The morning NAFTA
Labour's Voice on Economic Integration Issue No. 14
Were sorry, really!
Canada is the first NAFTA country to
pay off a foreign investor
(Virginia-based Ethyl Corp.) and
apologize for legislation protecting health.
Three more US corporations are lining up
demanding over $200 million because of NAFTAs
Chapter 11, the investment chapter.
Cease and desist
Canada has become an international trade
Catastrophically low commodity
criminal at the World Trade Organization. Meeting behind closed
doors, WTO trade dispute panels have ruled that Canada is prices have demolished Canadian
illegal on magazine rules, illegal on dairy marketing, illegal on regional economies, farm incomes, the
aerospace research and development support, and illegal on a
forestry sector, petroleum industry, and
billion dollar export-supporting Canada Account.
fishery communities. In the post-Asia crisis
Bullying with $4 billion era, low prices for Canadas resource
Canadas major trading partner, the US, has threatened a exports is keeping the looney at its lowest
$4 billion trade war against Canadas steel, lumber, plastics and levels in years. Relief is not just around the
other industries in retaliation for Canadas magazine policy, corner. The World Bank expects that real
exposing NAFTAs so called cultural exemption as a fake. commodity prices in the year 2010 will be
below 1997 levels due to more rapid
Ticking increase in supply than in demand.
Canadian water exports are a political time-bomb if NAFTAs Canadians disposable income in 1996
national treatment kicks in. was lower than in 1981. The richest
10 percent of Canadian families make
Sucking up to Suharto 314 times the bottom 10 percent.
The Pepper spray scandal at Vancouvers 1997 APEC Summit The Trade Department wont admit it
links police repression of student protestors to Canadas futile publicly, but Canada hasnt been doing too
attempts to protect trade with Indonesian dictator Suharto a few well in the global economy. Canadas share
months before he was overthrown by his own people. of total global foreign investment dropped
from 11 percent in 1980 to 4 percent in 1997.
Boycott busybody A 1997 Industry Canada discussion paper
Local communities in the US tried to ban procurement from bluntly stated: Canada has lost its position
companies dealing with repressive Myanmar (formerly Burma). as one of the worlds most important host
They were ruled unconstitutional because of the federal economies." (continued on page 2)
government's commitments under the WTO.
A regular update on the impact of the North American Free Trade Agreement,
produced by the Canadian Labour Congress.
No more NAFTA's
No more MAI's
No more WTO's
And now for something
completely d i f f e r e n t
(continued from page 1) eeting in Costa Rica in March, trade
Faced with shrinking global market unions, farmers organizations, networks of
share and heavy dependence on the US NGOs and social movements from all over the Americas
market,Canada initiated an aggressive reconfirmed our commitment to fight for a fair trade deal for the
program to expand trade and investment western hemisphere. Calling ourselves the Hemispheric Social
ties with emerging markets of Latin Alliance, trade unions affiliated to ORIT (the Inter-american
America and Asia in 1992. Five flashy Regional Workers Organization), representatives of the
Team Canada sales missions, personally International Trade Secretariats and social groups from the
led by the Prime Minister have become the NAFTA countries, Central America, and the Mercosur and
hallmark of Canadian trade policy. Andean Regions, agreed that a NAFTA or MAI-type agreement
Dictatorship regimes, such as China in the Americas would spell disaster.
and Indonesia, have become sought-after Just look at the impacts of NAFTA-style free trade on
trading and investment partners in order to trade unions, jobs, and living standards in North America.
lessen dependence on the US market. Southern countries, also, are suffering from corporate
restructuring, massive unemployment, growing poverty,
inequality and exclusion from the political process. An FTAA
Undaunted modeled on NAFTA and the MAI will only lock in these anti-
democratic policies, further reduce the role of elected
Just whisper trade obligations to governments and hand over more power to large
policy-makers on the hill. Watch the big multinationals. This is not a formula for development.
chill freeze new initiatives on The Costa Rica meeting was a bridge between the
environmental regulation, corporate Peoples Summit of the Americas held in Santiago, Chile in
accountability, culture or water policy. April, 1998 and the next FTAA trade ministers meeting in
Undaunted by trade scandals occupying Toronto in November, 1999.
Canadian headlines, Ottawas free Recognizing that it is not enough only to oppose, to
traders seem determined to push ahead
resist, and to criticize, the Peoples Summit produced
on more liberalization with new agendas
Alternatives for the Americas, a working document of
on agriculture, services and investment
in the millennium round to be innovative ways to conceive of trade and development. The
launched at a WTO Summit in Seattle in Hemispheric Social Alliance endorsed Alternatives for the
November. Canada is also chairing Americas as our platform for changing the integration model.
negotiations for a NAFTA-like Put democracy and development at the core of the trade
hemispheric free trade agreement agreement, says ORIT President Dick Martin, then well have
the Free Trade Area of the Americas, or something to talk about.
