
So remind us again why Canada had to sign NAFTA? Council of Canadians \|\| October 22, 2005 For nearly two decades, Canadian governments have pursued ever more expansive trade agreements with the United States in hopes of establishing a "rules based" trading relationship. The result? Canada has seen its domestic policy space increasingly restricted by trade rules while still being hit with unilateral American sanctions against key Canadian exports. The softwood lumber dispute is a classic case of déjà vu all over again. In the early 1990s, Canada won successive rulings from free-trade panels against U.S. anti-dumping penalties on Canadian softwood exports. Then, as now, the U.S. government flatly refused to comply with the decisions, prominent free-trade advocates lambasted the U.S. government for its non-compliance, and U.S. diplomats tried to get Canadians to accentuate the positive by focusing on trade that is trouble free. U.S. Senator Max Baucus of Montana seems to be dusting off news releases he used in 1992 that say that, no matter what trade panels rule, Canada will never get a resolution until it negotiates changes to its softwood lumber policies. The big difference between then and now was supposed to be the implementation of NAFTA. Promoters said the deal's stronger dispute-settlement mechanisms would enable successful Canadian challenges to unilateral U.S. trade actions. They cited the permanent resolution of the softwood dispute as a prime example of what Canada stood to gain. But Canada's negotiators never got NAFTA provisions to effectively counter U.S. protectionist laws. And they acquiesced to American negotiators' demands for increased investor rights. U.S. corporations have availed themselves of NAFTA's extraordinary Chapter 11 that allows investors to directly sue governments. They have challenged a broad range of Canadian policy, including Canadian environmental laws, B.C.'s ban on water exports and, most recently, Canada's support for its domestic film industry. The current challenge by UPS has perhaps the most ominous implications. UPS is claiming that Canada Post unfairly competes by using the publicly funded side of its operations to support its courier business. A ruling against Canada in this case could be used by foreign investors to get compensation in sectors such as health and education, where subsidized public services might be ruled unfair competition to private operators. In effect, NAFTA panels can determine government policy, as was demonstrated in the Myers case. S.D. Myers, Inc. is an Ohio corporation that processes and disposes of PCB waste. It filed a claim on Oct. 30, 1998, alleging that Canada's ban on the export of PCB wastes to the U.S. in 1995 breached Canada's NAFTA obligations. The NAFTA panel acknowledged that Canada had a legitimate goal in trying to develop a domestic capacity to process toxic PCB waste. But it said Canada should have done this by subsidizing Canadian-based companies rather than preventing PCBs from being exported to a U.S.-based company. Easy enough for a panel of trade lawyers to dictate policy, since it does not have to answer to taxpayers. Article Posted at www.KnowledgeDrivenRevolution.com What governments have chosen not to do for fear of NAFTA challenges is harder to assess, but it has undeniably been a factor in many decisions. The New Brunswick government turned down the recommendation of a select committee for a public insurance scheme after it had been warned that it could be sued for expropriation under NAFTA by private insurance. Tobacco companies threatened a NAFTA suit if Ottawa brought in plain paper packaging legislation. Canada never went through with this health measure. Canada has lost two Chapter 11 cases, and paid to settle another. Mexico has also lost two. But the U.S. thus far has emerged unscathed. When panels interpret the provisions of Chapter 11 broadly, they seem to do this only in cases brought against Canada and Mexico. In one case directed at the U.S., a panel ruled against a challenge by the Canadian funeral company Loewen even though the panel agreed that Loewen had been treated with "manifest injustice" by U.S. courts. Just this month, a panel ruled against Canadian investor Methanex's challenge to California's ban on a gasoline additive. It even awarded costs to the U.S. government that were 30 per cent higher than what the U.S. had sought. In contrast, when Canada tried to restrict the use of a different gasoline additive, MMT, a Chapter 11 challenge persuaded our government to withdraw the legislation, pay compensation and issue an apology. Legal scholars had predicted that, if Methanex had won its case, American politicians would not have stood for this intrusion into U.S. sovereignty and Chapter 11 would have been finished. The Council of Canadians, the Canadian Union of Postal Workers and the Charter Committee on Poverty Issues are currently challenging the constitutionality of Chapter 11. This challenge is particularly relevant at a time when NAFTA has totally failed to resolve the softwood lumber dispute even though it is a straight-up case about trade and protectionism. In sharp contrast, the UPS Chapter 11 lawsuit highlights how Chapter 11 is being used to illegitimately challenge a broad range of domestic policy only distantly related to trade. An end to Chapter 11 would go some ways to setting right the bad bargain NAFTA has been for Canadians. About KDR \| \| Home \| \| Weekly Features Archive	Weekly Weekly Features Archive
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So remind us again why Canada had to sign NAFTA?

