Friday, June 27, 2008

NAFTA II?

Barack Obama says he wants to renegotiate NAFTA if elected president of the US. Senator McCain says he defends NAFTA. From the Canadian perspective, does it make any difference? Obama's (and other Democrats') objections to NAFTA have gotten a lot of press -- both in Canada and the US -- but they don't seem to have become an important issue for the general population in Canada, in the manner of, say, the original C-USFTA or NAFTA. Journalists, a few politicians, and some business leaders are talking about Obama's stand but not all that much and generally without any clear sense of urgency. Are they making a mistake? Would an Obama administration represent a threat to NAFTA? Should Canadians be concerned? And, because of this concern should they hope McCain wins the presidency?

I don't think so. Instead, I think Canadians should adopt a different approach. Like Obama, I think Canada should be interested in renegotiating NAFTA. In this regard, an Obama electoral victory presents and opportunity; not a threat.

I say this for a number of reasons. The primary one is that the support of McCain and the Republican party for NAFTA is as much political theatre as it is a serious indication of public policy. We need to remember, that the Bush administration consistently refused to play by the rules of the NAFTA game with regard to softwood lumber. So ... even while declaring themselves in support of NAFTA, a Republican administration subverted the deal by refusing to respect it. New American energy regulations -- something that is not "on the radar" for most people -- are another example of this. The new regulations used by the US regulatory agency for energy have nothing to do with NAFTA and subvert its rules. Yet, Republicans have had no trouble in carrying this policy forward. What this means for Canadians is that the issue is not so much what one politician says as the track record of the party to which they are attached. In this regard, there is little to differentiate what the Republicans have done in practice from what Obama says he will do if elected.

I suspect this is the reason ordinary Canadians have not been all that much concerned about Obama, McCain, and the fate of NAFTA. They believe that the US government will make it own policy determinations regardless of who is in power and that these determinations will reflect an assessment of American interests as opposed to the rules of NAFTA. Said differently, Canadian indifference to the American NAFTA debate does not mean that Canadians don't have strong views on NAFTA. It represents what strikes me as an astute assessment of historical course of action followed by US governments. Regardless of who wins, NAFTA will be "on the table" either overtly (Obama) or through regulatory and policy mechanisms that are out of the public eye (the Republican approach).

If this is the real issue Canadians have before them, then, is not is Obama a threat. Indeed, it would be refreshing, open, and potentially democratic and transparent to engage is a serious reconsideration of NAFTA. The real issue is how Canada should respond to the manipulation of NAFTA, in some instances, by one of its signatories? I'll suggest a several pronged approach.

First, Canadians should begin to think about what a post-NAFTA NAFTA might look like. Obama has said that he is particularly concerned with the weaknesses of NAFTA's side agreements on the environment and labour standards. I think Canadians should be, too. If Obama wants to use some sort of NAFTA-esque negotiations (whatever these might end up being called) to strengthen environmental protection policies, reduce private claims on commons and public goods, address water depletion, move the US away from fossil fuel dependence, improve labour rights ... well ... this does not sound too bad. Certainly, it is no reason for refusing to negotiate. I suspect, most Canadians would be in favour of discussions along this line. Rather than opposing what Obama is suggesting, then, I think Canada should indicate its willingness to go back to the table and address these issues.

Second, trade negotiations are often conceptualized as a national zero-sum gain. Certainly, this is the tenor of some of Obama's discourse, which runs something like: the US has to be losing jobs because someone is cheating and not trading fair; we need to be tough with them and get those jobs back here. How should Canadians respond to this discourse? Our position should be that we should not try to turn back the clock -- to get those jobs back -- but need to look forward and take control of the process of integration. In other words, how can it be better directed to public good in the future. For Canadians, to do this, requires accepting the legitimacy of American concerns. We can certainly point out where the evidence does not match perception but I see absolutely nothing wrong with ordinary American being concerned about job loss. We Canadians are concerned about precisely the same thing so ... we have a community of interest on this.

For me, this entails several things. It entails proper capital regulation to ensure that things like the Enron and the sub-prime mortgage crisis don't happen again. In other words, Canada should suggest that better control of capital markets and large scale speculative ventures (say, like those proposed for the energy sector) be control and regulated on a North American wide scale. This will allow us all to address criminal activities faster and reassert public control over economic development. It might, as well, take some of the heat off rising energy prices, part of which seem to be driven by speculation (that is, energy trading which was, of course, Enron's game). Prescription drugs, medical services, patents, are also other areas where the US and Canada and Mexico could collectively benefit by greater control that allows for a downward movement of prices. We may, as well, want to talk about labour mobility.

Third, we should take this case to the US government: we are too economically integrated to abandon NAFTA. If we do that, we'll just have to recreate it. So ... why bother abandoning it? We should work to renew it and improve it.

What I am talking about here, then, is not a matter of international good will (although I think this is important and fair), but a recognition that we need to move beyond NAFTA. Obama is right. We can't just ditch NAFTA because that would be meaningless. Instead, we need to isolate areas where the NAFTA economy is failing citizens and zapping public good. We should take Obama at his word when he says he wants constructive and progressive change. Canadians should support that, not to be nice to the US but because it is what Canada needs and ethically it is the right thing to do. We could use the NAFTA framework to enhance environmental protection, promote better health and safety standards for labour, improve the mobility of labour, reduce health care costs by regulating profits for private enterprise in medicine, and other things. We can, as well, understand the concerns that feed support for Obama's position among ordinary Americans. Ordinary Americans have not both benefited and been hurt by NAFTA. Those who have been hurt are looking to their government to build a better society by renegotiating NAFTA. If Obama is serious about this, we should work with him to do so. If he isn't ... well ... that's a story for another blog.
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