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Winnipeg Free Press, Friday, August 26th, 2005

All show and no go on NAFTA

by Frances Russell

DON'T blame the Americans for their refusal to respect Canada's latest -- and penultimate -- softwood lumber victory under the North American Free Trade Agreement.

Blame the Canadians, especially former prime minister Brian Mulroney and his Canada-U.S. Free Trade Agreement negotiators, the very same people that are now screaming betrayal.

And don't trust the Liberal government. Its bluster is all show and no go.

Last week, Mr. Mulroney's free trade negotiators -- Derek Burney, Pat Carney, Allan Gotleib, Simon Reisman and Gordon Ritchie -- fulminated against the Americans' cavalier rejection of the NAFTA extraordinary challenges panel.

"Schoolyard bully," snapped Mr. Burney, Mr. Mulroney's chief of staff. "Jackboot negotiators," seethed Ms. Carney, Mr. Mulroney's international trade minister. "When you're dealing with a bully, and the bully punches you, you should punch him back," fumed Mr. Ritchie, the deputy chief free trade negotiator.

Brian Mulroney promised Canadians "secure access" to the U.S. market. Loss of sovereignty warnings were "lies."

The lie is that secure access never existed. Since 1989, Canada has been ruled extra-territorially by American trade law.

Technically, the trade negotiators and the Liberals are right -- the U.S. is acting illegally by rejecting the panel decision. But what neither admits is that under FTA/NAFTA, the U.S. merely had to amend its trade law to keep doing what it's doing legally.

The Bush administration knows it can act illegally because Canada won't bail out of NAFTA -- ever.

Now that the secure access lie is outed, Canada's most dedicated and articulate FTA/NAFTA opponents are urging Canadians to abrogate it and return to trading with the U.S. under international trade law.

"Chasing the utopian dream of secure access to the U.S. economy has devastated our livestock industry, led to almost total U.S. ownership of our meat-packing capacity and to repeated U.S. trade challenges and unprecedented tariffs on our grain and lumber, seen close to 20,000 Canadian companies (including the ownership of entire industries) move into U.S. hands in the last two decades and left us holding a bag of ashes instead of reaping the rewards of our abundant energy supplies," David Orchard writes in an article carried by several CanWest Global newspapers last week.

While the U.S. Congress legislates to ensure not one of its oil companies falls into foreign hands and countries around the world scramble to secure scarce energy supplies, "Canadians are treated to an ongoing mantra about how we should be pleased that foreigners are buying up our energy industry and reserves," Mr. Orchard continues.

The Canadian government divested us of PetroCanada at firesale prices. Shares now trading at $100 went first for $10, then $13, $20 and last fall, $64.50.

A Texas company has just bought Terasen Inc., B.C.'s largest natural gas distributor and western Canada's biggest private-sector provider of water services. "All of Terasen's pipelines, refineries, oil, gas and water operations are included in the deal, essentially stripping B.C. of domestic control of its energy supplies," the Saskatchewan farmer and former Progressive Conservative leadership contender writes.

In a second article published this week in the Free Press, Mr. Orchard and retired senior federal trade negotiator Mel Clark say "Canada does not have to give up ownership of its forests, its industries, its institutions" to end U.S. trade harassment.

"Canada can, with six months notice, withdraw from these agreements without penalty and without conditions." Canada would then revert to genuine rules-based trade with the U.S. under the global trade law of the General Agreement on Tarrifs and Trade, now the World Trade Organization.

Under GATT/WTO and prior to the Mulroney government, "the U.S. was never able to levy a countervailing or anti-dumping duty on our exports of lumber," Mr. Clark and Mr. Orchard write.

"During those four decades, Canada traded profitably, our standard of living rose, Canada won almost all its trade disputes with the U.S. -- and Washington abided by the rulings."

NAFTA's "essence cedes vital government powers to the U.S. and the private sector that were used to build an independent Canada." Rather than give Canada secure U.S. market access, FTA/NAFTA "unleashed the full force of U.S. protectionism" against us.

By abrogating it and returning to GATT/WTO, Canada would recover the $5 billion in illegal U.S. lumber tariffs and halt U.S. agribusiness's ongoing efforts to abolish the Canadian Wheat Board and seize control of Canada's grain trade.

More importantly, Mr. Clark and Mr. Orchard say, "all of the intolerable NAFTA rights U.S. companies now have over Canada -- to sue the Canadian government, to overturn Canadian laws, to control our exports and energy prices -- would disappear. Canada would regain its status as an independent nation."

It won't happen. The anti-American rhetoric of the Mulroney trade team and the Liberal cabinet is cynical politics. Deep Integration continues apace.

Frances Russell is a senior national affairs columnist for the Winnipeg Free Press.

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