Monday, August 22, 2005

Trading with the 'schoolyard bully' (e)

They were present at the creation. And they feel betrayed. Derek Burney, Pat Carney, Allan Gotlieb, Simon Reisman and Gordon Ritchie were key members of the negotiating team that forged the 1988 free-trade agreement between Canada and the US. Last week, the US government reneged on that agreement, and its successor, the 1993 North American free-trade agreement, by declaring that it would simply ignore the unanimous ruling of the ultimate free trade tribunal - a ruling that said the Americans had no right to impose tariffs on the import of Canadian softwood lumber. The Americans' refusal to respect the tribunal's decision represents “an egregious, shocking, dishonourable breach of their obligations,” says Ritchie, who was deputy chief negotiator during the original negotiations. “It's the tactic of the schoolyard bully,” declares Derek Burney, who was chief of staff to then-prime minister Brian Mulroney, and a key player in the talks, “which was exactly what we were trying to prevent when we negotiated the free-trade agreement . . . it's beyond the pale.” Those who were most responsible for establishing the rules that the Americans are now flouting have chosen to ignore the pleas of David Wilkins, American ambassador to Canada, who has warned Canadians of the “responsibility of keeping the rhetoric down.” Senator Pat Carney, who was trade minister at the time, believes the cause of free trade has suffered a major failure. “We will have to see now whether it unravels totally after this.” Gotlieb, who was Canada's ambassador to the US during the talks, also believes that the very foundations of the North American free-trade agreement have been undermined. “It is profound,” he argues. “There is a risk that you're putting NAFTA at risk.” If both sides agree to a dispute resolution process, and then one side flouts the rulings that come out of the process, Gotlieb argues, “then it goes to the very heart of the Grand Bargain.” He notes that the Americans insist they are not in violation, although all of those interviewed found the reasoning of Rob Portman, the US trade representative, ludicrous and incomprehensible.

Language this strong usually comes from opponents of the FTA, NAFTA and the globalization movement. That the very architects of free trade between Canada and the US should be speaking in such terms is, frankly, shocking. Even more shocking is that, to a man and woman, they believe Canada should impose retaliatory tariffs, or other restrictive measures, unless the Americans are prepared to negotiate a new softwood lumber agreement that accommodates Canadian, and not just US, concerns, even though such a move could lead to a trade war between the two countries. “I would sit them down and I would say to them, ‘All right. Enough of this. You are out of line, and you know that you are out of line,' ” says Reisman, who was chief negotiator of the original free trade pact. “Set a deadline. And if they cannot meet that deadline, and if they persist in this, then there might be no choice but to act in retaliation.”

Meanwhile, despite its inability to resolve the current softwood lumber dispute with the US, the North American Free Trade Agreement remains vital to Canada's prosperity, the majority of business leaders say in a Financial Post survey. In an online poll of senior business executives by COMPAS completed last week, more than 80% of respondents said Canada should be strongly committed to the preservation of NAFTA. Conrad Winn, COMPAS president, said Canadian business leaders remain overwhelmingly in support of the trade agreement. "They see it as essential to Canada over the long term," Winn said. He noted that the majority of respondents were staunch defenders of NAFTA, but the opinions of the vocal minority on the other side of the spectrum were just as passionate. Respondents' suggestions of how Canada should react were equally varied. Roughly three quarters of respondents were in favour of Canada strengthening its anti-terrorist efforts and boosting defence spending as a way of settling the current dispute but also as a way to improve relations in general with the US. But more than a third suggested that Canada should consider taking tough action using oil and gas as a reprisal.
(Globe and Mail 050820, National Post 050822)