Freeland denies concerns trade agreement gives Washington more freedom to impose tariffs

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Freeland denies concerns trade agreement gives Washington more freedom to impose tariffs


OTTAWA—Foreign Affairs Minister Chrystia Freeland is denying concerns that the new continental free trade deal gives Washington more freedom to impose tariffs on the grounds of national security, like the ones slapped on Canadian exports of steel and aluminum.

On Monday, Canada’s and Mexico’s foreign ministers could not say when those tariffs would be lifted.

“I’d love them to be lifted today,” Freeland said.

She has repeatedly insisted American tariffs are “illegal” and unjustified, and warranted Canada’s retaliation: counter-tariffs worth $16 billion on American goods, ranging from ketchup and Kentucky bourbon to U.S. steel and aluminum.

“There is nothing at all stopping any of us from lifting these tariffs…this afternoon,” said Freeland. “That is what we are communicating very directly to our U.S. partners.”

Mexico’s incoming foreign minister Marcelo Ebrard appeared more realistic about when tariffs might be withdrawn.

“I think the time that might occur is when the agreement is signed,” he said.

U.S. lawmakers say they won’t vote on the new United States-Mexico-Canada Agreement until 2019 after mid-term elections are over.

But trade experts caution that the new deal actually contains looser language that would allow the U.S. to slap on future tariffs using the same national security argument.

International trade lawyer Lawrence Herman said in a recent interview that while the new deal maintains stability and certainty of rules in many areas, “there are some rollbacks.”

Among them, he listed auto rules of origin that have changed significantly; a portion of the heavily regulated Canadian agriculture sector has been opened up to American imports; Canada agreed to a 16-year review or expiry clause; agreed to advise in advance the United States of any trade negotiations with China, and “we haven’t fully eliminated the national security surcharges that the U.S. imposes.”

Herman said in fact the U.S. has a “broader right to apply national security measures under this agreement than they have under the NAFTA.”

The text of the old NAFTA was aligned with language under the WTO (World Trade Organization) and GATT (General Agreement on Tariffs and Trade) which says countries can take national security measures “in time of war or other emergency in international relations,” said Herman.

“That was a fairly limited exemption,” he said. “Trump has said ‘I don’t care what the GATT or the WTO or the NAFTA say; I’m going to use these national security measures as I wish.’”

Herman said the new agreement actually contains a “more liberal” exemption, because the reference to national security measures to be “taken in time of war or other emergency” has been eliminated.

“So each government can take steps in its own national security interests as it sees fit.”

He suggests it was the kind of concession that had to be made to secure a deal.

“We had to give up something. Look, we were dealing with a very difficult, aggressive, unfair negotiator. There’s no question that the United States negotiated in bad faith in my view.”

He pointed to Trump’s “threats of action, threats of surcharges, threats of withdrawal, negotiating a deal with Mexico in a tripartite arrangement, negotiating behind Canada’s back with Mexico and springing a deal on Canada a month before an agreement was to be tabled.”

“This is not a hugely successful outcome but it’s a good outcome under the circumstances.”

Freeland flatly denied any concerns Monday. Asked at a news conference whether the looser language in the deal and the continuation of the American tariffs would allow future use of such tariffs as a trade weapon, Freeland was blunt: “No I don’t think we have.”

“I agree,” said Ebrard.

Canada has challenged the tariffs before WTO and NAFTA panels, and is resisting American pressure to agree to quotas on its imports in exchange for removal of the surcharges.

Much of the official Opposition’s — and public — skepticism about the new deal is grounded in the fact that the U.S. continues to impose its steel and aluminum tariffs on foreign imports from Canada and Mexico that first took effect in June.

Ebrard said the incoming Mexican government, which takes power Dec. 1, will nevertheless support the deal, now being reviewed by the Mexican Congress, despite its own reservations about it.

“We believe that it is not the very best agreement but we do need to support the advances that have been made,” Ebrard told reporters. “We believe it is worth supporting the agreement looking to the future of all three countries.”

A COMPARISON

Here is what the USMCA agreement-in-principle says:

Article 32.2: Essential Security

1. Nothing in this Agreement shall be construed to:

(a) require a Party to furnish or allow access to information the disclosure of

which it determines to be contrary to its essential security interests; or

(b) preclude a Party from applying measures that it considers necessary for the

fulfilment of its obligations with respect to the maintenance or restoration of

international peace or security, or the protection of its own essential security

interests.

Here is what the old NAFTA says:

Article 2102: National Security

1. Subject to Articles 607 (Energy — National Security Measures) and 1018 (Government Procurement Exceptions), nothing in this Agreement shall be construed:

(a) to require any Party to furnish or allow access to any information the disclosure of which it determines to be contrary to its essential security interests;

(b) to prevent any Party from taking any actions that it considers necessary for the protection of its essential security interests

(i) relating to the traffic in arms, ammunition and implements of war and to such traffic and transactions in other goods, materials, services and technology undertaken directly or indirectly for the purpose of supplying a military or other security establishment,

(ii) taken in time of war or other emergency in international relations, or

(iii) relating to the implementation of national policies or international agreements respecting the non-proliferation of nuclear weapons or other nuclear explosive devices; or

(c) to prevent any Party from taking action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.

Tonda MacCharles is an Ottawa-based reporter covering federal politics. Follow her on Twitter: @tondamacc





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