Foreign Affairs Minister Chrystia Freeland outlined her priorities for renegotiating the trade agreement this week. But will her ideas amount to anything?
The first round of negotiations toward a new North American Free Trade Agreement starts Wednesday in Washington, D.C. Foreign Affairs Minister Chrystia Freeland laid out Canada’s priorities in a speech at the University of Ottawa earlier this week.
Besides promising to modernize the trade deal, cut red tape, ease the movement of professionals across borders, and improve government procurement, Freeland emphasized that Canada would seek to make NAFTA a “more progressive” deal.
To this government, making the deal more progressive means adding chapters on labour safeguards, the environment and climate change, gender rights, and Indigenous issues, and it means reforming investor-state dispute resolution.
“Freeland was really focusing on a new agenda, or pushing out the envelope of what’s possible,” says Laura Dawson, director of the Canada Institute at the Wilson Centre in Washington. “And I think she did that because it’s important to Canadians, and it’s important to the Trudeau government.”
“When I look at Freeland’s agenda, I say, wow, good luck with that. Trade agreements are tough, and it’s really hard to put binding commitments into trade agreements that encourage positive behaviour,” she says. “Trade agreements are much better at the ‘thou shalt not’ stuff … But we don’t really know what’s possible to achieve until you put the stuff on the table.”
So what could these new progressive chapters look like?
There is no specific chapter in NAFTA that deals with labour protections. Instead, there were non-binding side agreements for both labour and the environment.
In proposing these new chapters, Freeland said she would be guided by the Canada-EU free trade agreement (CETA), which comes into effect in late September.
CETA includes a chapter on labour that affirms principles like freedom of association and the right to collective bargaining, the elimination of forced and child labour, and the abolition of discrimination based on occupation. The ideas come from the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, which was adopted in 1998, four years after NAFTA was implemented.
Instead of being a side agreement, it appears Canada wants labour to be included in the core of the new NAFTA, and wants the provisions to be binding.
Dawson says including chapters on labour and environment will be tricky, because it imposes external obligations on domestic sovereignty.
Again, CETA may provide some guidance as to what Canada wants from the U.S. and Mexico in the new agreement.
Canada and the EU agreed to “recognise that the environment is a fundamental pillar of sustainable development,” and that “it is inappropriate to encourage trade or investment by weakening or reducing the levels of protection afforded in their environmental law.”
The deal contains protections for forestry, fishery, and aquaculture. It highlights the importance of international co-operation on environmental issues. And the signatories promise to uphold their international commitments to protect the environment and fight climate change.
But whether the Trump administration will agree to any mention of climate change in NAFTA is another matter. The U.S. withdrew from the Paris climate agreement earlier this year, and Trump has tweeted his skepticism of climate change many times.
“The idea that there will be a specific reference to climate change is just not going to happen,” says Mark Warner, an international trade lawyer. “Trump won’t negotiate it, and Congress probably wouldn’t pass it.”
But there could be a way of still getting it into the agreement. If the three countries agree to uphold their multilateral commitments, that could bind the U.S. to climate change goals, Warner says. But putting too much emphasis on climate change could backfire. “The irony is, that by making too much of a big deal out of that, you might actually force Trump to say, ‘Well, I want out of those agreements, too.’”
The Canadian government said that it was “breaking ground” in early June when it announced it had added a gender chapter to its free trade agreement with Chile (originally signed in 1997). It was a first for Canada and is the first such chapter in any G20 trade deal, according to the Liberals. Now Freeland wants a gender chapter in NAFTA too.
The new chapter in the Canada-Chile deal reads: “The Parties shall carry out cooperation activities designed to improve the capacity and conditions for women, including workers, businesswomen and entrepreneurs, to access and fully benefit from the opportunities created by this Agreement.”
(The chapter has yet to be implemented. Global Affairs Canada did not respond to questions about when the chapter would be implemented, or about Freeland’s negotiating priorities, prior to publication.)
“That was announced with great flourish, and basically there’s nothing in it,” Warner says. “There’s no binding requirement to do it. So it’s branding, in my view, on the gender part.”
Warner says the Americans “made carve-outs for their affirmative action programs that apply to black people, black Americans,” in NAFTA and in the Canada-U.S. free trade agreement, so including a chapter on gender now is “reactionary” and not new at all.
“The good thing about that is, as long as it’s not substantive, they might actually get some of it through,” he says.
Dawson says, if it’s not on the table, we won’t know could be achieved. “So why not at least have a conversation on gender? Why not talk about a broader inclusive agenda?”
Given the dearth of references to Aboriginal peoples in Canada’s current and historical trade agreements, it’s harder to guess what the Liberals might be looking for with respect to Indigenous issues.
“I would expect to see some ‘best efforts’ language in the agreement about inclusion of Indigenous persons — and when I say best efforts, that means you put language in and everybody tries their best to do this, and if we don’t, it doesn’t matter. There’s no way to enforce it,” Dawson says. “But unless you have, say, a working group that is mandated by the NAFTA to really operationalize this objective, it’s just language in text that nobody does anything about.”
Investor-state dispute resolution (ISDS) is often criticized for being skewed toward corporate interests (rather than the public’s interest) and for being too opaque in its rulings. ISDS became a sore spot in the Canada-EU negotiations, when civic groups in several European countries protested against its inclusion in CETA.
So Canada and the EU agreed to a new model, called an investor court system. The new system will have a roster of tribunal members, three of whom are picked randomly each time a dispute arises; an appeal mechanism, which ISDS doesn’t have; a commitment that Canada and the EU have the right to regulate in the public interest; and a greater focus on public accountability.
So when Freeland spoke about reforming ISDS, it is possible that she meant she’d propose this court system for NAFTA as well.
“That would be the easiest way through it,” Dawson says. “Canada and the European Union have got a bit of an evolution of ISDS that’s more inclusive, more transparent, so I think that’s what Canada’s going to put on the table. Even though Donald Trump is proposing the ripping up of the agreement, it has to be approved by Congress. And Congress at this moment is controlled by Republicans who tend to be pro-trade and who were the authors of the original ISDS. So I think Canada might have a workable compromise there. It’s going to tell the Trump supporters, ‘We changed it,’ and it’s going to reassure the Republican traders, ‘Don’t worry, we’ve still got you covered in foreign markets.”
Warner, though, thinks the court system will be a no-go with the Americans. “If people like [U.S. Trade Representative Robert] Lighthizer are concerned about the loss of American sovereignty — through having panels of judges or lawyers reviewing anti-dumping, countervailing duties, discrimination by American agencies — they’re not going to be happy with setting up a quasi-court system that does the same. It’s just not going to happen. It’s a non-starter. But I think a landing point could be the kind of changes on ISDS that were done in TPP.”
While the Trans-Pacific Partnership doesn’t have a court system, it does include similar principles to those in CETA, including a code of ethics for arbitrators, transparency provisions, and language around states’ rights to regulate.