The Broadbent Blog


National Security, Protectionism and the New Trade Deal with the United States and Mexico

The Trudeau government has said that the new USMC agreement continues to give us an effective means of resolving bilateral disputes with the United States, allowing us to appeal to a special tribunal if  that country (or Mexico) has, in our view, violated the agreement.

But, as widely noted, United States tariffs on steel and aluminum which were invoked under the national security provisions of United States trade law (Section 32 of the Trade Expansion Act of 1962) remain in place.

And, the new trade deal hands the United States a sweeping exemption for these kinds of trade actions and unilateral protectionist measures taken in the name of national security. These provisions go well beyond the exemption currently in place in the NAFTA and WTO agreements.

The Liberal government has been less than frank in bringing this to the attention of Canadians.

The details are as follows:

The United States has long insisted that an exemption for national security provisions should be included in all trade and investment agreements.  

The current model is Article XXI of the World Trade Organization which is also reproduced in Article 2102 of the North American Free Trade Agreement.

This NAFTA clause is as follows:

 

Article 2102: National Security

  1. Subject to Articles 607 (Energy - National Security Measures) and 1018 (Government Procurement Exceptions), nothing in this Agreement shall be construed:

(a) to require any Party to furnish or allow access to any information the disclosure of which it determines to be contrary to its essential security interests;

(b) to prevent any Party from taking any actions that it considers necessary for the protection of its essential security interests

(i) relating to the traffic in arms, ammunition and implements of war and to such traffic and transactions in other goods, materials, services and technology undertaken directly or indirectly for the purpose of supplying a military or other security establishment,

(ii) taken in time of war or other emergency in international relations, or

(iii) relating to the implementation of national policies or international agreements respecting the non-proliferation of nuclear weapons or other nuclear explosive devices;

or

to prevent any Party from taking action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.

 

WTO countries including Canada, the European Union, China and Russia have charged that the steel and aluminum tariffs are really trade protectionist measures and are not justifiable under the national security exemption of the WTO.

The matter has not yet been adjudicated, but the plain reading of the clause is that the United States will have to show that imports of steel and aluminum pose a genuine threat to the maintenance of its military industrial capacity.

In this context, it is disturbing that Canada and Mexico have agreed to a new national security exemption in the USMC agreement which reads as follows:

 

Article 32.2: Essential Security

  1. Nothing in this Agreement shall be construed to:

(a) require a Party to furnish or allow access to information the disclosure of which it determines to be contrary to its essential security interests; or

(b) preclude a Party from applying measures that it considers necessary for the fulfilment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests.

(No further clauses qualifying this clause are in the text.)

 

This is a sweeping, self-defining exemption which seems to allow the United States to take more or less any trade action they want simply by declaring it to be a matter of national security.

Strikingly, the Canadian government summary of the agreement does not reference changes to the national security provisions, only saying that the  clauses “Ensures that parties can take necessary measures for the fulfilment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests.”

It could be argued that the WTO and NAFTA provisions already give the United States a great deal of latitude. But why expand the scope for such actions?

One can only think that we gave up much more than is being acknowledged.

 

Photo by Billie Grace Ward used under a Creative Commons licence.