Newman on NAFTA: Does the Boeing/Bombardier dispute set a dangerous precedent for Canadian companies?

Newman on NAFTA: Does the Boeing/Bombardier dispute set a dangerous precedent for Canadian companies?

Don Newman

Ensight’s Don Newman on the timing of the third round of NAFTA negotiations ending at the same time as the Boeing/Bombardier dispute escalateing and how timing is everything in politics.

Timing is everything.

Foreign Affairs Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer have been scrambling to assure everyone who will listen that the massive punitive duties imposed by the United States on Bombardier C series aircraft have nothing to do with the current NAFTA ‎negotiations.

But of course they do. How could they not?

Technically, the two hundred and twenty per cent tariff imposed‎ by Commerce Secretary Wilbur Ross, is the result of a trade complaint against Bombardier launched by Boeing, the behemoth American air plane manufacturer and defence contractor, last spring. But the fact that the tariff Ross imposed is almost three times as much as the penalty Boeing requested shows that there is something more going on.

The tariff announcement came the same day that the third round of NAFTA treaty talks were winding down in Ottawa. There is a feeling that this round was even less productive than the two that proceeded it in Washington and Mexico City. No small feat.

One reason is that the Americans, who forced this renegotiation in the first place, have so far‎ not tabled the one demand, for what is for both Canada and Mexico a make or break clause in the deal. And that is Chapter 19, the independent dispute settlement provisions that allow trade disagreement under NAFTA to be settled by panels of arbiters drawn from all three countries.

The original American NAFTA negotiating objectives tabled with the U.S. Congress said‎ the removal of Chapter 19 was a U.S. goal. So far, what (if anything) Washington wants to replace it with, has not been presented.

If there were to be no replacement at all and President Trump made good on his threat to leave NAFTA, that would mean that every trade dispute would be subject to the same kind of U.S. kangaroo court procedure we have seen Bombardier subjected to in the Boeing complaint.

That is why both Canada and Mexico have said that without an independent dispute settlement process there can be no NAFTA deal.‎ Essentially, we want Chapter 19 maintained.

But what if the Americans propose a watered down version that gives them more chance of winning most trade disputes?

As we have reported before, there is a growing Canadian concern that the Americans are holding back their most controversial proposals on purpose. They will table them as “take it or leave it” as the negotiations progress.

The next round of talks will be in Washington, from October 11th to the 15th. Will this be the time, with any “home field advantage” that might apply, that the Trump administration will table its plans for a dispute mechanism more favourable to American interests?

And will the Bombardier decision be held out as the example of what will happen to Canadian Exporters if we don’t agree?

Bombardier and the NAFTA negotiations have nothing to do with each other? The timing is everything.

Don Newman is Senior Counsel at Ensight, a Member of the Order of Canada, and a life-member and past president of the Canadian Parliamentary Press Gallery.