Trade Compliance

GHY discusses changes to international trade regulations and explores cutting-edge compliance strategies.

Freeland Shares Key Objectives Canada Will Be Seeking in a Modernized NAFTA

Posted August 14, 2017

Speaking this morning (text and video) at the University of Ottawa’s Centre of International Policy Studies and a few hours later in testimony before the House of Commons Standing Committee on International Trade, Foreign Affairs Minister Chrystia Freeland sketched out the broad outlines of Ottawa’s key priorities for renegotiation of the North American Free Trade Agreement.

Stressing the historical trade ties between Canada and the United States that date back to the earliest days of both countries and a longstanding national approach that views trade as more than just a “zero-sum game” but one that is “about creating the best possible conditions for growth, for jobs, for prosperity for individuals and working families,” Freeland said the Trudeau government views the modernization of NAFTA as an “opportunity to make what is already a good agreement, even better.”

Pointing to Canada’s soon-to-be implemented deal with the European Union as an example of the kind of “progressive” trade pact Canada wants to see emulated in a new NAFTA, Freeland said her negotiating team would “come to the table with goodwill, and Canada’s characteristic ability and willingness to seek compromise and find win-win solutions,” but she also noted that “we are committed to a good deal, not just any deal.”

Among the “progressive elements” the government is looking to have incorporated into the core of a revised agreement are stronger labour standards, enhanced environmental protection provisions (“to ensure no NAFTA country weakens environmental protection to attract investment, for example”) and reforming the controversial investor-state dispute settlement provisions to remove any doubt “that governments have an unassailable right to regulate in the public interest.” Additionally, Freeland said the government wants to see new chapters added to NAFTA addressing gender equality and the rights of Indigenous peoples.

Including such provisions, particularly those concerning the environment and labour, are important “if you want a free-trade deal that’s also a fair-trade deal,” Freeland said.  It is also critical to maintaining popular support for free markets, she suggested. “Canadians broadly support free trade. But their enthusiasm wavers when trade agreements put our workers at an unfair disadvantage because of the high standards that we rightly demand. Instead, we must pursue progressive trade agreements that are win-win, helping workers both at home and abroad to enjoy higher wages and better conditions.”

In terms of addressing the priorities of Canadian companies, Freeland sees the modernization of NAFTA as long overdue opportunity to cut red tape and harmonize regulations to “make life easier for business people on both sides of the border.” Staking out some common ground with the Trump administration, Freeland says the federal government shares its “desire to liberate our companies from needless bureaucracy, and this negotiation is a welcome chance to act on that goal.”

Ottawa also wants to ease labour mobility across the borders, specifically the movement of designated professionals by expanding NAFTA’s Chapter 16 provisions for temporary entry for businesspeople, and will seek to create a freer market for government procurement. Taking a swipe at the “Buy American” rules that Donald Trump campaigned on and which are staunchly backed by many U.S. lawmakers from both parties, Freeland said such local-content provisions are “political junk food: superficially appetizing, but unhealthy in the long run.”

With regards to what are likely to be among the most contentious aspects of the talks, Freeland said the Trudeau government is “fully committed” to maintaining Canada’s traditional protections under NAFTA, including the Chapter 19 dispute resolution system that helps ensure anti-dumping and countervailing duties are applied fairly, as well as an exception to preserve Canadian culture in areas such as publishing and telecommunications and the country’s system of supply management for milk, cheese, eggs, chicken, and turkey.

Comparing the modernizing of an existing trade agreement to “renovating your house, while you’re still living in it,” Freeland said that although she is “deeply optimistic” about the final outcome, “getting there can be a little messy and uncomfortable.” There will be times “when walls are opened up, and pipes and wiring get exposed, that can be a little unsettling” she said, warning Canadians to be prepared for the possibility of “some dramatic moments ahead.”