21 April 2008

NAFTA - so who is getting screwed?

A few weeks ago, during the comedy show that is the selection process for the Democrats' nominee for the next president of the United States, both candidates were heard to say that they would renegotiate the terms of NAFTA (the North American Free Trade Association), Hillary Clinton even hinting that she would even consider withdrawing the US.

Promptly, a staff member on Barack Obama's team, privately reassured the Canadian Government that he had no intention of doing so and that Obama's public statement was merely some campaigning puff. That reassurance was then leaked by either a civil servant or by a politician. There has been denial, of course, and an enquiry instigated, but I wouldn't mind betting that the leak was ordered by the PM's office.

Hillary's team more or less admitted publicly that her words on the subject were little more than an overt plea to emotional patriotism for her own campaigning purposes.

Little notice was, in fact, taken of the matter, at least as far the Democrat nomination is concerned. When the real fight gets on, it may yet become an issue.

NAFTA is the 'free' trade system between the US, Canada and Mexico. There are certain parallels with the EEC, save that it does not have the shared political content of that benighted Colossus, and the trade is not, well, free. One similaraty is that the US is to NAFTA what France is to the EEC.

Now, Hillary either thinks she may have cottoned on to something, has made a serious miscalculation or is being duplicitous, for last week she was at it again. She is strongly hinting at withdrawal, and went out of her way to state publicly that the US is being disadvantaged by NAFTA and that Canada, in particular, is illegally obstructing the movement of goods. To some extent, this is true, as Canada has been a bit awkward of late about the import of some fruit, vegetables and dairy products. As far as other goods are concerned, Mrs Clinton seems not to realise that Canada makes little or nothing, and therefore nearly all our consumer goods come from either the US, Mexico or the Far East. It seems of little relevance to her that it was her husband who spent most of his presidency fixing it so that the US has access to every resource in Canada, at preferential prices. 20% of all oil used by the US comes from Canada.

Lumber is another case in point. For years, the US has placed an illegal tarriff on Canadian wood exports. Not content with refusing to allow milled lumber in (thus protecting the jobs of US lumber mill workers), it had, by the end of 2006, pulled in the estimated sum of $8 billion illegally collected from raw lumber exporters. Even after arbitrators and courts had got involved over a period of about 10 years, the US just ignored all rulings, supposedly binding under the NAFTA treaty. In 2006, Stephen Harper's new Conservative government put its foot down, and managed to get an agreement to have $6 billion refunded. Unfortunately, this has come too late for Canadian forestry and mill industries, for they have been all but obliterated.

Any US company or individual can set up business in Canada, more or less without restriction, and they can buy up Canadian enterprises, subject only to any question of Canada's overriding national interests. Individuals can work and live here at will, with little or no restriction. As the following article shows, things do not quite work the same in reverse:

Click to read the CBC article.

Hillary has got it wrong, whether she is being sincere or not. There are many Canadian business people now talking openly about the ill -effects of NAFTA and for whom withdrawal might be a better option. Conversely, many US jobs, manufacturers and exporters must be wondering how their protection and/or market is going to continue if Hillary were to get to the White House and carry out her threat.

For a more detailed overview of the problems for Canada and its association with NAFTA. I recommend reading David Orchard's The Fight for Canada: Four Centuries of Resistance to American Expansionism

As a politician, Orchard is a maverick and certainly not my cup of maple syrup, but on the question of free trade there is no-one more informed nor more perceptive. Both he and reviews of his book can be Googled, as can references to NAFTA. He has his own website, and an article by him about free trade can be found here:

http://www.davidorchard.com/online/2do-index.html (Select 'Articles by David Orchard' and scroll to 'How Free Trade changed us - October 1 2004')


Bearsy said...

A very interesting article, James. I shall study it in greater depth later.

It is not widely known outside of Australia, but a few years back, John Howard forced through an Australian-USA "Free Trade Agreement" which wa supposed to be modelled on NAFTA.

It is anything but free trade, giving USA companies effective control of our PBS (Pharmeceutical Benefits scheme), which means we pay more for our medicines. It also forced us to adopt American Copyright laws with their ridiculous time extensions, and many more things besides.

Our farmers and small businesses (SMCs) were meant to get easier access to the American market, with lower tariffs, but I'm sure you can guess the outcome.

The USA is an economic bully. It would be a great idea if this agreement were scrapped, too.

Bearsy said...

"SME", not "SMC". Sorry!

James Wolfe said...

I had not realised that Australia had done this with the US. Economic bully, indeed. What really bothers me is that the US public has not responded in the slightest to this bit of electioneering puff. Do they know anything about NAFTA? Or the treaty with Oz? Do they know the benefits they enjoy from it? I am afraid that it is a country which drifts along largely in ignorance of what goes on beyond its own parochial back gardens. Of 300 million or so population, I wonder if there are many more than half a million or so that understand where is where and what is what.