Robert Bériault
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| Clark
and Orchard's idea
might offer a first step towards Canadian independence.
Robert Bériault |
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| Aug. 23, 2005. 01:00 AM |
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Canada can pull out of free trade agreements and return to WTO without penalty, say Mel Clark and David Orchard Nowhere in these responses is there a concrete plan of how Canada
should respond.
Lost in the cacophony of bluster is the fact that Canada is already
part of a coherent rules-based trade agreement with the United States.
It is called the World Trade Organization, formerly the General
Agreement on Tariffs and Trade and it has the mechanisms already in
place to enable Canada to emerge a clear winner from the current
situation.
Founded in the late 1940s, the GATT/WTO was for almost 40 years the
primary trade contract between Canada and the U.S.
In all of that time, the United States was never able to levy a
countervailing or anti-dumping duty on our exports of lumber. During
those four decades, Canada traded profitably, our standard of living
rose, Canada won almost all its trade disputes with the U.S. — and
Washington abided by the rulings.
By the mid-1980s, 90 per cent of Canadian lumber entered the U.S.
tariff free and the duties on the remaining 10 per cent were negligible.
It was only when Canada decided to turn away from the multilateral
framework of trade rules with the U.S. and enter into a bilateral
one-on-one "free trade" agreement with the U.S. in the
mid-1980s, that U.S. industry saw its opportunity and used it. It has
been using it ever since.
Under the FTA and NAFTA, it is U.S. law which now applies to all of
Canada's exports in countervailing, anti-dumping and related disputes
with America. The dispute panels are limited to deciding if the U.S. has
applied its own law correctly.
Furthermore, the U.S. can at any time amend its trade law without
Canada's agreement and, on lumber alone, it has done so three times to
Canada's great disadvantage.
In other words, the FTA and NAFTA, instead of giving us more secure
U.S. market access, unleashed the full force of U.S. protectionism to be
used against Canada in a way that was not possible under GATT/WTO.
As for the dispute settlement mechanism, touted repeatedly as
"the crown jewel" of the FTA, it bears repeating that all
agreements end when the negotiated means of resolution are discarded by
either player.
The answer is not to shake our fists or shout meaningless threats at
America. The answer is to simply return to the safer, more effective,
already existing multilateral WTO framework of which Canada and the U.S.
are both still members. When Washington not long ago threatened hefty steel duties against
Europe, Japan and a number of other steel exporters, Europe triggered
the WTO retaliatory process and the Bush administration backed down.
The same defences are available to Canada under the WTO.
Since signing the FTA and NAFTA, the United States has taken 10 trade
actions against the Canadian Wheat Board, Canada's largest net earner of
foreign currency, and we now have U.S. tariffs against our wheat
exports.
In all the years of trading with the U.S. under GATT, the Americans
never launched a single formal action against the wheat board, because
they knew they could not win.
The essence of the FTA and NAFTA is that they cede vital government
powers to the U.S. and the private sector that were used to build an
independent Canada.
What the U.S. wants out of the repeated challenges against Canadian
lumber exports is to wear Canada down until it agrees to privatize its
crown-owned forests, opening them to direct U.S. ownership.
In grain, Washington wants an end to the wheat board. This would see
the Canadian grain trade move virtually overnight into U.S. hands.
There is a simple way out, without bluster or insults. Canada does
not have to give up ownership of its forests, its industries and its
institutions.
With a simple letter to the U.S., under FTA Article 2106, NAFTA
Article 2205, Canada can, with six months notice, withdraw from these
agreements without penalty and without conditions.
Our trading relations with the U.S. will then automatically revert
back to the GATT/WTO framework of international law, which will enable
us to both maintain our institutions and trade profitably with the U.S.
All of the intolerable NAFTA rights U.S. companies now have over
Canada — to sue the Canadian government, to overturn Canadian laws, to
control our exports and energy prices — would disappear. Canada would
regain its status as a sovereign nation.
Chasing the dream of a "special relationship" and some kind
of shortcut to "secure access" to the U.S. market is a
dangerous delusion which has cost Canada dearly.
Superpowers do not have friends or "special relationships,"
they have interests and they pursue them. Canada must learn to do the
same.
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