Mitch Potter of the Star reported this week on the increase in protectionism in the U.S.,
A small army of Canadian diplomats fanned out across Washington today in a full-court press to “contain the contagion” of Buy America trade protectionism.
Stressing that the frantic round of lobbying was “to educate, not to threaten,” Canada’s Deputy Head of Mission Guy Saint-Jacques led Ottawa’s effort to reach out to more than 75 members of Congress with a barrage of raw statistics showing how the benefits of free trade flow both ways.
Does the US have an argument that there should be an exception in dire situations, such as the current economic recession?
To put a hold on NAFTA and focus their attention domestically in order to revive a severely damaged economy?
With their international trade obligations, the US cannot legitimately argue or act on protectionist measures without some sort of backlash internationally, especially from Canada and Mexico through NAFTA.
The US does have an obligation to abide by NAFTA (although any NAFTA country can opt out of NAFTA so long as a 6 month cancellation notice is provided to the other members)
If US senators do not back down from the “Buy America†mentality and the US acts on additional protectionist measures, to the extent Canadian trade and investment is hindered, possible courses of action for the Canadian government include:
- Chapter 11 of NAFTA (which includes article 1122 – requiring each member government to consent to settle disputes by arbitration) – is concerned with investor-state dispute settlement; where complainants (investors) can bring a case against a state in front of a tribunal.
- Chapter 19 of NAFTA – deals strictly with goods; and complainants can urge their own national governments to take action.
- WTO – that can also issue binding rulings that can issue a reward for damages or compensation to a country