The North American Free Trade Agreement (NAFTA) came into effect January 1st 1994. The main argument supporting NAFTA during its creation was the foreseen increase in trade that it would bring. Ten years after its implementation, research has shown that trade has increased dramatically among the three nations. During the first ten years of its existence total trade between the United States and Canada increased by 110.1%, yet total trade between the United States and non-NAFTA partners increased 123.8% in the same period. Therefore, it can be argued that trade did not necessarily increase because of NAFTA.
On NAFTA’s 10th anniversary (2004), researchers based in all three countries assessed the agreement’s consequences and found them to be overwhelmingly negative. Despite some continued support for NAFTA, polls in Canada show that citizens see their own country as the loser in NAFTA, and see the United States as the winner. The impact of NAFTA on most of the people in all three countries has been devastating. The agreement has destroyed more skilled jobs than it has created and has depressed wages on all levels. Socially, it has worsened poverty and inequality, and eroded social programs. Moreover, many of the jobs created during the NAFTA period have been part-time, insecure jobs with fewer benefits, particularly for women.
The experience of Canadian farmers demonstrates that more trade does not necessarily translate into more prosperity. According to the National Farmers Union, even though since 1988 agriculture exports have almost tripled, farmers’ net income (adjusted for inflation) has fallen by 24%. Furthermore, during that same period, farm debt has doubled, and 16% of Canadian farms have been lost.
Before NAFTA, in British Columbia we had in-season tariffs that meant that our fruit and vegetable producers could grow and sell their crops without fear that cheap subsidized American produce would flood the markets. As an example, before NAFTA we had approximately 2000 onion producers while now we have only a handful.
Two other issues which greatly hinder Canada’s sovereignty are NAFTA’s Chapter 11 and the proportional sharing and commodity clauses. Chapter 11 allows private companies to sue governments whose policies and regulations are alleged to hurt their opportunities to do business here.
The Canadian Government tried to ban the import of a gasoline additive, Methylcyclopentadienyl Manganese Tricarbonyl (MMT) in Canada. Ethyl Corporation sued and we wound up paying them $13Million of tax payers’ money for damages. Today, there are a number of other pending corporate law suits that have the potential of further draining our government coffers.
It is ironic that although Canada exports over 60% of its oil to the US, Atlantic Canada’s, Quebec’s and Ontario’s needs are met by importing 45% from Algeria, Saudi Arabia and Iraq and 37% from Norway and Britain. Canada could be self-sufficient in oil and gas, however, our export rules under NAFTA ensure that we continue to provide a cheap flow of fuel to the South. If we want to cut back on exports, the agreement states that proportionally we have to cut back our domestic consumption.
Of the three NAFTA countries, Canada is the only one that does not have a National Energy Policy. Before free trade, Canada had a National Energy Board that ensured that we had a 25 year supply of non-renewable energy prior to exporting our oil and gas. Now, we do not even have a 90 day energy reserve and yet, we continue to supply the U.S. with cheap energy.
I do not believe it is an understatement to say that free trade has changed our way of life. In the 1990s the federal government, bowing to pressure under NAFTA to become competitive, made drastic changes to EI eligibility, introduced sever cutbacks to health care and social programs and repealed the Canada Assistance Plan. Since 1980, the medium salary in B.C. has fallen by 11.3%. Clearly something is not right. Major corporations and multinationals are making huge profits while, for the majority of Canadians, life has become more difficult. It is up to all of us to get our country back on track.
Tags: NAFTA