NAFTA becomes USMCA – what has changed for workers and the environment?

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Canada’s Foreign Affairs Minister Chrystia Freeland in Mexico City,  July 25, 2018. (AP Photo/Eduardo Verdugo)

On September 30, the  governments of Canada, the United States and Mexico  agreed on a replacement of the North American Free Trade Agreement –  the United States Mexico Canada Agreement (USMCA). Legislatures in all three countries must now consider and ratify the agreement before it is final; if that happens, it will automatically be reviewed after six years, at which time it will continue for a 16-year period, if all parties agree to that.

What has changed?   The new agreement runs to over 1800 pages, including annexes and side letters – a complexity that will take a while to digest.  For WCR readers,  the major changes of interest relate to the elimination of Chapter 11,  (Investor-State Dispute Resolution) for Canada, and a change to auto tariffs, so that, as of 2020, a car will qualify for tariff-free treatment  if 75 per cent of its contents are made in North America (an increase from the current NAFTA threshold of 62.5 per cent).

General summaries and reaction:  From  CBC News “Buried behind the cows and cars: key changes in NAFTA 2.0” ; an iPolitics article on October 3  is headlined  “Canada can claim at least partial success of progressive agenda in USMCA”  . From the Council of Canadians: “The Good, the bad and the ugly from NAFTA 2.0”   with #1 in the “good news” category: “at the request of the U.S., there will be no ISDS process between U.S. and Canada”;  also on ISDS,  “Canada cheers the end of corporate NAFTA challenges in the new deal”  (Toronto Star  Oct. 2) .  From The Conversation Canada:  “Winners and Losers in the new NAFTA”   by Atif Kubursi , Professor Emeritus of Economics, McMaster University, who states “ The most significant achievement by Canadian negotiators is their success in preserving Chapter 19 from the original NAFTA” (which covers  dispute resolution re tariffs and countervailing duties).

In the bad news category:  An Opinion from Gordon Ritchie in The Globe and Mail on Oct. 1 says “NAFTA gets a new name but little else has changed” , reflecting a cynicism that the agreement was an exercise in “branding” by President Trump.   It has been noted that Article 32.1 would make it difficult for Canada or Mexico to negotiate any separate free-trade agreements with a “non-market country,” (shorthand for  China) . And from a broader view, the New York Times on October 3, “For Canada and U.S., ‘That Relationsip is Gone’ after bitter NAFTA Talks”  and “For Canada, a Sigh of relief more than a celebration in new Nafta deal”  (Oct. 1), which chronicles the difficulties of negotiation and includes some unique reactions.

The oil and gas industry lobbied and made gains, mostly in provisions relating to Mexico (which maintains the Investor State Dispute Resolution provisions for oil and gas investment) – explained in an article in Grist  , and explained in more detail in  “Trump’s USMCA delivers big wins to drugmakers, oil companies and tech firms”  in the Washington Post.  Energy Mix  echoes the same ideas from a Canadian viewpoint in  “Fossils cheer climate absent as Canada Mexico U.S. reach new trade deal”  (Oct. 3) .

On the key issue of the Environment: The National Observer article of October 1 notes that   the agreement does not appear to contain the terms “climate change” or “global warming” in any of its chapters, annexes or side letters. The article quotes the Sierra Club in the U.S. : it  “includes weak environmental terms that have historically enabled outsourcing of pollution and jobs, fails to make any mention of climate change, and includes special handouts to oil and gas corporations. …Much of the language appears designed to greenwash the deal, not to rectify NAFTA’s threats to wildlife, ecosystems, or clean air and water.”   Sierra Club’s “Environmental Audit of the new NAFTA deal” is here .  The weaknesses of USMCA on the environmental front are explored in “Trudeau says he still wants to talk climate change and trade with Trump” in the National Observer (Oct. 1).  The Canadian government Technical Summary of the Negotiated Outcomes:  Environment Chapter   states “Climate change remains a priority for Canada, and we remain committed to addressing this issue through ongoing negotiations of a parallel environmental cooperation agreement (ECA).”