FTAA involving 34 countries from (Alternatives for the Americas is available from Common
the Arctic to the Antarctic. Frontiers, 416-443-9244,or http://www.web.net.comfront)
((c (continued on page 8)
The morning NAFTA, page 2
Lined up at the Why do they think the
Canadian trough for Canadian treasury will hand them millions?
a payout, so far,
Ethyl Corp. of
... How many more pay-outs?
$19 million when
Canada tried to ban arliament banned the import and interprovincial trade
the use of MMT, a of a noxious gas additive, called MMT. Canadas law-makers
harmful manganese- said they were not sure about its effects on human health.
based gasoline U.S.-based Ethyl Corp., the sole producer of MMT, sued the feds for
additive. $350 million claiming that the feds expropriated Ethyl's Canadian
earnings by not allowing them to sell MMT. They also said that, by
signing NAFTA, the feds had agreed not to discriminate against any
S. D. Myers
North American company.
of Ohio is Rather than risk losing, the federal government backed down
claiming $20 even before the case could be heard by a secret NAFTA arbitration
million, because a panel. The feds paid Ethyl $20 million in an out-of-court settlement in
federal law banned July 1998. The government apologized to the company and publicly
the export of announced that MMT was not a proven danger to human health. In
Canadian toxic other words, a Virginia company overturned a Canadian health
polychlorinated regulation. Canada blinked and now there are at least three more
biphenyl (PCB) companies clamoring for Canadian taxpayers dollars.
NAFTAs Chapter 11, the Investment Chapter
Talbot of n gives corporations a form of veto power over national public
Oregon is policy;
demanding $30 n obliges governments to protect foreign companies profits
million due to a before they protect their citizens (this is called national treatment).
softwood lumber n gives the company (investor) the right to sue the government
(state) in an investor-state dispute if national legislation causes
any loss of profits (this is called expropriation);
in four of Canadas
n a secret panel of trade experts hears the case and the decision
is binding (rather than the case being heard in a Canadian court
where a judge can balance corporate property rights with the
Sun Belt Water public interest);
n claims go before an arbitration panel set up under the
Inc. of California
International Centre for Settlement of Investment Disputes, a
is seeking $220
Washington-based unit of the World Bank. (continued on page 4)
million because the
B.C. government x Environment Canada Budget for
stopped the export of Program Enforcement and Compliance - $16.9 million
billions of gallons of x Federal Government payout to Ethyl Corp. - $19.5 million
fresh water to the US.
For more information, see Intervenor, vol. 23, No. 3, July-Sept/98 published
by the Canadian Environmental Law Association.
The morning NAFTA, page 3
Just the beginning
(Chapter 11, continued)
US and Mexico, labour, environmental and
other public interest organizations have
A Canadian funeral company, voiced their concerns over MAI and
Loewen Group Inc. is using another part of NAFTA provisions which give new rights to
NAFTAs chapter 11 to recoup heavy corporations and which potentially limit
losses due to a civil case in Mississippi. legitimate government activity in the public
The firm almost went bankrupt when a interest.
state court awarded an adversary half a
billion dollars in a minor contract squabble.
Loewen wants the US federal government
Watch out, more coming
to be accountable for the actions of the Can a local government set
state of Mississippi. selective purchasing laws such as buy
The Mexican government is also local, boycott repressive regimes, or
facing four investor-state challenges. recycled-content requirements? Not
according to a US federal judge who
overturned a Massachusetts law
Cant tinker forbidding the state to purchase from
Concerned about the potential companies involved in Myanmar. Local
deluge of public payouts to companies that communities wanted to make a statement
dont like Canadian laws, Minister Marchi about that countrys dismal human rights
says he wants his NAFTA colleagues to record and repressive military regime,
attach a note to Chapter 11 to redefine formerly known as SLORC.
exactly what expropriation means. The The EU, backed by Japan and the
Mexican government is, so far, not Association of Southeast Asian Nations,
interested in talking. used the WTO system to attack the statute
CLCs President Bob White recently because their companies also invest in
wrote Trade Minister Sergio Marchi saying Myanmar and would be effected if such a
not to bother with a stop-gap measure. ban were to be allowed. Another score for
Chapter 11 should be re-opened to the corporations. Another loss for local
remedy fundamental defects. In both the power and good governance.
The morning NAFTA, page 4
Once upon a time...
Just the facts.....
