logo logo

United States tears up free-trade rule book

United States tears up free-trade rule book

The Gazette (Montreal)

Friday, August 12, 2005

In 1992, a bilateral panel convened under terms of the Canada-U.S. free-trade agreement ruled in favour of Canada in a dispute over an auto-industry issue. U.S. "trade representative" Carla Hills, a cabinet-level official for then-President George H. Bush, responded tersely: "We will comply." And the United States did.

Since then, however, the United States’ sense of being bound by its treaties has deteriorated badly. Despite losing ruling after ruling under the North American Free Trade Agreement, the administration of George W. Bush remains truculently obdurate about softwood lumber, that perennial trade sore spot. This week, even an Extraordinary Challenge Committee, the ultimate arbiter of disputes under NAFTA, came down squarely on Canada’s side.

We will not comply, responded somebody from the office of today’s trade representative, Rob Portman. Even before the decision, U.S. Commerce Secretary Carlos Gutierrez had said the United States would not return the almost-$5 billion U.S. in duties and interest it is holding, even though NAFTA’s chapter 1904.15 requires exactly that.

Even more odiously, that money could well end up with the very U.S. timber companies the challenge committee found are not, repeat not, being unduly harmed by Canada’s forestry system. (U.S. consumers, meanwhile, are being hurt by their government’s policy. Pity they aren’t better organized.)

So the United States, such a paragon and champion of free trade when it comes to exporting its own products and services, evidently considers itself free unilaterally to ignore the rules when the umpire comes down against it.

This is not merely one more thing for Canadians to sneer at George W. Bush about. It is about more than the $5 billion, more than timber for framing houses. This is serious, because it’s a precedent. If the United States will not abide by the rules in this case, why should it in any other? What good are rules when they become optional? When a government prefers to pander to lumber-baron party contributors and their tame small-state senators? Who can say which protectionist lobby will win Bush’s favour next?

Canada sought and won a free-trade deal with the United States precisely to avoid this sort of arbitrary case-by-case politicization of trade. Dealing with an economy 10 times the size of ours, we need the protection of trade rules. The bitter reality is Canada can hardly "retaliate" in any meaningful way: Too many Canadian paycheques depend on the continued flow of goods and services both ways across the border.

The only thing we have going for us here is that this U.S. bullying is public. Much of the world already considers the United States a rogue state. If the Americans are seen to tear up the NAFTA rule book, that impression will be intensified. For its own sake, the United States needs to abide by the rules.

 source: Montreal Gazette