Union Reaction to the USMCA:    The Canadian Labour Congress welcomes the elimination of Chapter 11 and is “pleased to see the side agreements on labour moved into the main agreement, now subject to a state-to-state dispute resolution process.” in “Along with key gains in the USMCA, Canada’s unions raise concern” (Oct. 1) .

Similarly, Canadian Union of Public Employees posted:  “CUPE applauds the elimination of Chapter 11, the ISDS (investor-state dispute settlement) mechanism from NAFTA, which CUPE has long fought to have removed, though it is regrettable that Mexico will remain subject to ISDS provisions” in “NAFTA gets worse for Canadians under USMCA”    (Oct. 1) . CUPE continues: “it is disappointing that the agreement does not meet or even come close to the progressive benchmarks that the Liberal government set for itself on NAFTA.”

The current tariffs against Canadian steel and aluminum remain unaffected by the new USMCA, prompting the United Steelworkers to issue a press release: “NAFTA Deal a Sell-Out for Canadian Steel, Aluminum Workers” .

“United States-Mexico-Canada Agreement (USMCA) should offer more protections for workers, says OFL”  in a press release (Oct. 2) .   “ The OFL calls on the government of Ontario to work alongside their federal counterparts to ensure that the immediate removal of security tariffs on Canadian steel and aluminum are a top priority.”

In a surprisingly subdued press release on September 30, auto workers union Unifor was withholding any celebrations until further study of the language of the official agreement, according to  “USMCA framework achieves auto gains: Unifor”

Official Documents related to the USMCA:  Canada’s Office of International Trade has compiled Technical summaries of the Chapters and backgrounders at its main website in English  and in French  . The government’s overview summary is in English here  ( in French here ).  Also available,  Technnical Summaries of the Negotiated Outcomes: for  Labour ; for  Trade remedies and related dispute settlement (Chapter 19) (re countervailing duties and tariffs);  for State-to-State Dispute Settlement ; Section 232 Side Letters summary re auto industry

The full text of USMCA is (so far) available only at the  Office of the U.S. Trade Representative.  Chapter 23 on Labour is here ; Chapter 24 on the Environment is here  ; Chapter 31 on Dispute Settlement is here .

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New voices calling for climate change protections in NAFTA 2.0 – updated on May 7

NAFTA-2-0-People-or-Polluters-coverCanada’s Minister of Foreign Affairs, Chrystia Freeland, arrived in Washington on May 7 for final “make or break” talks about NAFTA, according to a CBC report.  Below, some reports reflecting concerns from Canada’s labour and climate change communities.

On April 17, the Sierra Club, the Council of Canadians, and Greenpeace Mexico released a new report, NAFTA 2.0: For People Or Polluters? A Climate Denier’s Trade Deal versus a Clean Energy Economy.   In this report, economists from the U.S., Canada, and Mexico document the obstacles to climate progress in the current North American Free Trade Agreement (NAFTA) negotiations, and propose climate, labour, and human rights protections  in line with the Paris Accord.  Canadian contributor Gordon Laxer, founder of the Parkland Institute, states:  “NAFTA’s little-known ‘proportionality’ rule locks Canada into perpetual production of climate-polluting tar sands oil and fracked gas, while giving corporate polluters a permanent green light to build tar sands oil pipelines to the U.S.” The NAFTA 2.0 report urges elimination of the proportionality rule, elimination of the investor-state dispute settlement (ISDS) tribunals under Chapter 11,  and elimination of  rules regarding regulatory cooperation that could be used to delay, weaken, or halt new climate policies, or to pressure Canada and Mexico to adopt the weaker climate standards favoured by the Trump administration.  NAFTA 2.0: For People or Polluters?  was written and researched by Dr. Frank Ackerman (Synapse Energy Economics, U.S.),  Dr. Alejandro Álvarez Béjar (Professor, National Autonomous University of Mexico), Dr. Gordon Laxer,  (Founding Director, Parkland Institute, University of Alberta, Canada), and Ben Beachy (Director of the Sierra Club’s Responsible Trade Program, U.S.). A summary appears in a Sierra Club Blog.

