October 4, 2005

The CEO of the Canadian Council of Chief Executives has recommended that "the existing NAFTA dispute-settlement mechanism should be reformed to provide for more effective implementation of NAFTA panel rulings." Thomas d'Aquino called for this "design (of) a new dispute settlement mechanism" in the National Post on September 30.

While acknowledging that "a majority of Canadians voted for parties opposed to the deal" in the 1988 federal election, d'Aquino argues that "we must not let this single dispute distract us from the main challenge of building a safer and more competitive North America within a transforming global economy." In other words, Mr. d'Aquino does not want the softwood lumber dispute to derail his deep integration agenda.

The Council of Canadians believes that NAFTA has failed Canadians. Rather than the one change to the corporate-friendly deal that Mr. d'Aquino supports - we believe the current agreement is fundamentally flawed and that there are many key provisions that should be removed immediately. Among them:

1. Chapter 11, the investor-state clause. This clause allows a foreign corporation to sue the Canadian government if public interest legislation affects the profit margins of a corporation. The Canadian government paid millions to the American-based Ethyl corporation for banning the toxic fuel additive MMT in Canada, as well as lifting the ban itself.

2. Article 3:15, the proportional sharing provision. In terms of energy resources, this clause means that Canada cannot refuse to issue a license for export; maintain its own "vital supply safeguard"; demand export impact assessments; levy export taxes; or charge higher prices for exports. Fundamentally, it means that exports are guaranteed to the level they had acquired over the preceding 36 months even in times of shortage or national crisis. (As a result of proportional sharing, 65% of Canada's oil and 61% of its natural gas is now exported to the United States. In order to fulfill its NAFTA commitments to the United States, Canada is now importing almost half the oil it uses, even though its production has grown by 64% since the FTA was signed.)

3. Chapters 3 and 12. Chapter 3 establishes obligations regarding the trade in goods and clearly lists "waters, including natural or artificial waters and aerated waters." Chapter 12 sets out a comprehensive regime to govern trade and investment in the service sector, including water services. These provisions could transform Canada's waters into a tradable commodity.

The Prime Minister should know that:

• 76% of Canadians believe that the federal government has not been tough enough in its response to the U.S. on the issue of softwood lumber (Strategic Counsel poll, The Globe and Mail, September 17, 2005).

• 50.23% of respondents (9,206 people) voted that Canada should withdraw from NAFTA in a recent Globe daily poll (The Globe and Mail, September 30, 2005).

E-mail Paul Martin at pm@pm.gc.ca and tell him that NAFTA has failed Canadians. (He will be speaking this Thursday October 6 to an American business audience at the Economic Club of New York.)