In 1998 Canada spent $4.1 billion on
cultural products from the US. Canada sold
$1.3 billion worth of cultural products to the
Magazine advertising is an important
factor in the survival of the Canadian magazine
industry. Canadian magazine advertising is
estimated at $400 million a year.
Use it and youll lose it
A True Canadian Story
F For 30 years, Canada has used tariffs
(customs duties), postal subsidies and Sports Illustrated started crossing the Canadian
(lately) excise taxes to help build up its border through cyber-space in 1997.
magazine industry in the shadow of They sold space to Canadian advertisers in their
American giants such as Newsweek and US magazine and distributed their split-run in Canada.
Sports Illustrated. Canada levied a special excise tax on the distribution of
split run magazines because there was little Canadian
F The 1988 Canada-US Free Trade content.
Agreement allowed Canada to keep the US Trade officials furiously denounced Canada at
postal subsidy and the tariff under a the World Trade Organization (WTO). The WTO told
cultural exemption. Canada both the tariff and the excise tax were illegal
under WTO rules.
F Canadian negotiators claimed they kept Canadas Heritage Minister designed Bill C-55, a
the cultural exemption in the 1994 North new law making it illegal for a foreign magazine publisher
American FreeTrade Agreement to sell advertising in its Canadian edition to any company
(NAFTA). But NAFTA gave the US the in this country. Any publisher who breaks the law will
right to retaliate if Canada uses the face fines of up to $250,000. Because the new law was
cultural exemption to protect its cultural about advertising (a service), not about magazines (a
industries. Washington can determine how product), the minister claimed it would be both NAFTA-
much damage the Canadian actions proof and WTO-proof. That is what she thought!
cause US companies and retaliate with The US Trade Secretary threatened retaliation
measures that would result in the same with a $4 billion trade war on industries that have nothing
degree of economic damage to to do with magazines such as steel, plastics, wood and
Canada. clothing industries. These were cleverly selected
(continued on page 6)
The morning NAFTA, page 5
upon a time...
because they are located in the electoral ridings of both depend on the US entertainment industry to dominate
the Canadian Trade and Heritage ministers. what others call "culture" around the world.
Meanwhile, back at the Parliament, Time Warner
and Hearst International, two US mega companies, On advice from the Trade Department,
were, reportedly, producing speech material for the Bill C-55 was amended so that it can only be triggered
opposition Reform Party. by a Cabinet decision. In the meantime, policy-makers
Hollywood giants, like the Walt Disney Co., Time are hoping to sign a peace treaty with the US.
Warner Inc. and Microsoft Corp. are pushing to draw a The moral of this story is: Dont put your nations
line in the Canadian sand to stop cultural culture into a free trade agreement with the mighty US
independence from spreading. After all, they do government.
Drink Canada Dry ?
f a NAFTA country exports water, even just a little, then water becomes a commodity and is treated like any
other product. Once the water export tap is turned on, NAFTA makes it illegal to turn it off. One US company,
SunBelt Water Inc. of California, is already suing the Canadian government for $220 million arguing that they
have lost business from a moratorium on the sale of water from British Columbia. NAFTA has made exporting
water a political time bomb. Water Watch, a common front to protect Canada's water.
Water Watch Targets
Watch For years, the Canadian Governments are facing
government has promised to enormous pressure to privatize
protect our water. Now Water water and water services. The
s No water exports Watch wants to see some first step in most privatized
action. For example: water utilities is to get rid of
unionized workers, downsize
s No privatization t federal legislation banning and raise rates.
of Municipal large scale water exports;
Water Services Water Watch insists that
t ensuring that trade and governments maintain
s Promote water investment agreements, common ownership of water as
conservation, such as NAFTA and the a sustainable public resource.
protection of proposed MAI, do not
threaten Canadas water. For more information, contact:
water quality The Canadian Union of Public
and healthy Employees (613-237-1590), the
Canadian Environmental Law
aquatic Association (416-960-2284)
ecosystems or the Council of Canadians
The morning NAFTA, page 6
Population: 163 million people
With the countrys coffers ransacked, the IMF
GNP: US$773 billion in 1997, is and the US Treasury are loaning the money back to
half of all of Latin Americas. Brazil in order to pay the interest on its debt.
l Half of the nations wealth is From Bad to Worse
owned by the top 10 percent
of the population. Already facing the highest unemployment rates
l 32 million people live below the in decades, the IMF demanded: that Brazil design
poverty line. massive austerity measures; lay-offs of federal
l Over half of all workers are in the government employees; higher taxes; and the curbing
informal sector with no access to transfer payments to state governments. It also
social security or social programs. forbade Brazil from raising tariffs as a source of
revenue and demanded that it speed up its program
of privatization of public utilities and state-owned
In the Global Vortex
House of cards
aught in the global vortex is Brazil,
second largest economy in the That was the situation before Christmas.
