Sub-national jurisdictions protect certain types of government contracts
WASHINGTON—The premiers of Canada’s two largest provinces came to Washington on Feb. 23 to sing the praises of free trade: lower prices, more jobs, better selection at the grocery store and supply chains that create geo-political bonds.
But that trade-liberalizing passion comes with some caveats.
The premiers of Quebec and Ontario acknowledged that their own trade practices are not perfectly open in every sector and will not suddenly become that way in a newly renegotiated North American Free Trade Agreement.
In one exchange, the governor of Colorado voiced a desire for freer trade in dairy. He made the request on a panel while seated beside Kathleen Wynne and Philippe Couillard—premiers of the two main dairy-producing provinces in a country that limits dairy imports.
“Colorado is a big cheese-manufacturing state. So I’d probably want to negotiate a little bit about the cheese,” said Gov. John Hickenlooper. “Because we all have our specific things that we think, maybe, aren’t quite as fair.”
Dairy isn’t the only protected sector in Canada. So is poultry. In addition, sub-national jurisdictions protect certain types of government contracts. Also, Couillard said it’s important for Quebec to maintain protections on cultural products in order to preserve its francophone culture.
Couillard said it’s normal to maintain some protections in a trade deal.
“I would say, tongue in cheek, there’s no such thing as a free-trade agreement. There are trade agreements with exceptions and specificities—ones countries need to keep in order to keep their policies and priorities moving forward,” Couillard told a panel at the Washington International Trade Association.
“So, (let’s proceed with) modernizing (NAFTA). Keeping each others’ interests in perspective. Being able to put yourself in the other person’s—to understand why (certain sectors are) so important… But overall let’s keep markets open.”
On government procurement, Couillard told reporters he’s considering whether to speed up planned renovations of Montreal metro cars in order to provide work for Bombardier, as layoffs are threatened there.
States and provinces have the right to exempt certain public agencies from competitive bidding under WTO rules, although Canada entered these NAFTA negotiations hoping to expand free trade for public contracts with the giant U.S. market.
The U.S. has taken the opposite approach—it’s looking to limit trade in public works. That’s one of several controversial proposals from the Americans, who have also proposed creating a so-called sunset clause that could end NAFTA every five years.
Wynne said this negotiation has been unusual.
“Do I think there needs to be some systematic approach to reviewing (NAFTA)? I think we can all agree,” she said. “(But) what has triggered this review is not a systematic or rational process. That was not a political comment. But if there were a way to have a more rational (five-year) trigger, I think that would make sense.”
Events a few kilometres away underscored her point.
As Wynne was speaking at that panel, U.S. President Donald Trump was just outside the city at a conservative political conference where, in his speech to partisans, he trashed NAFTA.
“NAFTA is no good. It never was any good. But, for some reason, nobody ever changed it,” Trump said. “They emptied our factories. You’ve got to see the car plants and the auto plants in Mexico. Like, you’ve never seen anything like it before. I want those companies—and they’re starting—I want them back here.”
Ironically, he was saying this at a conference made famous by Ronald Reagan—the conservative favourite who spearheaded North American free-trade talks. Meanwhile, in downtown Washington, D.C., the premiers were promoting NAFTA inside the Ronald Reagan Building.
The premiers are in Washington for the annual winter conference of state governors. State leaders have proven to be influential allies to people trying save NAFTA—writing letters, lobbying U.S. President Donald Trump and sharing their concerns with Vice-President Mike Pence.
Couillard said he and his Ontario counterpart have met dozens of U.S. governors since last year—and every one supports NAFTA. He said they understand the benefits of free trade—cheaper fruits and vegetables available throughout the year, minerals from Canada that supply manufacturing in the southern U.S., an integrated defence-industrial base and nine million jobs linked to trade in the U.S. alone.
“Open markets create jobs,” Couillard said. “Closed markets kill jobs. … Closed markets increase prices, for people who have economic difficulties.”
He urged the countries to reach a quick agreement. He said businesses hate uncertainty, and said the uncertainty at some point needs to end.
Projections from Scotiabank and the Bank of Canada estimate that if ambiguity lingers over NAFTA into next year, the ensuing investment concerns would reduce Canada’s GDP by about one-fifth of one per cent through 2019.