Ottawa's Free Trade Ardour Cools

The 1988 Canada-U.S. free trade agreement (FTA) which led to the 1993 North American free trade agreement (NAFTA) would have culminated in the 2005 Free Trade Area of the Americas agreement (FTAA). But over the course of the negotiations, many nations — including Canada — have learned the hazards of American-style free trade. Peterson refuses to link the downgrading of the hemispheric trade talks to the unwillingness of the U.S. to comply with the ruling of a NAFTA panel on softwood lumber last month. But he would have a tough time explaining to Canadians why their government is pressing ahead with an enlargement of NAFTA, when the Americans see no need to abide by the terms of the existing pact. And Canada would have a tough time explaining to its Latin American negotiating partners why it is to their advantage to join a trade bloc led by the United States. "The World Trade Organization is more important to Canada and Mexico (America's two NAFTA partners) than any hemispheric agreement, at this time," Peterson said diplomatically. "That doesn't mean we're giving up on the FTAA. We'd like to see it go ahead. But the WTO is our priority right now." The world trade talks, which reach a critical juncture in Hong Kong in December, are no sure thing either. The negotiations are more than a year behind schedule, having faltered over everything from drug patents to investment rules. Most seriously, the U.S. and the European Union are deadlocked over farm subsidies. To complicate matters further, U.S. President George Bush's "fast-track authority," which allows him to negotiate international treaties and present the final product to Congress for a simple yes or no vote, runs out in June of 2007. That doesn't leave much time. By focusing on the World Trade Organization, Canada is sending three signals: It prefers to negotiate in a forum where America's dominance is diluted by other, albeit lesser, powers such as the European Union, China and India. It seeks to establish global trading rules that will eventually supersede the weak — and hard to enforce — provisions of NAFTA. And it wants to build a framework in which Canada can broaden its commercial relations and reduce its dependence on the U.S. market. With 85 per cent of the country's exports now going to the United States, it will take more than a new global trade pact to propel Canadian manufacturers and service providers out into the wider world. Building new markets, especially in places where North American business practices aren't the norm, is hard, risky work. But it is significant that Ottawa — once one of the primary exponents of preferential trade deals — is turning away from regionalism. And it is notable that Peterson, unlike his predecessors Pierre Pettigrew, Sergio Marchi and Art Eggleton, sees no need to act as a cheerleader for Ronald Reagan's vision of a hemispheric free trade zone with America at the helm. That is not to say the federal Liberals have a clearly defined trade strategy. Peterson is not prepared to shut any doors, rule out any bilateral or regional deals or make any choices that might offend current or potential partners. "We believe our long-term interest lies in trade liberalization wherever we can promote it." But it does appear that Ottawa, which spent almost two decades bargaining for special treatment from the U.S., is moving back toward its old multilateral stance, pinning its hopes on a common set of trading rules and obligations for all nations. Peterson will go to the Summit of the Americas in Mar del Plata, Argentina, on Nov. 4. He will ask that the final communiqué include a reference to the importance of getting the FTAA talks back on track. He just won't be surprised — or heartbroken — if it doesn't happen. http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_PrintFriendly&c=Article&cid=1126648214656&call_pageid=968256290204

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