Obama and Clinton Have a Point: Let’s Take a Hard Look at NAFTA

Barack Obama and Hillary Clinton have been squabbling over which of them is more serious about standing up to Canada on the shortcomings of the North American Free Trade Agreement. In her last ditch effort to seize victory from the jaws of defeat in Ohio (we’ll know the result tonight), Clinton has been accusing Obama of talking tough to hard hit workers while reassuring Ottawa that he’s only kidding.

Neither of these candidates is remotely pro-Canadian. As a border state senator, Hillary Clinton has been happy to bash Canada for its supposedly lax security whenever that suits her. Not that we should be surprised that the Democratic front runners could care less about Canada. That’s normal, despite the dewy-eyed proclivity of some Canadians to seek salvation from American politicians.

We ought to be thankful though to Obama and Clinton for insisting on the renegotiation of NAFTA if either of them reaches the White House.

Canadians have pressing reasons for taking a hard look at NAFTA.

NAFTA and its predecessor, the Canada-U.S. Free Trade Agreement were negotiated at a time when petroleum prices were much lower than today and the world was much less queasy about petroleum supply than it is now.

When the Mulroney Conservatives negotiated the free trade deals, one of their major objectives was to ensure that no Canadian government could ever again pursue a petroleum policy that did not suit the oil companies, the Conservative government in Alberta and the U.S. administration in Washington. And while they failed miserably at gaining secure access for Canadian exports to the U.S. (witness softwood lumber), they succeeded brilliantly in tying the hands of Ottawa on petroleum.

Under NAFTA, Canada is required to continue exporting petroleum to the United States at a level which must not fall below the average of the past three years. This remarkable commitment stands even should the regions of eastern Canada that rely on imported oil fall short as a consequence of a supply interruption. Not only does Canada have no strategic petroleum reserve---a point driven home by the recent work of the Parkland Institute in Alberta---under the terms of NAFTA Canada must make exports of petroleum to the U.S. a higher priority than meeting the energy needs of Canadians.

From the start, NAFTA has been an “unequal treaty” for Canadians. The Mexicans, also major oil suppliers to the United States, are saddled with no such outrageous commitment, for the simple reason that Mexicans would never have stood for it.

With petroleum shortages now a real threat in the world, Canada needs to renegotiate NAFTA, and if the United States is unwilling to reach a deal that removes the petroleum export commitments as they stand, Ottawa should give notice that Canada will withdraw from the trade deal.

Under the Harper Conservatives and the newly re-elected Stelmach government in Alberta, the highest priority of Canadian economic policy is to increase petroleum exports as rapidly as possible, despite the ruinous environmental consequences, and the disastrous effects of the policy for Canadian industry.

Finance Minister Jim Flaherty has gone to war with Ontario insisting that the province slash its corporate taxes. By promoting the rapid increase in petroleum exports, the Conservatives are directly responsible for driving up the value of the Canadian dollar so quickly that Canadian manufacturing has had no chance to adjust.

The Conservatives have skewed Canadian economic development to the long-run detriment of all Canadians, including Albertans who face the reduction of large regions of their province to a polluted moonscape.

Thanks Barack and Hillary, for putting NAFTA back on the agenda. In our own national election, which can’t come too soon, Canadians ought to put the issue front and centre.