Obama’s Canada Trip May Spell Change for NAFTA

Canadians are looking forward to Barack Obama’s February 19 visit to Ottawa — the president’s first trip to a foreign country since he took office. Many of us here dare to hope Obama’s “change” agenda will inspire some fresh thinking among our own politicians. Ironically, Canadians concerned about our country’s economic future (along with the well-being of our social programs) may now find a more sympathetic ear in Washington than in Ottawa — particularly when it comes to the subject of renegotiating the North American Free Trade Agreement (NAFTA).

NAFTA made headlines in Canada last year thanks to Obama’s election promises to renegotiate it. White House press secretary Robert Gibbs recently said, “I strongly anticipate…that trade will be part of that docket” in the upcoming Ottawa talks. The apparent openness in Washington toward reviewing trade arrangements is in marked contrast to the ostrich-like stance of government officials and the business elite north of the 49th parallel. For example, the issue of “free trade” was largely a non-issue during Canada’s fall 2008 federal election. However, NAFTA might have garnered a few headlines if the federal government had disclosed that U.S. chemical giant Dow had signaled in late August that it was gearing up to sue Canada over a pesticide ban in Quebec.

Dow’s claim is one in a long string of disputes (more than 50) to arise under NAFTA’S Chapter 11 — a legal back channel that permits foreign investors to detour around local courts and sue the federal government before an international tribunal. Chapter 11 effectively puts foreign corporations on a par with government thus undercutting a nation’s sovereignty. This investor-state provision has also had a “chilling effect” on governments at various levels by keeping them from enacting public policy. The province of New Brunswick, for example, backed away from public auto insurance after receiving legal advice that it could be actionable under NAFTA’s Chapter 11.

Another significant Chapter 11 challenge was brought against Canada in July 2008 when a group of 200 U.S. investors, led by an Arizona businessman, launched a $155 million lawsuit under NAFTA against the Canadian government claiming they faced ‘anti-American’ roadblocks in trying to establish private health clinics in Canada. Canadian politicians from the two major political parties have always insisted that Canada’s Medicare was safe under NAFTA and could not be re-modeled after the U.S. system. This case represents the first test of that assertion.

Fifteen Years

NAFTA has been in effect for 15 years now. To date, none of the three North American governments have assessed the accord’s public impact. A 2008 posting on Obama’s web-site spoke to this issue: “Obama and Biden believe that NAFTA and its potential were oversold to the American people. They will work with the leaders of Canada and Mexico to fix NAFTA so that it works for American workers.” Hopefully Ottawa can take a page from Washington’s new playbook and put Canada’s working people and unemployed at the center of any future trade deals.

During the NAFTA negotiations Canada (but not Mexico) agreed to a “proportionality” provision tied to our oil exports to the U.S. This, like Chapter 11, was one of NAFTA’s “sleeper” provisions, and it’s come back to haunt us by requiring that almost two-thirds of Canada’s oil be exported to the United States. With conventional oil sources drying up out west, the Canadian government should be negotiating a way out of “proportionality.” Instead, it’s doggedly backing the oil patch in one of the biggest climate-change debacles the world has ever known — the tar sands development.

Until recently Canadian Prime Minister Stephen Harper could count on his ideological soulmate in Mexico, President Felipe Calderón, to help him brush away criticisms of NAFTA. However, following a January 12 meeting with Obama, Calderón professed a willingness to revisit the deal. This policy shift leaves the Canadian government out of sync with its two “amigos.”

Public opinion has changed in Canada as well. A September 2008 public opinion poll done by Environics found that 61% of Canadians agreed that NAFTA should be renegotiated. In another Environics poll on February 9, over 70% of respondents in both the United States and Canada agree that energy corporations should not be allowed to sue governments (as Chapter 11 enables them to do) for policy changes aiming to protect the environment or otherwise safeguard the public interest.

On the road to the presidency, Obama stated unequivocally: “Starting my first year in office, I will convene annual meetings with Mr. Calderón and the Prime Minister of Canada. Unlike similar summits under President Bush, these will be conducted with a level of transparency that represents the close ties among our three countries. We will seek the active and open involvement of citizens, labor, the private sector and non-governmental organizations in setting the agenda and making progress.”

Shutter the SPP

The first order of business at such a tri-national meeting should be an agreement to shut down the undemocratic and corporate-led Security and Prosperity Partnership of North America (SPP). Ever since its inception in 2005, the SPP program excluded legislative oversight, lacked any consultation with civil society, and led to further deregulation that has benefited only corporations. The SPP has also led to an increase in militarism and the violation of civil liberties in North America.

In 2008, Canadian, Mexican, and U.S. organizations launched a joint policy proposal titled “NAFTA Must be Renegotiated; A Proposal from North American Civil Society Networks” that calls for a fundamental review of NAFTA and of the SPP so as to establish economic relations based on social justice within a framework of sustainable development. The new Environics poll indicates that 9 out of 10 Canadians believe the Canadian government should pursue a comprehensive strategy to create more green jobs in renewable energy and improve energy efficiency, areas that Washington is noticeably paying more attention to than is Ottawa.

The supra-national “rights” bestowed upon large corporations under NAFTA are undermining the decisions of our democratically elected governments. Obama swept in to the White House on a transformational wave that has people saying “yes we can” to building something better. It’s a message many Canadians hope the new U.S. president will bring to Ottawa, and one that can inspire our politicians to take a good hard look at a poorly designed trade deal, and turn it into a fair trade agreement to benefit us all.

Rick Arnold, a Foreign Policy In Focus contributor, is the coordinator of Common Frontiers, a multi-sectoral network of Canadian organizations working on trade issues. Common Frontiers is also the Canadian chapter of the Hemispheric Social Alliance.