Canada should invoke powerful NAFTA provision

August 11, 2005

Canadian policy-makers and pundits are predictably outraged by the United States' refusal to abide by the final NAFTA appeal ruling in favour of Canadian lumber exporters. The premiers have called on Ottawa to take all necessary measures to force Washington to respect the ruling.

Here's a measure it could take that has not yet received public attention. Canada could and should now invoke a powerful and to date unused NAFTA provision — Article 1905. This article would allow Canada to trigger a bilateral consultation process on the grounds that the U.S. is violating the Agreement. A win, which is very likely, would give Canada the right, as trade experts have told the Commons trade subcommittee, to begin to withdraw benefits that it extended to the United States under NAFTA. The most obvious candidates for the withdrawal of benefits are the investment provisions — for example, (investor-state) privileges which allow U.S. corporations to sue Canadian governments, or the benefit extended under the deal that obligates Canada to share its energy resources with the U.S. in times of shortage.

Gordon Ritchie, deputy chief negotiator of the original free trade deal, and currently appointed by the international trade minister to negotiate a settlement to the lumber dispute, wrote in his memoir Wrestling with the Elephant, that Canada would never have signed the free trade agreement without the dispute settlement system, certainly not if it thought the United States government would show such disregard for its own commitments. If Canada continues to cave in, the U.S. will continue to trample over us whenever it has an important interest to protect. We are not powerless. We do have alternatives. It is time to draw a line in the sand.

Bruce Campbell is Executive Director of the CCPA. This letter was printed in The Toronto Star on August 11, 2005.