NAFTA Renegotiations Must Be Done Through The Lens Of Climate Change
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April 20, 2017 By John Dillon
Canada, and not just Mexico, may be in for a rough ride when it renegotiates NAFTA with the United States. A draft letter from the U.S. Trade Representative to Congress outlining renegotiation objectives, which was leaked on March 30, reveals that the U.S. agenda goes far beyond the modest tweaking implied earlier by President Trump.
When it comes to fighting climate change, however, the ride will be rougher. Trade provisions will likely continue to be a stumbling block in any efforts to curb greenhouse gas emissions.
Observers note that the U.S. has no intention of doing away with the notorious investor state dispute settlement (ISDS) provisions that allow corporations to sue governments when they deem public policies -- such as those aimed at fighting climate change -- to be a threat to their profits. Corporations, chiefly chemical and resource extraction companies, sued Canada 39 times under this mechanism, collecting more than $215 million in compensation. Ottawa will likely not push for the elimination of ISDS from NAFTA since it has agreed to a slightly modified ISDS system in the Comprehensive Economic and Trade Agreement with the European Union.
Additionally, a crucial chapter incorporated into the original Canada-U.S. Free Trade Agreement (FTA), and now part of NAFTA, has escaped notice in current debate. Chapter Six on energy gives the U.S. unfettered access to Canadian energy resources.
During the 1993 election campaign Jean Chrétien promised that a Liberal government would renegotiate both the FTA and NAFTA and abrogate both agreements unless Canada were to obtain "the same energy protection as Mexico."
A careful reading of the energy chapter in NAFTA shows that the only significant difference in the treatment of Mexico and Canada is the former's exemption from the application of the proportional sharing clause (Article 605). This provision obliges Canada, under certain circumstances, to continue exporting oil and gas to the U.S. in the same proportion as in the previous three years, even if such exports cause domestic shortages.
After Chrétien won a majority government some perfunctory talks were held with the U.S. before this campaign promise was quietly shelved allowing the proportional sharing clause to remain unchanged.
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