Mexico and Canada: Trading on our Future

by Rick Arnold*

When most people compare Mexico with Canada they often focus on the differences (languages, climate, colonial histories, form of government, level of industrial development etc.). While these differences are significant, they can mask areas of common concern. The most obvious tie that binds our two countries is that of living beside the United States of America. Our common neighbour is a global colossus that has historically wielded enormous economic influence and backed it up with military might.

As part of its world view the US has long considered the Americas to be its own ‘back yard’. Despite that fact, during much of the 1900’s both Mexico and Canada did dare (on occasion) to ‘speak truth to power’. For example both countries maintained ties with the Cuban revolution in the face of enormous pressure from Washington to stop all contact. The nationalization of Petroleos Mexicanos under Cardenas was a courageous act taken in the face of threats from the US oil giants and US government representatives. In Canada the introduction of innovations such as socialized medicine, and marketing boards for agricultural producers, resulted from struggles that were won despite the ‘anti-communist’ mind set prevalent at that time in Washington.

However, the implementation of NAFTA (North American Free trade Agreement) on January 1st, 1994 changed things. It has since served to bind both Mexico and Canada ever closer to the requirements of the US marketplace, and it turned both our governments into uncritical mouthpieces for the neo-liberal agenda. Both countries have become extremely dependent on exporting to the U.S. - surpassing 80% (of all exports) in each case. NAFTA proponents who lauded this growth as a barometer of success, now temper their remarks as a tanking US economy takes down its overly-dependent neighbours.

The removal of tariffs on the importation of corn into Mexico combined with the maintenance of illegal US agricultural subsidies have combined to drive some 2 million small farmers off the land. While this dramatic story has received some coverage in the North American media, a similar double-whammy that hit corn producers in Canada has gone virtually unreported. Pleas for help from Canadian corn growers went unheeded in Ottawa until suddenly on January 8, 2007 (with a minority government fearing a federal election) the Canadian government launched a WTO challenge against the US corn subsidy programs. Though this WTO action acknowledges the pain being felt by Canadian growers, relief in the form of a final ruling is not expected any time soon.

Over the past two decades Canadian farm families have suffered under “free trade”. For example, even though Canadian agricultural exports tripled from $11 billion to $33 billion between 1988 and 2007, net farm income fell by more than half. In that same time period Canadian farm debt more than doubled from $22.5 billion to $54 billion. Retail food prices climbed as farm prices fell. In this context, both Canadian farmers and consumers have been losers under NAFTA.

Prior to the implementation of NAFTA, Canadians and Mexicans alike were promised a golden era with jobs aplenty. Instead, in the last 6 years, Canada has lost 450,000 manufacturing jobs. That’s more than 150 good jobs disappearing every day. And it’s getting worse. The job loss is hitting many different industries all over the country: auto, food processing, forestry products, textiles, metals, furniture etc. Too many of the new jobs being created today are low-paying, insecure jobs with fewer benefits, particularly for women. Clearly, in both countries, the gap between the incomes of the most vulnerable and those of the wealthy has grown wider over the past 15 years of NAFTA.

Both nations have seen their sovereignty challenged by foreign (mostly US based) corporations under provisions contained in NAFTA’s Chapter 11 - a legal back channel which permits foreign investors to detour around local courts and sue the federal government before an international tribunal. These challenges picked up speed in Canada during 2008. In July, a group of 200 US investors, led by an Arizonan businessman, launched a $155 million lawsuit under NAFTA against the Canadian government claiming they faced ‘anti-American’ roadblocks in trying to establish private health clinics in Canada. In August, DOW Chemical announced its intention to challenge legislation in Quebec banning the sale and cosmetic use of pesticides. In December, US AbitibiBowater threatened a NAFTA Chapter 11 suit even though by closing all its plants in the province of Newfoundland it was violating the terms of the 1905 Newfoundland Charter Lease that required it to provide jobs in order to continue logging on public lands.

During the NAFTA negotiations Canada (but not Mexico) agreed to a ‘proportionality’ provision tied to our oil exports to the US. This provision requires that almost two-thirds of our oil be sent to the US (even in the case of an emergency in Canada). With conventional sources of oil drying up in western Canada, the oil companies have moved to develop a vast area containing tar sands. The processing of this ‘dirty oil’ is turning Canada into a global polluter - a pariah state unwilling to cease contributing to climate change through the mega-release of greenhouse gasses.

With the new US President traveling to Ottawa shortly, hopes have been raised that Barack Obama will live up to his promises to discuss NAFTA renegotiation with the Canadian Prime Minister. Thus far the Canadian government has shown little inclination to re-open NAFTA despite a September 2008 Environics opinion poll that had 61% of Canadians favouring renegotiation. Ultimately it will be the cross-border transformational actions of our respective peoples that can ensure the building of a fair trade model for North America.

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For more information on an ongoing tri-national initiative opposing NAFTA please go to www.rmalc.org.mx

* Rick Arnold is the Coordinator of Common Frontiers - a multi-sectoral network of Canadian organizations working on trade issues www.commonfrontiers.ca . Common Frontiers is also the Canadian chapter of the Hemispheric Social Alliance.