Americas (after the US). On September 11, Shortly after the New Year a renegade state governor
1998 alone, $1.7 billion left the country. Then, (and ex-President of the country), Itamar Franco,
capital flight averaged $400 million a day throughout announced he was bankrupt. The Central Bank
October. Coffee prices (a major export) are down capitulated, the currency devaluated and continued to
44 percent. So are prices of other major exports. flee.
Most of the Fortune 500 companies are in Brazil Now Brazilian workers have joined their
until recently the darling of emerging markets. With brothers and sisters from South Korea, Thailand,
profits and stock prices of multinational companies Mexico, Russia, Indonesia and other citizens of
and banks in danger, the International Monetary emerging markets. The country is in shock, the
Fund and the US Treasury jumped in to bail out value of its currency reduced by almost half . The
the nearly bankrupt Brazilian government. IMF and international financiers, left to put the pieces
back together have tightened the screws demanding
Panic, Investor Panic a steep recession which will mean a probable decline
in GDP of 3.5 to 4 percent. Many are holding their
Raising short-term interest rates to a breath to see if the pain will lead to eventual gain.
whopping 50 percent didnt stop the bleeding, In a move that seemed so symbolic of Brazils
but it did: submission to the global market, President Cardoso
named a former aid to international multi-billion dollar
q add a whopping $5 billion a month in financier, George Soros, to head the Brazilian Central
Bank. The fox in charge of the hen-house cried the
interest payments on the debt;
opposition. Yes, and the golden egg is more elusive
q empty out factories and shopping malls as
credit became scarce.
The morning NAFTA, page 7
c (cont'd from page 2)
to be a business executive, and provincial trade officials in
preferably one that exports. February in Ottawa. While
Standing Committee on
The Trade Department is paying lip service to the need for
Foreign Affairs and
working closely with business public consultation on trade and
International Trade, and Sub-
on a hemispheric Business investment issues, the old one-
Committee on Trade and Trade
Forum just before the next sided, biased, pro-business
Disputes is holding cross-
FTAA ministers meeting in approach is the one that still
country hearings this spring.
November in Toronto. The counts.
This will be an opportunity for
Business Forums role is to
civil society organizations,
promote business interests in
unions, social groups, and
the new trade agreement. The
businesses to say what they
minister also meets regularly
think about globalization and
with advisors from national
free trade. Groups can also
business groups such as the
mail in a brief to the Trade
Alliance of Manufacturers and
Exporters of Canada, the
Business Council on National
Buddy buddy Issues and the Canadian
Chamber of Commerce.
If you want a direct line These groups were invited to
to the Trade Minister, you have speak on a panel to federal
fter years of fighting for The Declaration resembles Trillion
$9 Trillion Market
labour rights in their free the NAFTA side deal by obliging
trade agreement , the governments to promote a series of While the talks for the
Southern Cone Trade Union labour principles and ensure that FTAA have stalled due to the
Coordination(CSCS) made some their domestic labour laws are US lack of fast track negotiating
headway last December. That is enforced. But it differs from NAFTA power, Mercosur and the
when the Presidents of the four by building a new tripartite European Union will begin talks
countries making up the Commission of government, in June to set up a trans-
Southern Cone Common Market business and trade unions Atlantic super-bloc. The EU-
(MERCOSUR) signed a new internally into the architecture of Mercosur free trade zone will
Social/Labour Declaration. the trade agreement. CLC be the worlds biggest, larger
Union representatives had Secretary Treasurer Dick Martin than the proposed FTAA. The
negotiated the terms of the notes, This Commission gives new free trade zone will have a
agreement with government unions a direct role in monitoring total gross national product of
representatives of a labour rights in the MERCOSUR US$9 trillion of which
MERCOSUR Working Group on countries. This doesnt exist in Mercosurs share is
Labour Relations. NAFTA. US$1.2 trillion.
The morning NAFTA, page 8 opeiu225
Side Dealing: When a company unilaterally
declares a Code of Conduct that
doesnt include labour rights and has
Canadian Jurisdiction Tested no monitoring or verification
component, it can do more damage
Labour groups submitted the first two NAFTA side deal
than good d.
cases on labour rights violations in a Canadian CLC Executive Vice-President Jean Claude Parrot
jurisdiction to the US NAO in December.
