Canada's NAFTA debate revived in wake of US softwood decision

[Marvin Gandall <marvgandall@xxxxxxxxxxxx>]

(The Bush administration's decision to ignore a NAFTA panels's ruling in
Canada's favour on softwood lumber exports has ignited a firestorm in
Canada, and led to renewed calls by NAFTA critics - foremost among them
journalist and author Linda McQuaig - to withdraw from the free trade
treaty. US ambassador David Wilkins has exacerbated matters by accusing
Canadians of having gotten "too emotional", and that further trade sanctions
are on the way against the country's dairy and broadcasting industries.
Industry minister Jim Emerson has charged the government wouldn't "stand by
and allow the bully to mop up the floor with us", but beyond the angry
rhetoric, Ottawa has so far only indicated that it is "considering" a range
of retaliatory options. Below, an exchange in today's Toronto Star between
McQuaig, calling for withdrawal from NAFTA, and admittedly "pro-American
Canadian" Rondi Adamson saying Canada doesn't really have any other trade
options.)

We should revert to use of global trade rules
Linda McQuaig
Toronto Star
August 28 2005

It's often noted that the United States is so big and powerful it barely
notices Canada. Indeed, the average U.S. citizen probably couldn't locate
Canada on a map of North America (and if he could, he wouldn't bother to).

This sense of Canada's insignificance, drummed into us constantly by our
media commentators, has helped fuel the mythology that we scored a great
coup back in 1988 when we signed the Free Trade Agreement with the U.S.

In fact, that deal - and the subsequent North American Free Trade
Agreement - was more a coup for Washington than Ottawa.

Contrary to mythology, Washington was keen to sign free-trade deals with
Canada for lots of reasons, including winning guaranteed access to our
energy, which they got.

But the Americans are tough negotiators, and they weren't willing to give us
much in return.

The one thing Canada really wanted was a common set of rules that would
ensure Canadian goods access to the U.S. market, and the Mulroney government
promised not to sign any deal without this.

But Washington never had any intention of agreeing to this, although its
negotiators teasingly hinted from time to time that they were considering
it.

After years of exasperating negotiations, the Mulroney government, desperate
for a deal, signed anyway.

The utter failure of NAFTA to guarantee us access to the U.S. market has
long been clear, but is now undeniable. Despite a unanimous pro-Canada
ruling earlier this month by a NAFTA panel, Washington simply refuses to
remove punishing duties on our lumber.

This has led to much hand-wringing and even calls for retaliation. Instead,
we should simply bow out of NAFTA, which we can do with six months' notice.

We'd continue to trade with the Americans but we'd revert to our old way of
trading with them - under the rules of the World Trade Organization, a
global trade treaty formerly known as the General Agreement on Tariffs and
Trade.

This was the basis of our successful trading relationship with the U.S. for
almost 40 years, until we were naïve enough in the 1980s to think we could
do better negotiating a one-on-one deal with Washington.

Washington was delighted, knowing it would have more leverage facing one
country (and a relatively small one at that) than facing a whole array of
nations.

It easily tossed us around on the mat.

NAFTA has done much to erode our sovereignty, denying us control over our
own energy resources, creating a wide-ranging set of rights for
corporations, and limiting our power to protect the environment and shape
public programs.

Rather than rant and rave and retaliate, we should finally acknowledge that
we do better when we negotiate with the Americans with a host of other
nations on our side.

There was a reason that the U.S. Congress quickly and eagerly approved the
one-on-one deal Washington signed with Canada - and it wasn't because U.S.
congressmen have a soft spot for Canadians.

Linda McQuaig is a Toronto-based author and commentator.

------------------------

NAFTA and FTA has been beneficial to Canada
Rondi Adamson
Toronto Star
August 28 2005

The ongoing softwood lumber dispute with the United States is not sufficient
reason to scrap NAFTA and FTA. As a pro-American Canadian - and I am in a
minority, I fear - I find Washington's disregard for the Extraordinary
Challenge Committee's ultimate ruling on the softwood lumber tariffs
particularly disturbing. What better way to give Canadian nationalists fuel
for their fires?

Even pro-American architects of the original agreement - among them, Simon
Reisman and Allan Gotlieb - expressed dismay that NAFTA was being put at
risk. But we must keep things in perspective and remember that softwood
represents only a small percentage of Canadian exports to the U.S. Canada
would be shooting itself in the foot to react by abrogating its free trade
agreements, as they are highly beneficial and have led to economic growth
and increased prosperity at home. Without them, there would be any number of
tariffs imposed on any number of items.

According to International Trade Canada, "Since NAFTA came into force, the
Canadian economy has grown by an average of 3.6 per cent annually, keeping
Canada in the lead among the G7 countries." Canadian productivity has risen
by nearly 25 per cent since free trade's inception.

As part of the world's largest trade bloc, we are a part of a free trade
area that represents a third of the world's gross domestic product and our
exports to the U.S. and Mexico have grown in value by more than 100 per
cent. Since NAFTA, Canadian exports to the U.S. have nearly tripled.

And we registered an all-time high merchandise trade surplus with the U.S.
last year. According to Agriculture and Agri-Food Canada, "Canada's
agriculture and agri-food industry is largely export oriented and has
benefited from the increased access to U.S. and Mexican markets." Since
1994, our agricultural exports to the U.S. and Mexico have increased by 95
per cent.

And there is much more that could be added to the "pro" column for NAFTA and
FTA. Which is not to say there should not be a response to the American
decision. Even the conservative Wall Street Journal editorialized in our
favour, in large part, regarding lumber tariffs, and suggested George Bush
should have used the committee's ruling "as a graceful exit" from the
tariffs.

A useful retaliation, not just chest-thumping and petulance, is in order.

Slapping tariffs on U.S. products would, in turn, only increase the cost of
items purchased by Canadians. Limiting energy exports would be about as
clever an idea as a trade war. A good start would be for Canada's Prime
Minister to show some concern beyond making bold statements to Canadian
media.

International Trade Minister Jim Peterson said that Paul Martin would talk
to George Bush about the matter, "sooner, rather than later." Now there's
passion. I would suggest sooner. Or even now.

There are a number of paths to travel here, starting with trying to reach a
settlement. But doing away with open access to the world's largest market
would be travelling the wrong path.

Rondi Adamson is a Toronto writer whose work has been published in the
Christian Science Monitor, Wall Street Journal Europe and USA Today.