NAFTA: Chapter 6 - Climate Change & Energy

NAFTA: Chapter 6 - Climate Change & Energy

Postby Oscar » Fri Apr 21, 2017 10:22 am

NAFTA Renegotiations Must Be Done Through The Lens Of Climate Change

[ http://www.huffingtonpost.ca/developmen ... 27946.html ]

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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Re: NAFTA: Chapter 6 - Climate Change & Energy

Postby Oscar » Sat Apr 22, 2017 9:21 am

What was behind Trump's comment on NAFTA and energy?

[ https://canadians.org/blog/what-was-beh ... and-energy ]

April 22, 2017 - 10:07 am

There is wide-ranging speculation on the implications of US President Donald Trump's recent comments about Canadian energy exports and the upcoming renegotiation of the North American Free Trade Agreement (NAFTA).

On Thursday (April 20), Trump said, "I was in Wisconsin the other day, and I want to end, and add, by saying that Canada, what they've done to our dairy farm workers is a disgrace. It's a disgrace. We can't let Canada or anybody else take advantage and do what they did to our workers and to our farmers. And again I want to also just mention: included in there is lumber, timber and energy."

The Globe and Mail now reports, "Neither Canada’s government nor oil industry have any idea what U.S. President Donald Trump was talking about when he warned that the U.S. will target Canada’s energy sector in renegotiations of the North American free-trade agreement. Finance Minister Bill Morneau, in Washington at the International Monetary Fund and World Bank spring meetings, said he could not think of any energy-related trade disputes between the two countries."

A border adjustment tax?

That article adds, "Mr. Trump did not specify what he was aiming to do. He has previously presented himself as a friend to Canada’s oil and gas sector, restarting the Keystone XL pipeline project blocked by Barack Obama. The President is planning to unveil his tax plan next week [on April 26], which some economists have speculated could include a tax on foreign oil imports."

According to the US Energy Information Administration, the US imported 3.76 million barrels of oil a day from Canada in 2015. Last month, the US Department of Energy said the United States posted a $39 billion energy-trade deficit with Canada due to imports of oil, natural gas and electricity.

An American border adjustment tax on energy exports from Canada would be a clear violation of NAFTA.

Proportional sharing clause for Mexico?

The article further speculates, "The United States is heavily dependent on Canada for oil and gas because it does not produce enough to meet demand. A more likely target for NAFTA negotiations is Mexico’s energy sector, which has historically been the subject of government monopolies but has been opened up to private investment since 2013. One Canadian official, speaking on condition of anonymity, said bringing Mexican oil and gas under NAFTA would be an attractive prospect in trade talks."

This could suggest that Trump may seek to have NAFTA's proportional sharing provision apply to Mexico as well. That provision basically says that Canada must maintain at least the same level of oil and gas exports to the United States as it had supplied for the past thirty-six months. Author-activist Gordon Laxer has commented, "Proportionality, the de facto, mandatory-exporting clause applies only to Canada, since Mexico refused it."

In December 2013, Mexico ended 75 years of government control of its oil reserves when it passed an energy reform law that allows transnational corporations to explore and extract oil and gas. That reform is expected to attract as much as $15 billion of foreign investment annually and increase oil production to as much as 4 million barrels per day by 2025 and double natural gas production.

Timelines

Speculation has suggested that NAFTA negotiations could begin this summer or fall.

Former diplomat Colin Robertson has stated, “At the earliest I think the renegotiation - with or without Mexico - will take at least a year, probably 19 months. After that we have to go for ratification, which adds on another year plus. My guess is that NAFTA, or whatever we call it, doesn’t get wrapped up until spring or summer 2019, meaning it will be front and centre in our October 2019 election."

Mexico's economy minister Ildefonso Guajardo sees a shorter time frame. He believes talks could start in late July and be concluded in April 2018. That may be because a general election will take place in Mexico in July 2018 and the early front-runner to be the next president of Mexico is Andres Manuel Lopez Obrador, a vocal opponent of Trump. He has stated, "[NAFTA] didn’t hurt, but it wasn’t the panacea", suggesting he would be willing to walk away from the deal during the negotiation process.

To demand public consultations on NAFTA -- and the removal of the proportional sharing clause from NAFTA -- please click here:
[ https://secure.canadians.org/ea-action/ ... n.id=63184 ]



Brent Patterson's blog
Political Director of the Council of Canadians
[ https://canadians.org/blogs/brent-patterson ]
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