Having a Code of Conduct didnt stop
JusticeDelayed..... shirt-maker Phillip Van Heusen (PVH) from
firing, en masse, the Guatemalan maquila
The good news was that the Canadian Teamsters were workers in the only unionized shop in
certified to represent employees at the St. Hubert Central America right before Christmas.
McDonalds restaurant in Montreal in late 1997. The Being a member of the US Apparel Industry
bad news was that its owner announced the closing of Initiative (AIP), a US task force on
the restaurant a few days earlier. When businesses in sweatshops convened by the White House
Quebec shut down to crush an organizing drive, unions last year didn't stop PVH either. This was
have no recourse under Quebecs current labour code. the message brought by Neil Kearney,
The Teamsters and the Quebec Federation of Labours General Secretary of the International
complaint under the NAFTA labour side deal Textile, Garment and Leather Workers
denounces this problem as well as unwarranted delays Federation (an international sectoral labour
in certification procedures. Since Quebec has since organization). Kearney was a speaker at
announced changes to its labour code, the case will Commerce with Conscience, a one day
likely not proceed to a hearing. conference of labour groups, NGOs,
business and government representatives
Through rain and wind....but no union interested in mechanisms which could end
sweatshop conditions in production facilities
Rural postal carriers in Canada are not allowed to join a around the world.
union because the Canada Post Corporation Act Meanwhile, Canadas Department of
excludes them as employees eligible to bargain Foreign Affairs has promised it will announce
collectively. A December submission to the US NAO, in early spring, the name of a facilitator to
led by the Canadian Union of Postal Workers (CUPW), steer a National Task Force composed of
claimed that the Canadian governments refusal to business, labour, NGOs and churches to
repeal this clause means that it is not enforcing the look at these questions. That is when
labour side deal. discussions will begin to determine what
sectors a Task Force will cover and what
The US labour office (NAO) didnt bother to tell the kind of Code of Conduct should be designed
union that it had received information from the or adopted.
Canadian government (the employer). And the NAO
refused to review the case. The CLC and CUPW have For more information see Maquila Network Update,
asked the NAO to reconsider their decision. newsletter of the Maquila Solidarity Network,
Help or hindrance?
The morning NAFTA, page 9
Here, eat this! They are called Frankenstein Foods. They are
genetically altered and nobody knows their effect on human
health. But we do know that biotechnology multinationals
are earning lots of profit from them. The corporations dont
want to label bioengineered products. And they are getting
their own way.
Disgraceful. That is what environmentalists called
Canadas trashing of a biosafety agreement agreed to by
125 other countries in Colombia in February. Canadian
officials opposed requirements to label genetically altered
food and products because Canada is heavily invested in
engineered crops. The US was also against the treaty
because, they said, they were protecting the worlds food
trade. More likely, the US was protecting the profits of giant
biotechnology firms such as Monsanto, the company that
tried to shove Combined Bovine Growth Hormone into our
cows. Now they want to shove engineered food down our
ncreasing world trade is not, necessarily, a bad idea. Dow Chemical, is one of the biggest polluters in
But multinational corporations have hijacked the the United States, the worlds largest producer of
World Trade Organization (WTO) and have generated chlorine--the root source of dioxin--and one of the
NAFTA and the MAI. largest pesticide companies on the planet.
Fifty-one of the 100 largest economies in the world Citibank is the U.S. financial services
are multinational companies. They make financial corporation which played an important role in the Asian
contributions to political parties. Corporate bosses hob nob financial crisis that threw millions of workers out of work
with prime ministers and presidents. Corporate power pulls in 1997. Citicorp was also a major lender to developing
national governments puppet strings, manipulating official countries in the 1960s and 1970s, leading up to the
trade and social policies to benefit shareholders and boards Third World debt crisis.
of directors. They earn huge profits from locating wherever Rio Tinto Pic, a British mining corporation has
costs are lowest, where labour is cheapest, environmental inspired a global network of trade unions, indigenous
regulation is dirtiest, and governments are most desperate peoples, church groups, communities and activists to
to attract international investment. fight its abuses. The company stands accused of
The United Nations Development Program (UNDP) is complicity in, or direct violations of, environmental, labor
planning to open the door for corporate patronage. UNDP and human rights in Indonesia, Papua New Guinea,
has approached at least 30 major global corporations and at Philippines, Namibia, Madagascar, the United States
least eleven agreed to pay $50,000 each to UNDP for and Australia, just for starters.
privileges such as special UNDP sanctioned logos for use Whats next? Corporations taking a seat in the
by corporate sponsors. Many of these new, potential UNDP General Assembly? How about Coca Cola for
"partners" are well known for ignoring development, human Secretary General!
rights and the environment.
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The morning NAFTA, page 10