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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Wind energy continues to grow in the U.S.; Solar energy weathers Trump’s tariffs

Aerial view of the National Wind Technology Center; wind turbinesWind power capacity has tripled across the United States in just the last decade as prices have plunged and the technology has improved, according to new reports released by the U.S. Department of Energy at the end of August.  Three reports are summarized in a press release on August 23 , and in “U.S. Wind Power Is ‘Going All Out’ with Bigger Tech, Falling Prices, Reports Show” by Inside Climate News . The full reports are: 2017 Offshore Wind Technologies Market Update  August 2018 ; 2017 Wind Technologies Market Report  ; and 2017 Distributed Wind Market Report  .

How Much Damage are Trump’s Solar Tariffs Doing to the U.S. Industry?” (Aug. 20) in Inside Climate News concludes that the tariffs have had a dampening effect on the industry, but less than expected.  The  Solar Energy Industries Association (SEIA), using confidential information provided by the companies which are its members, estimates that 9,000 jobs have been affected to date – either by layoffs or prospective jobs that were cancelled. Their initial forecast in January 2018 had been that tariff-related job losses could reach about 23,000 for 2018.  The Solar Foundation reported in February 2018 in its annual Solar Jobs Census that 250,271 Americans worked in solar as of 2017, although the number of workers had declined in 2017 for the first time since 2010.  That trend will surely turn around by 2020 when the new regulations in California take effect, requiring solar panels on almost all new homes.

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) .

 

Kinder Morgan Trans Mountain pipeline ignites a trade war between Alberta and British Columbia

trudeau-notley-20161129Pipeline politics have ignited a trade war between the governments of Alberta and British Columbia – both led by NDP Premiers  – with the Prime Minister clearly siding with Alberta and the construction of the Kinder Morgan Trans Mountain pipeline, as recently as February 1 .  The latest episode in the longstanding interprovincial feud was triggered on January 30,  when the B.C. government announced the formation of an independent scientific advisory panel to determine whether diluted bitumen can be effectively cleaned up after being spilled in water, and  “Until that committee reports, the government will impose a regulation prohibiting any expansion, either by pipeline or rail, of heavy oil sands crude.”  Details are in “B.C. announces oil transportation restrictions that could affect Kinder Morgan”  in the National Observer (Jan. 30); “B.C.’s Action on Bitumen Spills ‘Finds Kinder Morgan’s Achilles’ Heel’ (Feb. 5).

Alberta’s reaction was strong. First, in what Toronto’s Globe and Mail described as a “spat” on February 1:  “Alberta suspends electricity talks with B.C. over pipeline fight“. In a few days, The Energy Mix wrote ” Sour Grapes: Alberta to stop importing B.C. wine over Kinder Morgan feud” (Feb. 6) and  “Alberta Declares Boycott of B.C. Wine in Escalating Kinder Morgan Dispute” (Feb. 7 ) . CBC News reports reveal the escalating emotions: “The Alberta vs. B.C. pipeline fight. Now it’s war.” (Feb. 3) and “Weaponizing wine: Notley’s engineering a federal crisis in her battle with B.C.” and  “Oil, water and wine: “Escalating Alberta-B.C. feud threatens future of Trans Mountain pipeline” (Feb. 7); DeSmog Canada wrote “This might get Nasty: Why the Kinder Morgan standoff between Alberta and B.C. is a Zero-Sum Game” (Feb. 2). On February 9, Alberta’s Premier announced “a task force of prominent Canadians to respond to B.C.’s unconstitutional attack on the Trans Mountain Pipeline and the jobs that go with it”. The Market Access Task Force is loaded with government representatives and oil industry executives.

If you only have time to read one article about this dispute, read the analysis of Alberta’s Parkland Institute, in Let’s share actual facts about the Trans Mountain Pipeline. The three claims being made by the Alberta government are: 1. the  pipeline would generate $18.5 billion for “roads, schools, and hospitals”;  2.  it would create 15,000 jobs during construction, and 3. it would create 37,000 jobs per year. With deep expertise in the oil and gas industry, Parkland explains how these numbers were derived and why they are mostly outdated and selective.

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Protests against Kinder Morgan will continue in B.C., with the Tsleil-Waututh First Nation  calling for a mass demonstration on Burnaby Mountain in March. – see the CBC summary here.

