My assessment of the Canada-US-Mexico Agreement

Updated: Feb 8



CUSMA is not a perfect agreement.


As parliamentarians we are being asked to choose between the original version of NAFTA and this updated version - CUSMA. The original NAFTA successfully created an integrated supply chain that benefited businesses and entrepreneurs. Unfortunately, there were many flaws in the agreement that created and accelerated inequality.  


For more than a decade, the Green Party has called for the re-negotiation of NAFTA and the removal of problematic components. In our view, the worst part of the original agreement was the Investor State Dispute Settlement mechanisms and the proportionality clause, both of which have been removed from CUSMA. 


Investor State


The Investor State provisions in NAFTA allowed foreign corporations to seek financial compensation from taxpayers through private arbitration tribunals, when laws and regulations got in the way of their profits. Canada is the most sued country under these NAFTA Investor State rules and taxpayers have paid hundreds of millions of dollars to US companies. But, no Canadian company has ever successfully won compensation from the US government.


For more than ten years I have worked to raise awareness about the serious problems created by Investor State provisions in our trade agreements. These provisions are anti-democratic, and they obstruct good public policy and environmental protections -- including action on climate change. I’m happy to see Investor State removed from CUSMA. This is a win. I would like to see Investor State Dispute Settlement provisions removed from all of the trade agreements and investment treaties that Canada has signed. And, they should be excluded from any new agreements. 


The Proportionality Clause


NAFTA’s proportionality clause required Canada to export the same proportion of energy that it had on average in the previous three years, even in an energy crisis. Mexico did not agree to the inclusion of this clause. Canada, the coldest NAFTA country, signed away too much control of its energy sector. Fortunately, the proportionality clause was removed from CUSMA. This is also a win. 

The continued exemption of bulk water exports is encouraging. And the Canadian cultural exemption remains intact. These are wins too. 


Labour Standards


I believe in fair and equitable trade that does not exploit lower labour, health, safety or environmental standards in other countries, or result in the lowering of standards in Canada. Done right, trade can be an effective way to improve conditions for people and the planet, rather than creating a race to the bottom.


Free-trade agreements have allowed corporations to exploit lower wages and standards in other countries. Under the NAFTA agreement, many jobs in Canada were moved to Mexico for this reason. This hollowed out Canada’s manufacturing and textile sectors and led to the loss of hundreds of thousands of good paying jobs here. When NAFTA was negotiated and signed Canadians were promised that it would increase prosperity. In reality NAFTA increased the wealth of the rich, at the expense of working Canadians whose wages have stagnated.


As an international human rights observer in the 1990s, I accompanied labour activists who were trying to organize workers in Guatemalan sweatshops, which produced low cost goods for the North American market. The simple act of trying to create a union led to intimidation, violence, dissappearances and murder. This was not how international trade should work.

I am pleased that the CUSMA agreement creates stricter enforcement of labour standards in Mexico. It guarantees Mexican workers the rights of freedom of association and collective bargaining, and will help to strengthen the labour movement there. The agreement includes a rapid response mechanism for labour violations. 


These labour standards were strengthened in the improved version of the agreement thanks to a push by Democrats in the United States who were not happy with the lack of proper labour standards or enforcement in the first signed version of CUSMA.


Drug Patents


The US Democrats also managed to roll back the patent extensions on biologic drugs proposed in the first version of the CUSMA agreement. This change will save Canadian consumers money and make it more affordable to create a Universal Pharmacare program in Canada. 


Thankfully the Canadian parliament did not rush ratification of the first signed version of this agreement so we can all benefit from these important changes made by the US Democrats.


Rules of Origin


Another area of improvement are the rules of origin. Higher levels of North American content are now required before goods can be certified as made in North America. There is a new 70% North American steel and aluminum requirement for automobiles but while the steel content requirement guarantees that steel must be produced in North America there is not an equal requirement for aluminum. This is something that should have been included in the agreement.  


Supply Management


Our supply management system for dairy and poultry farmers will remain intact, but one of the drawbacks to the new agreement is that it will allow imports of dairy products from the US. This will undermine the economic viability of Canadian farms and will require compensation to farmers. In addition, many dairy products in the US contain a genetically modified bovine growth hormone called rBGH which is banned in Canada. We need legislation in place to ensure that US products containing rBGH are either labelled or blocked from entering this country. 


Environment and Climate Change


The CUSMA agreement makes some progress on environmental protections. Countries are committed to meet their obligations on a number of multilateral environmental treaties they have signed. These agreements are all enforceable. 


What CUSMA is missing is any mention of climate change and any obligation for the three CUSMA countries to uphold their commitments under the climate accords. While the climate change targets established in Paris are binding there are no enforcement mechanisms or penalties for countries that do not live up to their commitments.


Increasing trade in goods will accelerate climate change. One of the best ways to combat climate change is to localize our economies as much as possible. This is especially true of agricultural products. Redundant trade such as importing products that can easily be produced locally does not make sense.


Other Concerns With CUSMA


The agreement fails to address the decades-long softwood lumber dispute between Canada and the United States. Getting a proper agreement on softwood is critical to the health of the Canadian forest industry.


The good regulatory practices chapter is concerning. Who decides what good regulatory practices are? Will this process involve only business and government or will civil society organizations representing labour, consumers and the environment be involved? 

The extension of copyright from 50 years after an author's death to 75 years is an unnecessary change. 


CUSMA does not mandate, or even promote, UNDRIP informed decision-making. This is concerning, given our government's stated commitment to implement UNDRIP. How will this impact First Nations if US corporations are not held to the same standards as domestic corporations? This question is particularly pressing when it comes to fossil fuel projects.


In the 1990's I did a lot of solidarity work with indigenous people in Chiapas, Mexico. I was a human rights observer in several small rural villages in in 1999. The Zapatista uprising was a direct result of Mexico signing NAFTA. The trade agreement was a direct threat to the collective land rights of indigenous people. I am still concerned about the affect that these trade agreements, including CUSMA, have on the rights of indigenous people.


CUSMA also fails to adequately address gender equity, which is disappointing because the government promised a chapter addressing equity issues.


More Transparency is Needed


It’s ironic to hear the Conservatives complaining about not having enough access during the negotiation process and having to study an agreement that is a done deal. This really speaks to the lack of a clear and transparent process for negotiating trade agreements.

The process for negotiating CUSMA included briefings for an expanded group of stakeholders going beyond just the business organizations and corporations that were consulted in past negotiations. That’s an improvement but there is still work to do to make the trade agreement negotiation process more transparent. It is unacceptable that Canadians, and the parliamentarians who represent them, can only get involved in a debate about the merits of a trade agreement once it has been completed and signed.

Both the Liberals and Conservatives have complained about the secretive nature of the negotiation process while they were in opposition. The Green Party believes that we should be following the European Union model for trade negotiations. We should have an open transparent discussion and debate about Canada’s objectives before negotiations start. That debate should continue during and after negotiations are concluded.  There should also be a socio-economic analysis of the potential impacts and benefits of a new trade agreement that is made available to all Canadians. 


Conclusion


Trade affects all aspects of the lives of Canadians. Trade can build bridges between cultures and nations or it can lead to a race to the bottom, increasing inequality and conflict.


For years I have spoken out loudly against the corporate free-trade model, so people who know me might wonder why I intend to support the CUSMA agreement. This is not a perfect agreement. The negotiation process is flawed. We can and should do better. But this is a choice between retaining the old deeply-flawed version of NAFTA or ratifying this new improved version. In this case, I believe a step forward is preferable to the status quo.

Copyright © 2019 Paul Manly. All rights reserved.

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