The Truth About Canada (31 page)

The softwood lumber fiasco made it clear that Americans regard the NAFTA dispute settlement process as somewhere between largely unimportant and completely irrelevant. The clear set of rules Canadians wanted when we negotiated the agreement, and the exemptions to U.S. countervailing and anti-dumping laws, were not to be had. (It’s very difficult to understand how our naive negotiators could have expected that the Americans would
ever
agree to give Canada such exemptions.) Ultimately, as before the NAFTA agreement was signed, U.S. trade laws prevail — laws which they will certainly change at any time, and in any way, they wish. As in all other bilateral Canada-U.S. trade, U.S. domestic concerns will always win out.

As a result of the American refusal to obey the softwood lumber tribunal decisions, NAFTA has become a joke, and is effectively a dead agreement. As journalist Thomas Walkom has written, “Free trade is much less than it seems; the NAFTA emperor has no clothes.”
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Bear in mind that panel after panel decided that duties on Canadian softwood should never have been imposed by the Americans. The United States should have admitted as much and should have returned all of the $5-billion in duties unfairly and incorrectly charged to and collected from us, plus interest.

The Harper government’s incomprehensible softwood surrender set an appallingly bad and dangerous precedent. Canadian lumber producers,
instead of having free trade and guaranteed access to the U.S. market, now have their exports limited and a 15 percent export tax if prices “are too low” or “exports are too high.” In signing the new “compromise best-ever agreement” (according to Stephen Harper), Canada has acknowledged that NAFTA is not only worthless for lumber companies, but
for all businesses in Canada
. Which Canadian industries will, in the future, opt to spend tens of millions of dollars in legal fees to appear before NAFTA tribunals, knowing that even if they win it will be meaningless?

When Canadians were asked, in September 2005 by the public opinion polling firm The Strategic Counsel, if Canada has been tough enough with the United States over trade, especially softwood lumber, 76 percent said we haven’t been tough enough.
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Not tough enough? We acted like a bunch of helpless wimps. Simply put, we should have told the Americans that we were going to cut off all of their Canadian supply of oil, natural gas, uranium, and electricity until they agreed to abide by the NAFTA tribunal decisions, and until they returned all of the $5-billion plus interest that they owed us. Sure, the Canadian cowards who have been managing our trade policy would quake in their boots at the suggestion that we take a strong stance with the Americans as a matter of principle, but it’s long past time we ignored these spineless individuals and their kind once and for all.

Remember, only one day after the Harper government completely surrendered, and allowed the Americans to keep $1-billion that belonged to this country, a U.S. court ordered the Bush administration to pay back
all
of the $5.3-billion collected from Canadian lumber companies. The U.S. Court of International Trade ordered the full refund because the duties were clearly illegal. But Harper and friends had already settled for only $4.3-billion, saying he was “proud of what we have achieved” and that his government stood by the deal it negotiated.

There have been millions of words written about the softwood lumber debacle over many years. The best explanation comes from Gordon Gibson, Vancouver newspaper columnist and former leader of the B.C. Liberal Party and a man with a family background in the lumber trade. He wrote that, after our huge victory in the U.S. Court of International Trade,

by summer, the duties would have been gone with the money-return order soon to be achieved.

Alas, there is also the political track. Just after the Tories won the election, they had a chance to recruit Liberal David Emerson. How to justify this? He was the softwood expert; we need him.

U.S. President George Bush soon picked up the phone and asked Prime Minister Stephen Harper if he wouldn’t like to settle softwood, fast. He called us. After five years as president, he suddenly wants to settle?

Mr. Bush had good reasons, of course. Our legal fight was going against him. We finally had the U.S. in one of their own courts — and they were losing. In addition, a Montana senator’s seat was hanging on softwood. So, let’s see if we can’t hornswoggle the Canucks.

No problem. The inexperienced Harper administration seized the chance to brag that in only a couple of months it had been able to fix an issue the Libs couldn’t solve for five years. And it would validate Emerson’s sleazy jump to the Tories. As a result, they bought a deal so loaded in favour of the Americans it was arguably worse than the one Martin had turned down earlier.

Gibson went on to explain the horrifying details of the deal:

Export taxes were to be imposed even higher than the old tariffs, and this has now been done. We were to be capped at 30 per cent of the U.S. market when the Liberals had negotiated 34 per cent. Sawmills are now closing in Eastern Canada, jobs lost in the thousands. There will be lots more.

The U.S. protectionist lobby is to be handed $500-million of our money to pay their lawyers and refill their coffers to attack us again. We will pay for our own thrashing, in a fight
we would have won had our government had the guts to stand up to the Americans.

Bad deal? Never mind. On April 27, Mr. Harper told an astonished House of Commons the issue had been settled. At that very hour, American lawyers were filing papers to restart the legal process. The U.S. lied, and we said nothing. Without that betrayal, the very next day the final NAFTA decision would have kicked in and countervail duties would have ended at once.

Continuing the political track, industry holdouts remained — so many that in desperation last week, the two governments jointly appealed to the U.S. court to dissolve everything on the basis it had never happened. We stipulated the U.S. had never done anything illegal, destroying five years’ worth of legal victories and our shield against future harassment. And yet, immediately thereafter came the “return the money” order from the CIT.

