AN OPEN LETTER TO THE PRIME MINISTER: Canadian culture is NOT protected under NAFTA.
(In this letter to the Prime Minister, former senior trade negotiator Mel Clark, who now heads his own firm of trade advisors, points out that the present Liberal government, like the previous Tory government, is perpetuating the myth that Canada's cultural institutions are protected by the terms of NAFTA. On the contrary, he says, the wording of NAFTA was devised to serve American interests and speed up the Americanization of our culture. Clark urges Chretien to abrogate NAFTA and return to conducting trade with the U.S. under the terms of the GATT/WTO.)
Right Hon. Jean Chretien, P.C., M.P. Prime Minister House of Commons, Ottawa.
Dear Prime Minister:
The Red Book stated that "Culture is the very essence of national identity, the bedrock of national sovereignty and national pride--Canada needs more than ever to commit itself to cultural development. Instead the Conservative regime has deliberately undermined our national cultural institutions."
The Deputy Prime Minister, in conversation with Peter Gzowski on Morningside, 3 April, 1996, said that NAFTA contains ". . . cultural exemptions that we negotiated" and explained the exemptions that are needed to protect us.
The purpose of this letter is to:
a) draw your attention to NAFTA provisions that establish beyond reasonable
doubt that it does not contain "cultural exemptions," and that it gives the
U.S. the unfettered legal right to retaliate against any Canadian measures
the U.S. judges "inconsistent with the Agreement;"
b) note the government has created for itself a serious ethical problem that will continue to erode its credibility as long as it trades with the U.S. under NAFTA; and
c) point out that there is an alternative that would enable the government to achieve the Red Book objectives, as well as speak to Canadians with candor.
The most important FTA/NAFTA provisions are summarized below.
* NAFTA Annex 2106 incorporates in the Agreement FTA rights and obligations relating to culture.
* FTA Article 2012 a)b)c)d) and e) defines the scope of the cultural industry to include publishing, broadcasting, films and recordings and their related operations such as publication, sales, production, distribution, exhibition and transmission.
* FTA Article 2001:1 exempts the cultural industry from the Agreement except for tariff elimination, a divestiture of an indirect acquisition, Article 2006 (retransmission rights) and Article 2007 (print in Canada requirement).
* FTA Article 2005:2 puts culture back in the Agreement by giving the U.S. the right to retaliate against Canada for "actions" the U.S. deems "inconsistent" with it.
* FTA Article 2011:2 exempts U.S. retaliation from the dispute settlement procedures.
* NAFTA Article 103.2 provides that NAFTA "shall prevail" over other agreements, including GATT.
* Other FTA/NAFTA provisions give the U.S. substantial rights that impinge on the cultural industry (e.g. NAFTA Chapters 1, Objective; 11, Investment; and 15, Competition Policy, Monopolies and State Enterprises.)
Clearly, the assertion that the Agreement exempts Canada's culture was created by lifting FTA Article 2005:1 from its context. But this Article is nullified by the other Articles noted above. The Article is an optical illusion which served the interests of the U.S., as well as Mulroney, by
diverting attention from the substantive articles and helping Mulroney deceive Canadians in the 1988 election.
In the seven years since the FTA text was published, no government has presented any evidence to support the assertion that culture is exempt.
Three conclusions that emerge from these NAFTA provisions are:
* First, the U.S. has a legal right to unilaterally decide if a Canadian cultural measure is "inconsistent" with the Agreement, to retaliate against Canada, and to select the nature and severity of the retaliation. The U.S. is the accuser, judge and enforcer. In addition, the U.S. has a right to take such decisions and actions without justifying them to a Dispute Settlement Panel.
* Second, Canada has no legal rights whatsoever. It cannot even request a panel to judge whether U.S. accusations are justified and, if so, to ensure U.S. retaliation is commensurate with the offence. And there is no cultural exemption.
* Third, NAFTA strips Canada of its GATT/WTO rights: we are locked in.
