BUSINESS

Proclaiming NAFTA is a national shame

BUSINESS WATCH

Peter C. Newman December 20 1993
BUSINESS

Proclaiming NAFTA is a national shame

BUSINESS WATCH

Peter C. Newman December 20 1993

Proclaiming NAFTA is a national shame

BUSINESS WATCH

PETER C. NEWMAN

Jean Chrétien won the election on three main pledges: that he would ground the defence department’s Flying Cadillac Helicopters, review and probably reject the sweet deal privatizing Toronto’s international airport, and renegotiate the North American Free Trade Agreement (NAFTA) so that it reflects Canada’s national interests.

He made good on the first two promises, though the navy will eventually require a fleet of alternate choppers and Pearson international will ultimately need alternate administrative arrangements. Despite the controversies they triggered, these were relatively minor issues with few long-term consequences.

But NAFTA is forever.

The deal’s impact will be nothing less than to place this country in the jaws of a magnet that will reorient our economy and our society. Whatever elements of Canadian life that still function along their historical east-west axis will be twisted into north-south channels. That will include highways and truck routes, what’s left of the railways and future telecommunications systems. Instead of perpetuating the nation’s founding metaphor of Canada as stretching from coast to coast, our defining horizons now face south.

We have become the citizens not of a country, but of a continent that boasts 370 million consumers and a gross domestic product that, at $7.5 trillion in 1992, is $1.5 trillion larger than that of Europe’s vaunted economic union. It all sounds dandy until we do a reality check. Just how much influence will we have in this new constellation of political forces? Judging by Chrétien’s failure to alter a single comma in the NAFTA agreement that he was pledged to change, the answer seems to be—roughly none.

If under the original Canada-U.S. Free Trade Agreement (FTA) we were limited to the influence of a mouse scratching the imperious hide of an elephant, under NAFTA we are about to assume the clout of a flea. The

No longer a mouse to the American elephant, under the new trade agreement Canada is about to assume the clout of a flea

reason for this reduced status—and the comparison may not hold because determined fleas can make even big guys squirm—is that the Mexican deal is only the first step in a set of alliances being planned by Washington to transform the hemisphere into its own giant day care centre, with the kid-nations all dancing for the Yankee dollar.

This is no distant, empty theory. U.S. negotiations to admit Chile into NAFTA are already under way, while Mexico—with the blessing of the U.S. state department—has signed bilateral agreements with such potential future NAFTA partners as Guatemala, Honduras, El Salvador and Costa Rica. Extensions to Colombia and Venezuela are also being discussed. It’s all somehow reminiscent of the imperial impulses first enunciated by the Monroe Doctrine of 1823, which was basically aimed at giving Washington sway over anything that moves between Alert Point at the permanently frozen edge of Ellesmere Island and Tierra del Fuego on Cape Horn, the windswept tip of South America.

Even after he won his majority, at his first postelection news conference, Chrétien was insisting that he would delay NAFTA’s implementation until he got some meaningful con-

cessions from the Americans on the treaty’s provisions dealing with energy, water exports, government subsidies and the indiscriminate application of countervailing trade sanctions.

Selling Americans our water, which next to k.d. lang may be the most precious asset we have left to offer, is the ghost issue of North American trade agreements. Canadian water is not among the specifically excluded trading commodities listed in the NAFTA and FTA accords. Although Canadian officials deny they gave away a single drop of the stuff, U.S. chief negotiator Mickey Kantor in October stated that water is a “good” like any other in the deal.

On energy, Chrétien wanted nothing more than the same protection clause the Americans signed with the Mexicans that allows them to retain control over their oil and gas supplies at times of international shortages. In contrast, during such emergencies Canadians will have to place fulfilment of existing contracts to U.S. customers ahead of any additional oil and gas required for domestic use—no matter how cold the winter. (Last year we exported 2.1 trillion cubic feet of natural gas and 804,000 barrels of oil a day to the United States as part of existing longterm contracts.)

On other outstanding issues, working groups have been set up to harmonize definitions of national subsidies and to try to find some method of preventing the Americans from slapping antidumping and countervail import duties on our goods. The authority of these extra-parliamentary bodies is dubious, their mandate vague.

Apart from such administrative considerations, NAFTA’s most severe impact on Canada is bound to be on industries with heavy labor content. Mexican wages are 10 per cent or so of comparative Canadian pay scales, with more than 100,000 Mexicans now working in auto-parts and assembly plants, most for wages between $15 and $25 a day. Andrew Jackson, senior economist with the Canadian Labour Congress, estimates that some 370,000 jobs will be threatened by the relocation of manufacturing plants to Mexico, once NAFTA becomes law on January 1,1994.

Part of former U.S. president George Bush’s motive for initiating the NAFTA process was that failure of the Mexican economy would have led to huge immigration problems for his down-home Texas economy. As it is, an estimated 300,000 Mexicans now move into the United States every year. (“Why aren’t there any Mexican swimmers and runners?” went a joke going the rounds at the 1984 Los Angeles Olympics. The answer: “Because any Mexican who can swim or run already lives in the United States.”)

NAFTA is a lousy treaty and Jean Chrétien and his cabinet will proclaim it in shame. Yet again, a Canadian political leader finds himself trapped between the inevitable rush of history, splitting the world into trading blocs—and the frightening reality of how that process will constrict Canada’s shortterm economic prospects.