So now we have those ongoing duties and a gutted NAFTA, plus supervision of much our forest law by Washington. Kind of makes you proud to be an allegedly sovereign Canadian, doesn’t it?
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We have read with a combination of fascination, amusement, and scorn the remarkable words of former Canadian ambassadors Allan Gotlieb and Derek Burney, trade negotiator Gordon Ritchie and Senator Pat Carney, suggesting that Canada retaliate against the United States for failing to live up to the terms of the FTA. Carney called the Americans “jackboot negotiators.” Burney said what the United States was doing was “beyond the pale,” it was using “the tactic of the schoolyard bully.” For Ritchie, who was the deputy chief FTA negotiator, “when you’re dealing with a bully, and the bully punches you, you should punch him back.” The American refusal to accept the NAFTA panel’s decision is “an egregious, shocking, dishonourable breach of their obligations,” says
Ritchie. Even the continentalist Simon Reisman, original chief FTA negotiator, says, “We should certainly load the gun on retaliation.
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Hilarious, of course. No one in Ottawa, no one, has the courage to retaliate. This is what Gordon Ritchie had to say in the
Globe and Mail
about the Americans:

A senior Commerce Department official has formally declared that when the administration finally loses its cases before the free trade panels, after exhausting all reasonable (and some highly questionable) legal tricks, it will simply refuse to pay back the money illegally collected.… This is indisputably in direct contravention of the NAFTA and amounts to nothing less than a unilateral abrogation of the central provisions of the free-trade agreement.

Today, the lumber industry is the target. Tomorrow, we can expect these tactics to be applied to everything from energy to agriculture.
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Except, of course, the Americans would never do anything to interrupt the flow of oil, natural gas, electricity, and uranium from Canada. But, still, despite Ritchie’s words, Stephen Harper et al caved in and agreed to a cowardly surrender.

And what about the Liberals? While in office, International Trade Minister Jim Peterson insisted that the United States adhere to the NAFTA panel rulings; but the ultimate response from the Paul Martin government was somewhere between limp and feeble. And let’s remember that before Martin became prime minister, Jean Chrétien said NAFTA was such a bad deal he would insist that it be renegotiated, and if the Americans refused he would abrogate the agreement. He even voted against it in parliament. Then, once he became prime minister, he implemented NAFTA without amendment.

For Gordon Ritchie, the new developments were vitally important: “The American refusal to comply (with the softwood lumber decisions) tears the heart out of NAFTA.”
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He went on to say that Canada would
not have signed the NAFTA agreement if it had thought that the United States would ignore its commitments in the agreement. Moreover Canadian exporters, far from being guaranteed protection against unfair application of U.S. trade laws, are now actually in a worse legal position than exporters from non-NAFTA countries.
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Despite all of this, Thomas d’Aquino and the other brilliant continentalist leaders of the campaign for both the FTA and NAFTA have called for NAFTA to be reopened and the dispute mechanism redesigned to fit “the new realities of North American integration.” It really makes one wonder about the intelligence on display from our corporate leaders. From Day One of the FTA negotiations, many of us said repeatedly that the Americans would never surrender the right to impose countervailing, anti-dumping, or other duties when pressures from their own industries and those who write the big cheques to their congressmen are a factor. Norman Spector wrote, “On softwood lumber, Canadians are discovering that the ‘binding’ dispute resolution mechanism in NAFTA is anything but binding. That’s what many opponents of free trade argued in the 1988 election. The U.S. still insists that its domestic law trumps binational panel rulings.”
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Amazingly, for our Canadian continentalists and compradors, “deepening NAFTA” is now an urgent priority. And why would that be? The Conference Board of Canada explains that “increasingly, Canadian businesses seeking to expand into the U.S. market would rather build new facilities there than expand existing operations in Canada.”
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Clearly, those obtuse continentalists don’t understand that it was the two trade agreements that created the very environment that would encourage business in Canada to prefer to locate in the United States.

So, all in all, what were the FTA and NAFTA really all about? Tariffs were already either non-existent or minuscule, and exchange rates were far more important for trade, and everyone knew that. Cross-border flows of goods and services were steadily growing and essentially unimpeded. So, then, what were the two agreements meant to achieve? Obviously, one major corporate goal was to get governments to lower taxes: “Either you lower taxes or we move to the Southern U.S.”; or, in the United
States, “Either you lower American taxes or we move to Mexico.” And you better get rid of all those silly rules and regulations while you’re at it, or off we go to China and India. And certainly now’s the time for major privatizations and for getting rid of those antiquated laws regarding foreign ownership and control. You better understand that under free trade, the market rules. Corporations will have much more power, and in dozens of important ways the hands of the government will be tied. Great!

Murray Dobbin, reviewing
The Ursula Franklin Reader
, writes:

For almost 20 years, since the advent of the Canada-U.S. free trade agreement in 1989, federal governments have been deliberately diminishing the nation-state in line with the notion that these entities are somehow passé and must get out of the way of the new imperative: transnational corporations and the international corporations and the international institutions such as the World Trade Organization, the International Monetary Fund and the World Bank that facilitate them.

Ursula Franklin’s way of expressing this phenomenon is priceless.… She writes, “In my picture of what is going on, we are being occupied by the marketeers just as the French and Norwegians were occupied by the Germans. We have, as they did, puppet governments who run the country for the benefit of the occupiers. We have, as they did, collaborators.… We are, as they were, threatened by deliberate wilfulness by people who have only contempt for those they occupy and who see their mission to turn over our territory to their masters.”
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What is to be done? Former Foreign Minister Lloyd Axworthy has suggested that Canada should seriously consider getting out of NAFTA and relying more on the World Trade Organization. (I am not a fan of the WTO, but we would be much better off going this way.) But
how
can we
get out of the FTA and NAFTA? Well, both agreements have clauses allowing Canada, with six months’ notice, to withdraw from the agreements without penalties. Axworthy, responding in 2005 to the U.S. behaviour in defiance of all the softwood lumber rulings, wrote:

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 current that counts is the exercise of raw power.