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Chrystia Freeland, Minister of Foreign Affairs

 

On May 2, Canada’s labour, climate, and social justice communities  sent a joint  Open Letter  to Canada’s Minister of Foreign Affairs, stating their  twelve shared principles and values on very specific NAFTA issues. They conclude: “ An alternative model of trade must be rooted in principles of equity, the primacy of human rights — including the rights of Indigenous peoples, women and girls, workers, migrants, farmers, and communities — and social and ecological justice. Furthermore, if Canada wishes to be an international champion of action on climate change, its trade policy must be compatible with its climate objectives.”  “Chrystia Freeland urged to be a climate champion at NAFTA talks” (National Observer, May 2summarizes the letter and quotes from an interview on the issue with Hassan Yussuff, President of the Canadian Labour Congress (CLC).   The CLC was one of 8 labour unions and 47  organizations to sign the Open Letter.  The others include Canadian Union of Public Employees, CWA-Canada, National Union of Public and General Employees (NUPGE), Public Service Alliance of Canada, Registered Nurses’ Association of Ontario, United Steelworkers, and Unifor amongst unions;  Climate Action Network-Canada, the Canadian Association of Physicians for the Environment, Citizens Climate Lobby Canada, Oxfam Canada, and other social justice groups.

NAFTA Getting it right Council of CanadiansThe Council of Canadians have maintained a long-standing campaign against NAFTA, especially the ISDS provisions.  Their website on the issue is here; their own guide to the NAFTA Negotiations, Getting it Right:  A People’s Guide to re-negotiating NAFTA   was published in October 2017 and agrees with the new Sierra Club report in most respects, including elimination of the ISDS, and incorporation of workers’ rights.

The Canadian Centre for Policy Analysis acts as the administrative lead  in the Trade and Investment Research Project (TIRP), a coalition of NGO and labour unions. CCPA published Canada’s Track Record Under NAFTA Chapter 11  (January 2018) which tracks the cases and penalties Canada has paid under the existing  ISDS provisions, and Renegotiating NAFTA: CCPA submission to Global Affairs Canada on the renegotiation and modernization of the North American Free Trade Agreement (July 2017).

The International Institute for Sustainable Development has published  Can Investor-State Dispute Settlement Be Good for the Environment?  which reviews the European Energy Charter Treaty as well as NAFTA; Environmental and Public Interest Considerations in NAFTA Renegotiation (November 2017); and A Wish List for an Environmentally friendly NAFTA  (April 2018) .

 

Analysis of the Canada – EU Trade Agreement

The Comprehensive Economic Trade Agreement (CETA) between the EU and Canada was announced as a “done deal” in Ottawa on September 26, despite the fact that the text had never been made public till that time.

The agreement abolishes almost all tariffs and reduces many non-tariff barriers, but most controversial is the chapter on investment protection, which includes Investor-State Dispute Settlement (ISDS) provisions. The ISDS mechanism gives foreign corporations the ability to sue Canada or a province, if the companies allege that domestic health or environmental policies and regulations interfere with their right to make a profit.

The Council of Canadians has been a vocal opponent of CETA because of these ISDS provisions and released a new book in November. Trading away Democracy (co-published by a number of other organizations, including Canadian Centre for Policy Alternatives, Canadian Union of Public Employees, European Federation of Public Service Unions, Friends of the Earth Europe).
The International Centre for Trade and Sustainable Development in Geneva has published a detailed review which includes a summary of the Environment and Labour chapters of the CETA . The article points out a departure from past trade agreements such as NAFTA: disputes under the Environment or Labour chapters cannot be initiated by civil society, but only by a government- to -government mechanism specifically defined in each chapter. See “Unpacking the EU Canada Free Trade Deal” in Bridges (Nov. 3).

Also see the Government of Canada website relating to CETA, including a link to the text of the agreement (English version / French version).