CANADA

The Liberals say ‘Si’ to NAFTA

December 13 1993
CANADA

The Liberals say ‘Si’ to NAFTA

December 13 1993

The Liberals say ‘Si’ to NAFTA

During the recent election campaign. Liberal Leader Jean Chrétien’s message seemed clear. He repeatedly hammered away at the North American Free Trade Agreement negotiated by the Mulroney government and promised, if elected, to make real changes to the pact before allowing it to become law on Jan. 1. Free trade with Mexico may not have been the most pressing concern of Canadians, but a promise is a promise—even in politics—and once in office, the new Liberal government threw itself into trying to rewrite an agreement that seasoned negotiators had already spent two years going over with a finetoothed comb. Even many Liberals conceded that it was a doomed struggle. Finally,

Chrétien announced the outcome last week: the Americans and Mexicans had agreed to three changes proposed by Canada—and NAFTA would proceed on schedule. “We said to them that it was very important to us, that we had very little choice because we were elected to get these improvements,” the Prime Minister said. “They have been, in my judgment, very nice.”

They may have been nice—but Mexico and the United States conceded very little to Chrétien’s government. They agreed to

Canada’s demand that over the next two years the three nations try to work out a definition of subsidies and dumping. The two southern trading partners also concurred with Canada’s assertion that, under the trade deal, it could not be forced into large-scale, fresh-water exports. And they allowed Canada to issue a declaration that it could protect its energy resources in a time of crisis by creating strategic reserves. But in Washington, U.S. Trade Representative Mickey Kantor asserted that none of Canada’s side deals ultimately affects NAFTA. That prompted critics to question whether the Liberals had really made good on their election promise. “The NAFTA Jean Chrétien is going to proclaim into law will be [former Prime Minister] Brian Mulroney’s NAFTA word for word,” said David Orchard, national chairman of Citizens Concerned about Free Trade. ‘There is no change.” Tory MP Jean Charest was even blunter. The Liberals, he said disdainfully, had obtained “zero, zilch, nothing.”

Ironically, the Liberals’ greatest triumph

Mexico and the United States concede very little to Chretien’s government

may have been in getting opponents and supporters of NAFTA alike to agree on one point: the side deals are meaningless. On water exports, most experts had agreed that the trade deal as it stood did not oblige Canada to supply drought-stricken areas in the United States or Mexico. The side agreement now states that “unless water, in any form, has entered into commerce and become a good or product, it is not covered by the provisions of any trade agreement.” That wording, say some experts, contains dangers. Once Canada sells any amount of nonbottled water—even within its own borders—they argue, the resource becomes a product and falls under the terms of the deal. Says former trade negotiator Mel Clark, who was deputy head of the Canadian negotiation team at the 1979 Tokyo round of the General Agreement on Tariffs and Trade: “If we start selling water in Canada, the Americans have the same right to it that we do.”

While nationalists fumed that the Liberal government did not achieve the same protec-

tion for Canadian energy resources as Mexico did under NAFTA, energy producers who are eager for access to a growing U.S. market were relieved at the weak wording of the Liberals’ energy declaration. “The government will keep Canada’s long-term energy security under review,” the declaration states, “and will take any measures that it deems necessary to the future energy security of Canadians, including the establishment, if necessary, of strategic reserves.” But David O’Brien, incoming chairman of the Canadian Association of Petroleum Producers, said the declaration does not really mean that Canada can discriminate against American consumers in times of crisis. “It doesn’t mean much of anything,” said O’Brien.

The Liberals did get the Americans to agree to discuss definitions of subsidies and dumping. American accusations that Canada has unfairly subsidized businesses or dumped goods at below-market prices have led to many bitter trade disputes between the two countries. In the original Canada-U.S. Free Trade Agreement, which went into effect on Jan. 1,1989, the two countries said they would come to an agreement about the trade definitions within seven years. But during the NAFTA talks, Canada was

unable to keep the Americans to that commitment and the clause was dropped.

While the Americans, as Kantor stated, have not actually committed themselves to reaching a solution, Liberals say that their new willingness to talk about the thorny issues of subsidies and dumping is encouraging. “Our assurance from President Clinton and Mr. Kantor is that they will enter into these discussions in good faith,” said Trade Minister Roy MacLaren. And if the Americans do not pursue the talks seriously, said Chrétien, Canada still has one option— invoking the clause in the trade deal that allows any partner to get out with six months’ notice. “Of course, they can run away from us,” the Prime Minister told reporters in Ottawa, “but if they were to, we can run away from them, too.” Nonetheless, as the new Liberal government satisfied itself with facesaving measures last week, any real threat to the trade deal seemed distant indeed.

NANCY WOOD with LUKE FISHER in Ottawa