Meet the New NAFTA, Same as the Old NAFTA?

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Meet the New NAFTA, Same as the Old NAFTA?

Sign from a NAFTA protest on January 1, 2012. (Photo: Billie Greenwood/Flickr)

During his presidential campaign, Donald Trump called for protection of jobs. Did he mean tariffs or other measures to keep employment in the United States? Or was he talking about stronger labor protection, such as the right to organize? The renegotiations of the North American Free Trade Agreement between Canada, the U.S. and Mexico, which began August 16, mean the cards will soon be on the table.

Given that many of the new proposed provisions lack specific language and effective enforcement mechanisms to protect labor rights and the environment, critics say, the new NAFTA risks being much the same as the old NAFTA.

One party that would seem to have strong incentive to alter the existing NAFTA agreement is Canada. As of 2015, the government had been sued thirty-nine times under the existing investor-state dispute mechanisms, which allows companies to sue governments for alleged trade discrimination. Canada has had to pay out some $215 million.

Given that many of the new proposed provisions lack specific language and effective enforcement mechanisms to protect labor rights and the environment, critics say, the new NAFTA risks being much the same as the old NAFTA.

Two days prior to the reopening of the negotiations, Canada’s Minister of Foreign Affairs, Chrystia Freeland, gave a speech in which she extolled NAFTA but also called for changes to the controversial investor-state dispute settlement mechanism in particular.  

“Canada’s economy is 2.5 percent larger every year than it otherwise would be, thanks to NAFTA,” she said. She also called for “reforming the Investor-State Dispute Settlement process, to ensure that governments have an unassailable right to regulate in the public interest,” along with strengthened labor and environmental protections at the core of NAFTA.

The Trump Administration’s negotiating objectives, meanwhile, are similar to those in the failed Trans-Pacific Partnership negotiations. They call for bringing what had been side agreements into the core provisions, including recognition of the right to collective bargaining, protection from forced labor and child labor, and laws governing acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.

The problem, critics say, comes when you examine the specifics closely. Sujata Dey, trade campaigner for the Council of Canadians, explains that the text of the TPP includes language that looks “really nice . . . but doesn’t say what standards are.” So if you are a right to work state with no minimum wage, he tells The Progressive, “that’s your standard, you can keep it.”

Ben Beachy, director of the trade program at the Sierra Club, concurs, explaining in an interview that the standards were essentially lifted from recent free trade agreements with Latin America, where they have failed to protect either workers or the environment.

“The Trump Administration's negotiating objectives indicate that they want to just copy and paste the weak labor and environmental provisions of the TPP and other past deals, which have consistently failed to curb blatant labor and environmental abuses,” Beachy says. For example, he points to a provision in the TPP that governments “should protect sharks,” but no guarantee that they actually shall, making it a suggestion that is not legally binding. Beachy argues that the problem lies in the way such agreements are negotiated. When language is written in private with corporate input, it fails to include much actual protection.

To make matters worse, enforcement is weak or nonexistent in the free trade agreements that appear to be the basis for negotiating NAFTA 2.0. Only governments, not environmental or labor groups, have been able to bring complaints about abuses. And no government has actually brought a complaint against another country for violation of environmental rights under any U.S. free trade agreement, Beachy notes.

There’s also an ongoing problem with enforcement. For example, environmental groups have repeatedly asked the U.S. government to bring a case against Peru for illegal logging, but the practice continues. The United States did register a complaint regarding labor abuses in Guatemala, but after nine years that case failed to bring an actual conviction.

The environment is particularly at risk. The Trump Administration has taken steps to reverse a host of Obama-era decisions aimed at combating climate change and promoting better clean air standards and protection of wildlands. New trade provisions proposed by the administration call for the revised agreement to “preserve and strengthen investment, market access, and state-owned enterprise disciplines benefitting energy production and transmission and support North American energy security and independence, while promoting continuing energy market-opening reforms.”

This allows oil and gas to be freely exported between the three NAFTA countries, regardless of attempts to protect the planet from global warming gases under the Paris agreement (which Canada and Mexico are committed to, but the United States is in the midst of abandoning).

Beachy believes such provisions will open up further fracking, offshore drilling, and exploitation of tar sands oil, which Dey describes in her book as “the most dangerous, polluting energy in the world.” Beachy adds, “We cannot afford trade deals to be tools of climate denial, but that is exactly what the Trump Administration is doing.”

While inadequate protections for labor and environmental rights may be allowed to stand, under NAFTA 2.0 corporations will likely retain the right to sue governments using the controversial investor-state dispute mechanism.  

Haley Sweetland Edwards, a staff writer for Time magazine, says in her book, Shadow Courts: The Tribunals that Rule Global Trade, that this mechanism was created to prevent governments from physically appropriating a company’s property overseas. But in recent years, she argues in the book, clever lawyers began using it to challenge labor, environmental, and tax policies. Haley documents the alteration of investor-state dispute mechanisms at length, which shows how government policies became accountable to the investor-state dispute tribunal, which she describes as “a small group of three corporate lawyers making decisions largely in secret.”  

The Council of Canadians argues for complete elimination of investor-state dispute mechanisms, but some method of dealing with disputes between corporations and governments is needed. The problem, activists say, is that the current method is secretive, relies on courts biased toward corporations, takes away local and national sovereignty, and cannot be challenged.

One moderate alternative to the investor-state dispute mechanism was adopted in the Comprehensive Economic and Trade Agreement (CETA), Europe’s new trade pact with Canada. The “Investment Court System” creates “a court-like structure . . . to more explicitly safeguard a government’s right to regulate.” The CETA agreement also includes a permanent tribunal with open proceedings as well as language designed to protect the sovereign rights of government to regulate public health, environmental protection, and labor rights, among other measures.

But Dey describes the CETA provisions as “a few little cosmetic changes, while fundamental problems remain.” She explains that it will still cost “$4 million to defend each case,” putting a potential chill on aggressive environmental regulation. Furthermore, decisions will still be made by “corporate lawyers, not lawyers looking at the environment,” or human rights, but “solely at investment legislation.” Dey adds that several countries have refused any system resembling the investor-state dispute mechanism, including Brazil, Ecuador and India.  

Regardless, NAFTA 2.0 is unlikely to throw out the mechanism as we have known it, or even entertain the European alternative. And despite calls for transparency, Beachy explains that the negotiations will be held in secret.  

“We know what closed-door negotiations produce,” he says. “We have seen time and again how corporations hijack the process.”

Ethan Goffman

Ethan Goffman is associate editor of Sustainability: Science, Practice, & Policy. His publications have appeared in E: The Environmental Magazine, Grist, and elsewhere.

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