Council of Canadians || October 22, 2005

For nearly two decades, Canadian governments have pursued ever more expansive trade agreements with the United States in hopes of establishing a "rules based" trading relationship. The result? Canada has seen its domestic policy space increasingly restricted by trade rules while still being hit with unilateral American sanctions against key Canadian exports.

The softwood lumber dispute is a classic case of déjà vu all over again. In the early 1990s, Canada won successive rulings from free-trade panels against U.S. anti-dumping penalties on Canadian softwood exports. Then, as now, the U.S. government flatly refused to comply with the decisions, prominent free-trade advocates lambasted the U.S. government for its non-compliance, and U.S. diplomats tried to get Canadians to accentuate the positive by focusing on trade that is trouble free. U.S. Senator Max Baucus of Montana seems to be dusting off news releases he used in 1992 that say that, no matter what trade panels rule, Canada will never get a resolution until it negotiates changes to its softwood lumber policies.

The big difference between then and now was supposed to be the implementation of NAFTA. Promoters said the deal's stronger dispute-settlement mechanisms would enable successful Canadian challenges to unilateral U.S. trade actions. They cited the permanent resolution of the softwood dispute as a prime example of what Canada stood to gain.

But Canada's negotiators never got NAFTA provisions to effectively counter U.S. protectionist laws. And they acquiesced to American negotiators' demands for increased investor rights. U.S. corporations have availed themselves of NAFTA's extraordinary Chapter 11 that allows investors to directly sue governments. They have challenged a broad range of Canadian policy, including Canadian environmental laws, B.C.'s ban on water exports and, most recently, Canada's support for its domestic film industry.

The current challenge by UPS has perhaps the most ominous implications. UPS is claiming that Canada Post unfairly competes by using the publicly funded side of its operations to support its courier business. A ruling against Canada in this case could be used by foreign investors to get compensation in sectors such as health and education, where subsidized public services might be ruled unfair competition to private operators.

In effect, NAFTA panels can determine government policy, as was demonstrated in the Myers case. S.D. Myers, Inc. is an Ohio corporation that processes and disposes of PCB waste. It filed a claim on Oct. 30, 1998, alleging that Canada's ban on the export of PCB wastes to the U.S. in 1995 breached Canada's NAFTA obligations. The NAFTA panel acknowledged that Canada had a legitimate goal in trying to develop a domestic capacity to process toxic PCB waste. But it said Canada should have done this by subsidizing Canadian-based companies rather than preventing PCBs from being exported to a U.S.-based company. Easy enough for a panel of trade lawyers to dictate policy, since it does not have to answer to taxpayers.

Article Posted at www.KnowledgeDrivenRevolution.com

What governments have chosen not to do for fear of NAFTA challenges is harder to assess, but it has undeniably been a factor in many decisions.

The New Brunswick government turned down the recommendation of a select committee for a public insurance scheme after it had been warned that it could be sued for expropriation under NAFTA by private insurance. Tobacco companies threatened a NAFTA suit if Ottawa brought in plain paper packaging legislation. Canada never went through with this health measure.

Canada has lost two Chapter 11 cases, and paid to settle another. Mexico has also lost two. But the U.S. thus far has emerged unscathed. When panels interpret the provisions of Chapter 11 broadly, they seem to do this only in cases brought against Canada and Mexico.

In one case directed at the U.S., a panel ruled against a challenge by the Canadian funeral company Loewen even though the panel agreed that Loewen had been treated with "manifest injustice" by U.S. courts. Just this month, a panel ruled against Canadian investor Methanex's challenge to California's ban on a gasoline additive. It even awarded costs to the U.S. government that were 30 per cent higher than what the U.S. had sought.

In contrast, when Canada tried to restrict the use of a different gasoline additive, MMT, a Chapter 11 challenge persuaded our government to withdraw the legislation, pay compensation and issue an apology.

Legal scholars had predicted that, if Methanex had won its case, American politicians would not have stood for this intrusion into U.S. sovereignty and Chapter 11 would have been finished.

The Council of Canadians, the Canadian Union of Postal Workers and the Charter Committee on Poverty Issues are currently challenging the constitutionality of Chapter 11. This challenge is particularly relevant at a time when NAFTA has totally failed to resolve the softwood lumber dispute even though it is a straight-up case about trade and protectionism.

In sharp contrast, the UPS Chapter 11 lawsuit highlights how Chapter 11 is being used to illegitimately challenge a broad range of domestic policy only distantly related to trade. An end to Chapter 11 would go some ways to setting right the bad bargain NAFTA has been for Canadians.

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