It May Be Time for Canada to Pull Out of NAFTA

It May Be Time for Canada to Pull Out of NAFTA

Embassy, August 24th, 2005
COLUMN By Lloyd Axworthy

Outrage over the duplicitous diplomacy used to avoid treaty obligations on Devils Lake is not enough.

Cancelling a meeting of trade bureaucrats in defiance of a NAFTA trade ruling on softwood lumber is blowing smoke in the wind. Telephone tag between the prime minister and the president is a sop, not a solution.

Huffing and puffing will neither impress nor influence the Bush administration in Washington, nor their regional allies like the governor and senators of North Dakota.

The reality is that we are dealing with an American political system currently steeped in the ideology of "empire." It recognizes few rules, adheres only to those treaties that are expedient to basic interests, and believes that the only political currency that counts is the exercise of raw power.

In its mildest form, it practices à la carte bilateralism, co-operating only when it wants to, and when it suits short-term domestic or international objectives. In its bad days, which are most often the case, it simply follows a strategy of "take no prisoners," "damn the torpedoes, full steam ahead," "don't tread on me," "America First," or any other of the clichés used by ultra-patriots. These are the extant policy directives from the White House.

While most Canadians responded with dismay to the U.S. invasion of Iraq, few could quite grasp that the same cavalier, imperial attitudes exemplified in Washington's rejection of various agreements on disarmament, its fierce opposition to the International Criminal Court, its indifference to climate-change warnings, and its undermining of the UN would prevail in our continental relationship as well.

There is a chronic and dangerous failure to fully appreciate the shift going on in the political demographics of the United States, and how this change affects attitudes not only towards Canada, but also to the broad U.S. approach to its international role. The reality is that political power is shifting to the south and west of the United States, bringing with it less understanding or interest in our country, and certainly an anti-internationalist notion that the United States can and should go it alone. Growing, as well, is the attitude -- especially prevalent among congressional Republicans -- that the U.S. should legislate extraterritorially to compel other countries to abide by its decisions.

Anyone who thinks that neighbourly proximity brings favours or privileges is living in a dream world. In the changing landscape of U.S. politics and policies, Canada lacks the necessary traction. We rely too often on old connections and our ability to negotiate a crisis, rather than trying to anticipate issues and build a different political case to meet the challenges that the new, parlous state of U.S.-Canada relations presents.

Part of the problem is that we are working through a system of border arrangements that are obsolete. Of the more than 200 treaties governing our relationship, most rely on goodwill -- they have no prescribed set of dispute-settlement mechanisms that are binding or subject to arbitration procedures.

The International Joint Commission worked well in resolving water disputes as long there was a co-operative attitude on both sides. Now that one of the partners treats this venerable institution as irrelevant, the capacity to effectively share stewardship of the continent's most valuable resource has been put in jeopardy.

Most vexatious are the free-trade agreements that were concluded on the basis that each country's trade laws would apply in disputes. This means that any sector of the U.S. economy that feels threatened by competition can use the domestic system to impose penalties and engage in constant harassment -- read softwood lumber, beef, steel.

Meanwhile, Canada is prevented under NAFTA rules from applying any strictures on energy that could be considered by the Americans as discriminatory, and the Americans pass an energy bill that assumes Canadian oilsands reserves are part of their continental supply.

Equally notorious is NAFTA's Chapter 11, which allows private industry to sue governments if they think there is a restraint of trade. Under this provision, United Parcel Service has challenged Canada Post operations, British Columbia has fought restrictions on the sale of fresh water, and the Canadian government's efforts to prevent the use of toxic engine additives have been stalled.

Compounding these difficulties are new security measures at the border that increasingly restrict the movement of goods and people -- according to rules arbitrarily determined by the Bush administration, Congress or both. Canada has been exceedingly compliant with these security demands, accepting with little challenge the U.S. view of counter-terrorism -- to the point of conceding an erosion of basic Canadian Charter rights.

Let's face it: This is a painful and uncertain time in our relations with the United States. Neither familiar bromides about friendly-hands-across-the-border, nor the traditional Beltway-to-canalway diplomacy can hide or fix this. Muddling through from crisis to crisis won't work. Neither will listening to the chorus of continentalist claptrap promoting more U.S.-Canada integration -- look no farther than the present disputes to see where such policies have landed us -- or the calls for protectionism and retaliation that can still be heard from the left.

It's time for new policies and tough action to shift our trade and security strategies away from a preoccupation with continental matters to a more global footing.

Let's begin by seriously considering an end to NAFTA and reliance instead upon the World Trade Organization (WTO) to regulate the terms and provisions of free trade. Not only would this offer us the protection of a trade body that has some teeth in its regulations -- and ones that are not rooted in U.S. domestic procedures and laws -- it would also free us to engage in a much more innovative and active global trade strategy. The emergence of new economic powers such as China, India, Brazil and South Africa provides markets hungry for the resources, services and know-how that Canada possesses. Our NAFTA connection impedes our ability to take advantage of this potential.

To make this work, however, we have to pull up our own socks and tackle long-neglected or perhaps too-sensitive domestic issues. It's a bit hypocritical to blame the Americans for problems of freshwater pollution when we have been so remiss in our own management. Despite more than a decade of federal-provincial negotiation, there is still no sign of a national freshwater policy. The federal Department of Fisheries and Oceans spends most of its funds on ocean fish and salty seawater, largely ignoring its responsibility to research and seriously monitor our increasingly valuable freshwater resources.

Since the demise of the National Energy Policy in the 1980s, there is nothing resembling a co-ordinated energy strategy that would see, for example, a national power grid or effective incentives for renewable alternatives. So now we have to rely on buying emission credits from other countries to meet our Kyoto commitments. And, as the cost of fuel skyrockets, revenues from the windfall are not evenly distributed.

Add to this list a moribund industrial-development policy, a fractured Department of Trade and Foreign Affairs that can't seem to produce a unified policy, a piecemeal approach to higher education and innovation, a crumbling national infrastructure, and an increasingly restrictive immigration regime.

The bottom line here is that the essentials of a vibrant public domain, capable of taking on greater control of our own decisions and pursuing global economic and security initiatives in a forceful and imaginative made-in-Canada way, are not being built.

The late Tory political thinker George Grant wrote a book called Lament For A Nation, in which he debunked the assumption -- made by too many Canadians -- that our prosperity, security and well-being could be easily obtained by simply riding on the economic and political coat-tails of the Americans rather than by paying real attention to our own institutions and defining our own way.

The Bush administration's actions and attitudes now show that Grant's lament is worth reconsidering. It's time to redefine this historic relationship.

Lloyd Axworthy is president of the University of Winnipeg and a former Canadian foreign minister. This article was first published in the Winnipeg Free Press.

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