These three conclusions form a fourth: NAFTA cedes to the U.S. power to manage and shape Canada's culture. For practical purposes, this power is exercised by U.S. broadcasting, publishing, film and recording corporations whose objective, as you well know, is to maximize profits. Since Canada has
given the U.S. the unfettered right to retaliate, it is defenceless and you cannot implement any measure to nourish culture that impinges on perceived U.S. interests without, sooner or later, facing retaliation.
NAFTA has thus made Canada an extension of the U.S. by giving Americans an unconditional licence to market their programs, books and magazines, films and recordings--i.e., their way of life--here and make us more and more like them. We are now in the transition period.
You will recall that the Mulroney government, from the time the FTA was made public until it resigned, assured Canadians their culture was protected and cited Article 2005:1 out of context. You will also recall that, during the 1988 FTA debates in both the House of Commons and the election campaign, the
Liberal leader John Turner and MPs placed in context the Mulroney government assertion by drawing attention to the unfettered U.S. right to retaliate and stressing that this right would overwhelm Canadian culture.
By the 1993 election, you and Liberal MPs accepted the FTA/NAFTA, despite the fact that it did not exempt culture, continued the unfettered U.S. right to retaliate, and conflicted with the Red Book assessment quoted in the first paragraph above. By 1996 your government appears to have adopted the
Mulroney government's hyperbole to hide its 180 degree policy turn, despite knowledge that it is an optical illusion designed to deceive Canadians and that the unfettered U.S. right to retaliate not only puts our culture at risk but also, by your own assessment, our national identity, sovereignty and pride.
It is not obvious how you can reconcile such behaviour with your frequently stated pledge to restore "honesty and integrity" to public life and encourage Canadians to again trust their government.
Fortunately, there is an alternative that would repatriate to Canada control of its culture, as well as enable the government to again speak with candor.
That alternative is to return to trading with the U.S. under the GATT/WTO, and abrogating NAFTA. Under the GATT/WTO, Canada would be free to act to nourish its cultural industry by a wide range of measures, providing they did not impair tariff concessions.
Canada would, for example, have a right to a panel to judge U.S. complaints on the basis of GATT/WTO law and not the vested interests of the U.S. broadcasting, publishing, film and recording industries. In addition, the U.S. would have a WTO obligation to prove to a panel that a Canadian cultural measure impaired its GATT/WTO rights before retaliating and that any such retaliation not exceed the offence.
Even more important is the fact that in the GATT/WTO Canada has much greater power vis-a-vis the U.S. than in NAFTA. The basic reasons are a) other GATT countries share many of Canada's interests and they strengthen our leverage in negotiations; and b) we benefit from the rule of GATT law whereas we lose from the NAFTA rule of U.S. trade law and its U.S. trade politics.
Supporters of the FTA/NAFTA have attempted to defend it on the grounds that it obtained better access to the U.S. and increased Canadian exports and jobs (Wilson in the House of Commons, 11 May, 1992, and Mulroney to a Montreal conference organized by The Economist in March 1993); and that abrogation would reverse agreement influenced decisions benefiting Canada and terminate the Auto-Pact (Wilson in the House of Commons, 11 May, 1992).
It is not my purpose to comment on these claims in detail in this letter, but I have examined them and concluded they cannot be reconciled with the facts.
Neither Mulroney nor Wilson assessed the costs and benefits of trading with the U.S. under the FTA/NAFTA and the GATT/WTO. I have made such an assessment for 12 sets of provisions that are especially important to Canada--indeed, several such as culture, are vital--and inter alia, concluded that a) substantial advantages would accrue to Canada under each of the 12 headings by returning to trading under GATT; b) the accumulated benefits begin with the repatriation of our independence and substantially better and more secure access to the U.S. (i.e. the composite of tariffs, non-tariff measures and dispute settlement); and c) whatever the cost of abrogation, it would be infinitesimal compared to the costs we now incur and to the benefits we would receive.
Defenders of NAFTA can slice it any way they wish, but you and the government must still face three facts: 1) NAFTA does not exempt culture; 2) NAFTA gives the U.S. the unfettered right to retaliate; and 3) Canada's culture will be Americanized.
For these reasons I urge you to return to conducting business with the U.S. under the GATT/WTO and abrogate NAFTA.
This article was taken from The CCPA Monitor, September 1996.