Canada-U.S. Blog Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

Canada Releases List of NAFTA Modernization “Core Objectives”

Posted in NAFTA Chapter 11, NAFTA Renegotiations

On August 14, 2017, Canada’s Foreign Affairs Minister, Chrystia Freeland delivered Canada’s list of NAFTA Modernization (note, not “renegotiation”) “core objectives”.  Minister Freeland stresses that Canada’s mission is a modern and progressive free trade agreement.  She stressed that “Trade is about people” and jobs in Canada and Canada’s NAFTA partners.  Canada’s approach will be to “make what is already a good agreement, even better”. This is the correct objective.

However, Minister Freeland provided the following list of “core objectives” as the means to achieve a great agreement:

  1. Modernize NAFTA, including addressing the trade in the technology sector (this means Canada must add rules of origin for new technologies, add a chapter on E-Commerce, add technology and artificial intelligence services to the Services Chapter 12, add technology based service providers to NAFTA Chapter 16, etc.);
  2. Make NAFTA more progressive by adding a chapter on Environment (move the Side Letter on Environment into the NAFTA and modernizing it) and including Climate Change in that chapter;
  3. Make NAFTA more progressive by adding a chapter of Labour (move the Side Letter on Labour into the NAFTA and modernizing it);
  4. Make NAFTA more progressive by adding a chapter on Gender Rights (Minister Freeland gives the Canada-Chile FTA Modernization Chapter on ‘Trade and Gender” as a precedent);
  5. Make NAFTA more progressive by adding  an Indigenous Chapter (when pressed, Minister Freeland could not describe what sorts of provisions would be in an Indigeneous Chapter);
  6. Make NAFTA more progressive by improving NAFTA Chapter 11  dispute settlement provisions to further ensure governments may regulate in the public interest;
  7. Modernize NAFTA by making life easier for business people by cutting red tape (e.g., reduce compliance burdens) and harmonizing regulations (aka regulatory alignment) (a continuation and elevation of the U.S.-Canada Regulatory Council initiatives);
  8. Procurement Liberalization: Increase covered procurements in NAFTA Chapter 10 “Government Procurement” to cover state and local procurements and reduce use of local-content provisions on major government contracts;
  9. Modernize NAFTA Chapter 16 “Temporary Entry for Business Persons” to evolve and lengthen the list of covered professionals who may enter a NAFTA Party without the need for labour market studies (that is, fewer immigration visas for Canadians wanting to working in the USA on a temporary basis);
  10. Preserve supply management policies;
  11. Preserve NAFTA Chapter 19;
  12. Preserve exemption of Canadian companies in global safeguard actions in a NAFTA Party; and
  13. Preserve Canadian cultural exception in NAFTA Chapter 21.

What is missing from the Canadian list of “core objectives”:

  1. Including the States and Provinces/Territories in the negotiation process (this is one core objective that Canada agreed to in the Canada-European Union CETA negotiations and it should be included in the NAFTA Modernization negotiations so that States can speak up in terms of trade with Canada);
  2. Modernization of the rules of origin;
  3. Preserve access of Canadian meat and agricultural goods to US markets;
  4. Modernization of sanitary and phyto-sanitary measures;
  5. Modernization of conformity assessment procedures (that is, where the U.S. and Mexico would accept Canadian testing and certifications and not require duplication);
  6. Elimination of continued technical barriers to trade (e.g., U.S. domestic policies that limit access of Canadian wine to store shelves);
  7. Modernization of NAFTA Chapter 12 “Services” to establish a negative list and to address technology and innovation services, including integrated research and development;
  8. Modernization of the border facilitation provisions in NAFTA Chapter 3;
  9. Modernization of provisions on border security (e.g., an evolution of the Beyond the Border Initiative);
  10. Modernization of NAFTA Chapter 6 “Energy and Basic Petrochemicals” to remove proportionality requirement and include natural gas and fracking;
  11. Solution to the Softwood Lumber Dispute;
  12. The development of a permanent investment dispute body (similar to what is being discussed with Europe);
  13. Addition of a Chapter on shared infrastructure and shared waterways;
  14. Modernization of provisions relating to border measures relating to illegal drugs from Mexico; and
  15. A Chapter to address trade in legalized drugs, such as cannabis.

Over the next few weeks and months, the details will emerge as to what is and is not included in Canada’s objectives.

For more information about the NAFTA modernization, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.  There are other articles on the LexSage website about the NAFTA.