With talks expected to focus heavily on trade issues when U.S. President Barack Obama visits Ottawa on Thursday, 26 diverse organizations from across Canada are using the opportunity to call for a “transparent and thorough” renegotiating of the North American Free Trade Agreement.
The organizations, which include some of the country’s major unions, the Council of Canadians, the Canadian Environmental Law Association and Common Frontiers, also want a moratorium on all bilateral free trade agreements involving Canada and an end to the Security and Prosperity Partnership of North America.
Both the Canadian and Mexican governments have been concerned about Obama's campaign promise to renegotiate NAFTA, which he said “gave broad rights to investors [and] paid only lip service to the rights of labour and the importance of environmental protection.”
Mexico’s President Felipe Calderón has historically been against any effort to renegotiate NAFTA, but after his January 13 meeting with Obama in Washington he said he was open to “reviewing” the environmental and labour provisions of the 15-year-old agreement.
Rick Arnold, coordinator of Common Frontiers, a network of Canadian organizations working on trade issues, calls NAFTA a “flawed trade deal” that has mainly benefited corporations.
“We don’t believe that NAFTA as such has much to do with fairness for the average worker; it was more opening markets for large corporations. In our estimation, the growing gap in all three countries between the lowest percentile of poor and a handful of rich has increased under NAFTA, not decreased as they promised.”
The millions of jobs NAFTA was supposed to create haven’t materialized, says Arnold. Canada’s manufacturing sector lost 350,000 high paying jobs between 2002 and 2008, according to the Canadian Auto Workers Union. Another 200,000 have disappeared over the past three months. These high wage jobs are being replaced by insecure work in lower paid sectors.
“This is something that was predicted before NAFTA was signed and it’s coming home to roost,” he says.
Jobs were also lost in the U.S. as hundreds of manufacturers moved operations to Mexico to take advantage of cheap labour and fewer controls on working conditions. Overall since 1994, America has lost 3.1 million manufacturing jobs, according to an L.A. Times news report.
“The businesses which have grown through more trade are doing well. The businesses which were exempted from the benefits of free trade such as agriculture, the public sector, possibly aren’t doing as well,” says Alan Rugman, a professor of international business at the University of Indiana who has written extensively on NAFTA.
Trade and economic growth across the continent have increased greatly since NAFTA, and new jobs have been created in some sectors. Canada’s economy in particular has benefited immensely under the treaty.
But critics say there hasn’t been a direct correlation between that and the overall wellbeing of the citizens of the three countries. The expected “trickle down” effect hasn’t happened.
Obama stated during the presidential campaign that his administration would work with Canada and Mexico to “amend” NAFTA to ensure that it “works better for all three countries.”
But Rugman says renegotiating the continental trade deal is likely not on the cards.
“I’m sure President Obama has no intention to do that. He just said that in order to win the primaries when he was running against Hilary Clinton. I’m pretty sure the agenda of the Obama administration is not to renegotiate NAFTA.”
Besides, Rugman adds, NAFTA is a “very complex arrangement” that would be virtually impossible to renegotiate. He believes NAFTA’s environmental provisions are working well, as are the labour provisions between Canada and the U.S. However, in Mexico there are “labour issues,” he says.
Citizen organizations in the three countries and some U.S. legislators have called for renegotiating NAFTA. U.S. Senator John Edwards has said the trade deal should be abolished altogether.
Laura Carlson, director of the America’s Policy Program in Mexico City, says there have been many calls for renegotiation in Mexico, especially in the agricultural sector.
In 2003 and again in 2008, under the banner of renegotiation, tens of thousands of people marched in the streets of Mexico City in an effort to have NAFTA’s agricultural provisions revised. They demanded protection of basic food staples such as corn and beans by removing them from the agreement.
Unable to compete with heavily subsidized U.S. imports, two million small farmers have been “displaced by NAFTA,” forcing them to seek some other way to make a living, Carlson says.
“Many have had to leave the countryside and their land. They’ve also lost, under NAFTA and the rules of the free trade model, many of the support programs that they had from the Mexican government before they were forced from their land.”
Despite promises that “trade, not aid” would improve the lot of Mexicans and curb illegal immigration to the U.S., the numbers crossing the border illegally have increased while the standard of living of the average Mexican is down.
“In Mexico, we did not see the kind of growth that was promised under NAFTA,” says Carlson. “The growth rate has been erratic and has averaged out to just a little over one per cent during the NAFTA period compared to much higher rates in other countries and in the period before NAFTA.”
Both Carlson and Arnold say a comprehensive independent assessment of NAFTA to discover what works and what doesn’t is long overdue.
“If there’s actually a review that takes into account the social and environmental as well as the economic and the trade impact of the agreement, then we’ll have a better idea of what the net result is of NAFTA and where the problems are,” Carlson says.
Public opinion in Canada and the U.S. leans strongly toward renegotiating the treaty. A September 2008 Environics poll found that 61 per cent of Canadians contacted were in favour of renegotiation. A Rasmussen poll last June in the U.S. showed 56 percent in favour.
Another Environics poll earlier this month indicated that 70 per cent of respondents in both Canada and the U.S. agreed that energy corporations should not be allowed to sue governments—a reference to NAFTA’s infamous Chapter 11—for policy changes in place to protect the environment or otherwise safeguard the public interest.
Arnold maintains Chapter 11 provision “challenges our sovereignty” and has a “chilling effect” on all levels of governments because it could deter them from enacting public policy.
U.S. chemical giant Dow signaled in August 2008 that it was preparing to sue Canada over a lawn pesticide ban in Quebec. Last July a U.S. businessman launched a $155 million lawsuit under NAFTA against the Canadian government for “anti-American roadblocks” in attempting to establish private health clinics in Quebec.
More than 50 legal disputes have arisen in Canada under Chapter 11, which allows foreign investors to avoid local courts and sue governments before an international tribunal.
Arnold believes Canadians, Americans, and Mexicans want a fair trade model that establishes “economic relations based on social justice” and creates quality jobs in all three countries.
“The winners have to be the people in each of the countries, not the corporations. It’s the people at the end of the day whose lives you want to see improved. And under NAFTA and other free trade agreements there’s no example where poverty has somehow been eradicated or greatly diminished. In most free trade cases poverty has continued to grow exponentially.”