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October 13, 2017

District 11

Is Trump preparing to exit NAFTA?


-The Machinists Union strongly encourages the Canadian government to make no concessions whatsoever with respect to Donald Trump and his negotiators regarding Chapter 19 of NAFTA (Review and Dispute Settlement in Antidumping and Countervailing Duty Matters). Even if NAFTA is were to be replaced by bilateral agreements we need an independent mechanism to handle trade disputes.

“It would be unthinkable to deprive an agreement such as NAFTA or a bilateral agreement from an independent mechanism to handle trade disputes. We instead need to improve this kind of mechanism by adding mandatory mediation and conciliation to it before the next trade dispute is heard by a national panel,” explains David Chartrand, Québec coordinator for the Machinists Union. “This is how we would be able to determine if complaints are founded on solid grounds and propose compromises between the parties while avoiding economic turbulence. After having gone through this process, a national panel would be hesitant to render unrealistic preliminary decisions on unfounded complaints as is currently the case in the Boeing matter.”

The Machinists contend that by making mediation and conciliation mandatory in the case of trade complaints originating from a NAFTA country, Canada, the United States and Mexico would prevent multinationals from resorting abusively to national panels while retaining their sovereignty.

“We must give ourselves the means to intervene before situations degenerate. For example, Boeing is currently using the American court system to defend its shareholders’ interests. Boeing believes that its shareholders’ interests have priority over the interests of thousands of workers in North America and England,” regrets the Québec coordinator. “What Donald Trump needs to understand is that, in the 23 years since NAFTA was signed, there has been enormous consolidation of supply chains and no single country can resort to protectionist measures without jeopardizing its own economy. If he is truly concerned for American citizens and their jobs, it is Chapter 11 (which enables investors or companies to sue a member country simply because they claim that a political decision hinders their freedom of trade and is prejudicial to their business strategy) that he should seek to eliminate and he should also provide American workers with increased rights. To the contrary, he is in search of a solution that will foremost protect the interests of the wealthy and influential. Fair trade is everyone’s business. Boeing’s attack against the C Series and the aerospace industry appears to be only the tip of the iceberg in terms of the Trump administration’s trade policy. This administration’s behaviour seems eerily familiar with the saying that goes like this: when you want to kill your dog, you accuse it of having rabies. All this leads me to believe that Donald Trump is preparing the United States’ exit from NAFTA to then replace it with bilateral agreements.”

A few facts on Chapter 19

In its current form, Chapter 19 allows NAFTA countries to circumvent the national panels, in cases where one country imposes antidumping and countervailing duties against another country, by appealing to a special binational panel that is mandated to rule on the fairness of penalties.

Out of the 47 lawsuits filed by the United States against Canada or Mexico, 36 resulted in a unanimous ruling.

Out of more than 70 cases heard by special NAFTA panels pursuant to Chapter 19, 47 involved the United States.

Chapter 19 hardly serves any purpose today. Canada invoked it on only three occasions in the last ten years, whereas the United States have not used it against Canada since 2005.

Advantages of mandatory mediation and conciliation:

  • Greater transparency
  • Rapid identification of potential damages and the plaintiff’s good faith
  • Reduced risks of trade wars between NAFTA countries
  • Potential reduction of court delays and cases
  • Potential reduction of trade irritants between NAFTA countries
  • Reduced risk of job losses resulting from trade disputes

The management and supervision of these operations could be entrusted to the Commercial Arbitration and Mediation Centre for the Americas (CAMCA).

A few facts on Chapter 11

Investor-state dispute mechanism

Chapter 11 enables investors in NAFTA countries to sue the government of any member country.

Only foreign companies are authorized to intent lawsuits.

This chapter was originally drafted to prevent companies from being expropriated or victims of unfair treatment by countries with unstable governments.

Companies quickly seized the advantages that they could stand to benefit from the mechanisms provided in this chapter by attacking any and all legislatures that limited their ability to generate profits or expand their operations.