Free Trade, Energy Security, and Transportation

Free Trade Agreements

• remove tarrifs, import quotas, preferences, boundaries, and fees on most goods and services traded between signatories

• lead to more free and open economic exchange, and (in theory) to an increase in the income, wealth, and well being for residents of the free trade regions

However…

Free trade agreements may have some very disturbing implications, including:

• Substitution of unelected corporate bodies for elected representatives in decision making about economic, social, and environmental policy

• Major transformations of traditional livelihoods (e.g., family farming) by corporatization / globalization

• Introduction of competitive players with little or no long-term interest in the welfare of the residents

• Loss of control of resources, land, and social institutions and services, ultimately including education and health care

Example 1:

Free Trade and Energy Security in Canada

Energy Security in Canada

• IF OUR NAFTA PARTNERS CAN HAVE NATIONAL ENERGY PROGRAMS, WHY CAN'T WE?

Gordon LaxerProfessor of Political Economy

University of Alberta

Article available online at:

• http://www.canadians.org/publications/CP/2005/spring/CP_summer_05_energy.pdf (PDF format), or

• http://www.canadians.org/publications/CP/2005/spring/NAFTA.html

Energy Security in Canada

• The USA and Mexico, Canada's North American Free Trade Agreement (NAFTA) partners, each have a policy of oil energy independence and public ownership.

• While our NAFTA partners are looking after their own energy security, Canada is the only NAFTA country prevented from doing so.

Energy Security in Canada

WHY?

• Canada is required to continue oil and gas exports to the USA even in times of shortage.

• Under the Proportionality Clause negotiated in the 1993 FTA, Canada can cut exports to the U.S. to deal with shortages only if it cuts the same proportion of supplies to Canadians.

Energy Security in Canada• Canada currently produces about 40 per cent more oil

than it consumes and so should not have to worry about shortages.

• Yet, because of NAFTA, Canada has put itself in a position that is as precarious as that of the United States, relying on imports of oil from offshore.

• Canada now exports 70 per cent of its supply to the U.S., and imports almost 60 per cent of the oil it consumes.

Energy Security in Canada

• The Mexicans were smart and got an exemption from energy sharing in times of shortage.

• A national energy policy for the U.S. and a continental energy market for Canada is a “raw deal for Canada”.

• Instead of negotiating further integration with the U.S., why not push for a Mexican-style exemption for Canada?

Example 2:

Free Trade and Toxic Substances: The sad case of MMT

MMT (Methylcyclopentadienyl manganese tricarbonyl)

• used for many years in Canada as a fuel additive to boost octane and to prevent valve problems in old cars designed for leaded fuel

• a suspected neurotoxin and respiratory toxin (manganese may cause memory impairment, tremors, and psychosis similar to Parkinson's Disease)

MMT (Methylcyclopentadienyl manganese tricarbonyl)

• banned in California and most of the US eastern seaboard

• 85% of U.S. gasoline is MMT free• use of MMT in US gasoline prohibited by US EPA

in 1994 • virtually every European country has also banned

the additive • Government of Canada banned trade and

transportation of MMT in 1996 due to health concerns

MMT (Methylcyclopentadienyl manganese tricarbonyl)

• Ethyl Corporation (now Afton Chemical) objected

• NAFTA Chapter 11 allows corporations to sue a government for compensation if that government passes a law that harms a corporation's profits or reputation ->

• Ethyl used Chapter 11 of NAFTA to sue Canada for 350 million dollars - the amount Ethyl says the ban cost them in lost profits and damage to their reputation

In an out of court settlement, the Govt. of Canada:

• paid US $13 million in damages to Ethyl Corp.

• agreed as a part of the settlement to allow MMT back into the Canadian market

• issued a statement through Health Canada (now buried, and available through special request only) saying that the additive poses no health threat

• Contrast health concerns with industry position (Afton Chemical, manufacturer of MMT)