Dennis Darby is president and chief executive officer of Canadian Manufacturers & Exporters.
NAFTA's renegotiation begins on Aug. 16 and for Canada's manufacturing sector – the top player in this, or any other trade agreement – one matter should be made perfectly clear before the talks start: Chapter 19, the dispute-settlement mechanism that decides the rights and wrongs of trade disagreements, cannot be eliminated.
Getting rid of Chapter 19 is one of the main objectives of the United States going into these talks, and it's a deal breaker for Canadian manufacturers.
Prime Minister Justin Trudeau recently told reporters in a scrum that maintaining a dispute-settlement mechanism in the North American free-trade agreement is a key concern for Canada. However, we needed to be more explicit. When Foreign Affairs Minister Chrystia Freeland testifies before the House of Commons trade committee on Aug. 14, maintaining Chapter 19 should be listed as one of this country's priority goals, making its importance clear in advance of negotiations slated to begin two days later in Washington.
The U.S. objective should come as no surprise, as the Americans didn't want the dispute-settlement mechanism to begin with in the original 1987 free-trade agreement. It took the direct intervention of then-prime minister Brian Mulroney at the highest levels of the U.S. government to get Chapter 19 in the deal. Otherwise, Mr. Mulroney said, Canada would have walked away from the agreement. Luckily, the Americans eventually agreed.
Now, the future of Chapter 19 is in doubt again. This issue must be cleared up so that the long-overdue conversation with our most important trading partners can get under way, something that the members of the Canadian Manufacturers & Exporters (CME) are enthusiastically looking forward to.
Generating 70 per cent of this country's total exports and worth an all-time high of $355-billion in 2016, the manufacturing sector is Canada's largest sector contributing to NAFTA. With 82 per cent of Canada's manufacturing exports destined for the United States and Mexico, manufacturers see clear opportunities to embrace change within NAFTA to help Canada better innovate, collaborate and compete globally.
Our confidence is bolstered by the fact Canada has done its homework. Manufacturers and their work force of 1.7 million are encouraged by Ottawa's deliberate approach to negotiations. The federal government ignored any potentially controversial statements or tweets from south of the border and instead concentrated on open, straight-to-the-point consultations with Canadian industries concerned about the future of NAFTA.
The feedback we received from our network of 10,000 businesses when preparing our recommendations to government is a thoughtful reminder that manufacturers are free traders. Our members believe NAFTA can and should be modernized to not only incorporate change that has occurred over the past 25 years, but also to lay a foundation for growth and innovation over the next several decades, to the benefit of Canada, the United States and Mexico. They see this as a historic moment in which Canada can work with its NAFTA partners to identify and eliminate non-tariff barriers and protectionist policy, and stimulate job creation through the flow of skilled labour.
CME's NAFTA recommendations can be summarized through four overarching pillars:
- 1. Do no harm to the current business environment that would lessen the trade between its members.
- 2. Eliminate barriers to trade within the NAFTA region.
- 3. Modernize and expand the agreement to include more sectors and new technologies.
- 4. Leverage NAFTA to implement common approaches to trade with outside countries.
Manufacturing is Canada's largest and most integrated sector, so it is imperative to the health of Canada's economy that negotiation outcomes allow Canadian manufacturers to maintain free and fair access into, and from, markets in the United States and Mexico.
Throughout these negotiations, Canada will undoubtedly build on advances achieved through negotiations for the Comprehensive Economic and Trade Agreement with Europe and the Trans-Pacific Partnership as a framework for modernizing its most important trade agreement. However, its uniquely integrated trade relationship with its NAFTA partners mean we must move aggressively beyond those agreements as we write this next chapter of trade and innovation across borders.
As the countdown to Aug. 16 continues, we cannot lose sight of the incredible advancements NAFTA has brought to North America. It has been a disrupting force for innovation that has been emulated around the world. A quarter of a century later, we have arrived at an opportunity to work with the United States and Mexico to apply those lessons here in a way that can drive Canada's economy forward.