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Think Tank Warns Of Challenges For Canada In NAFTA Talks

by Mike Godfrey, Tax-news.com, Washington

16 August 2017


Canada will face political challenges if it accedes to US objectives in the renegotiation of NAFTA, according to a new report from think tank The Fraser Institute.

The report sets out the main points of contention that could arise in the negotiations. In particular, the Institute said that the US's goal of unrestricted access to Canada's domestic agricultural markets represents a direct threat to Canada's dairy (and other) supply management programs. In addition, it argued that the US's call for the entry of US firms in all Canadian sectors would require Canada to eliminate a host of foreign investment restrictions, and that if it adopts US intellectual property protections, Canada could have to change its patent legislation.

The Institute said that while these consequences could be in Canada's long-term economic interests, they could prove politically contentious, especially if Canadian negotiators fail to gain important concessions from the US. Such concessions include a robust dispute resolution mechanism that would set clear limitations on the ability of US governments to take trade actions against Canadian exporters.

The report argued that "serious thought" must therefore be given to "the implications for the Canadian economy if the discord surrounding NAFTA results in the dissolution of that trade treaty and, particularly from Canada's perspective, if the United States withdraws from a regional free trade agreement."

The report noted that Canada and the US never formally ended their bilateral free trade agreement (FTA), which entered into effect in 1989. It suggested that if NAFTA is disbanded, the FTA would "snap back" into place as the legal structure governing Canada-US trade and investment relations. Yet if the US administration was unhappy with Canada's negotiating position on NAFTA, it could withdraw from the bilateral FTA or call for a renegotiation of that agreement.

TAGS: investment | free trade agreement (FTA) | export duty | intellectual property | trade treaty | Mexico | agreements | legislation | Canada | United States | import duty | trade

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