ve bought for the past three years.
The Canadian government has faced persistent pressure to repeal this clause or abrogate the whole agreement. American consumers don’t like Athabaska’s "dirty oil."
Scrapping NAFTA would be "political suicide," the authors warn. It would exacerbate regional tensions in Canada, jeopardize America’s energy security and put the cross-border electricity grid at risk.
A better approach, they suggest, would be to revise the agreement in anticipation of the move to cleaner fuels. With one set of greenhouse gas emission standards, the two countries could tackle climate change without disrupting the flow of energy.
Water: NAFTA does not cover bulk water exports. They weren’t considered a "tradable commodity" in the ’90s.
But there have always been doubts. What is a bulk export? How much water can commercial bottlers take? Would Canada have any protection if parched American states tried to buy vast amounts of water?
The best way to cut through this legal murkiness, the authors say, is to include a provision in NAFTA that explicitly prohibits large-scale exports of fresh water.
Worker protection: Obama’s call for tougher labour standards is sensible, the authors acknowledge, but it would pose a practical problem for Canada. All 10 provincial governments would have to ratify any proposed change, since labour falls partly within their jurisdiction.
A more promising route, they suggest, would be to update NAFTA using the labour provisions of recent bilateral trade agreements. Canada and the United States both concluded free trade deals with Peru within the past three years. Their rules could be incorporated into the older pact.
No doubt other groups would chime in, if there were debate.
No doubt many Canadians would have questions about free trade with Europe, if there were a forum.
Silence is the wrong backdrop for historic decisions.
Carol Goar’s column appears Monday, Wednesday and Friday.