Stepping back,  see Andrea Harden-Donahue‘s January 24  blog for the Council of Canadians, “#StopKM: State of Resistance” , which details past resistance and demonstrations against KM,  and states that “the Pull Together campaign recently reached the fundraising target of $625,000 towards Indigenous legal challenges.” For a view of the legal issues and lawsuits (including First Nations’) in this longstanding fight, see a West Coast Environmental Law blog published on January 17, before this war erupted: “Whose (pipe)line is it anyway? Adventures in jurisdictional wonderland “.

 

Trump’s solar tariffs may impact solar jobs worldwide

solar installers on roofDonald Trump’s decision to impose tariffs on solar panels and washing machines on January 23  was roundly criticized on many grounds – most frequently, the impact on jobs in the solar industry, as stated in the  New York Times Editorial on January 23 ,“Mr. Trump’s Tariffs will not bring back manufacturing jobs”.   The Times supported their opinion with several articles, including  “Trump’s Solar Tariffs are clouding the industry’s future” (Jan. 23) , which states: “Far more workers are employed in areas that underpin the use of solar technology, such as making steel racks that angle the panels toward the sun. And the bulk of workers in the solar industry install and maintain the projects, a process that is labor-intensive and hard to automate.” The Solar Energy Industries Association in the U.S. response is here, and their Fact Sheet (Feb. 2)  explains the terms and impact of the decision. The Solar Foundation released its 8th annual Jobs Census on February 7, revealing the first-ever year of decline in the number of jobs, but still a census of over 250,000 workers.    For a thorough overview, see the Fact Checker article by the Washington Post,  “Trump says solar tariff will create ‘a lot of jobs.’ But it could wipe out many more” (Jan. 29).

Three Canadian solar companies immediately filed a suit against the tariffs in the U.S. Court of International Trade, arguing that they violate NAFTA. The EU, China, South Korea, and Taiwan have also filed complaints at the World Trade Organization.  For a deeper look at the possible implications for other countries, including Canada, consider the complexity of global trade:  From an excellent overview in  The Energy Mix: “Trump Solar Tariff may be opening salvo in trade war”: “Although China appeared to be Trump’s intended target, the tariff on solar cells and panels will mostly hit workers in other countries. Thanks to dispersed supply chains—and partly in response to previous U.S. tariffs—solar photovoltaic manufacturing is a global industry. Malaysia, South Korea, and Vietnam all hold a larger share of the U.S. market than China does directly. And all are entitled to seek remedies under various trade agreements.”   The Energy Mix item refers to “U.S. tariffs aimed at China and South Korea hit targets worldwide”    in the New York Times (Jan. 23), which adds:  “Suniva, one of the American solar companies that had sought the tariffs, filed for bankruptcy protection last year, citing the effects of Chinese imports. But the majority owner of Suniva is itself Chinese, and the company’s American bankruptcy trustee supported the trade litigation over the objections of the Chinese owners.” From Reuters,  “Why the US decision on solar panels could hit Europe and Asia hard”  states that Goldman Sachs estimated that the tariffs implied “a 3-7 percent cost increase for utility-scale and residential solar costs, respectively …. Two key exclusions with respect to technology and certain countries (Canada/Singapore, among others) were included as part of the (initial) recommendation.” Canadian Solar , founded in Canada but a multinational traded on NASDAQ,  is one the world’s biggest panel manufacturers.

For an overview of the current state of the U.S. renewable energy markets and labour force, including solar, see  In Demand: Clean Energy, Sustainability and the new American Workforce  (Jan. 2018) , co-authored by Environmental Defense Fund (EDF) and Meister Consultants Group.  Highlights:  there are  4 million clean energy jobs in the U.S., with wind and solar energy jobs outnumbering  coal and gas jobs in 30 states.  Quoting the IRENA Renewable Energy and Jobs Annual Review for 2017 ,  the In Demand report states that: “The solar industry grew 24.5 percent to employ 260,000 workers, adding jobs at nearly 17 times the rate of the overall economy in 2016.”  The coal industry employs 160,000 workers in the U.S.  In Demand  compiles statistics from the U.S. Department of Energy, International Energy Agency, International Renewable Energy Agency (IRENA) and many others, about current and projected clean energy markets and employment in the U.S.: renewable energy, energy efficiency, alternative vehicles, and energy storage and advanced grid sectors.