Canada needs to look at BMD

“Rocket Man” has done it again. Each time North Korea’s Kim Jong-un improves his missile projection capacity, the potential increases that a missile intended for the United States will accidentally land in Canada. The Trudeau government needs to reconsider ballistic missile defence (BMD) as a shield to protect Canadians against this growing threat.

The government dodged consideration of BMD in its defence policy review last June. It got a perfunctory single line: “Canada’s policy with respect to participation in ballistic missile defence has not changed.” It meant that the policy of the Paul Martin government that was continued under Stephen Harper – a polite decline – remains in effect.

There is a reference in the defence review to discussing with the U.S. government the defence of North America against “all perils.” This should be sufficient cover to review its June decision.

When the Martin government considered BMD in 2005, the answers to three critical questions were deemed inadequate:

  • Does BMD work and how would it protect Canada?
  • How much participation would Canada have in what is essentially a U.S.-managed system?
  • How much would BMD cost?

These are still good questions. The current government should get these answers and share them with Canadians. It should begin by looking at the useful work done by the Senate national defence committee. It has twice examined BMD. Its June, 2014, report unanimously recommended that Canada participate in BMD. The witnesses supporting this recommendation included two former Liberal defence ministers, Bill Graham and David Pratt. More recently, retired general Roméo Dallaire added his support for BMD.

This week’s test is further evidence of North Korea’s improved capacity to project a warhead by ballistic missile across continents. As U.S. President George W. Bush reportedly asked Mr. Harper in 2006, what happens if a North Korean missile aimed at Los Angeles or Seattle winds up heading toward Calgary or Vancouver? Reconsideration was on the Harper government’s agenda had it received a fourth term.

In testimony this fall to parliamentarians, NORAD Deputy Commander Pierre St-Amand, current ranking Canadian at Colorado Springs, said that “U.S. policy is not to defend Canada,” although in the “heat of the moment” the U.S. could do so, “but that would be entirely a U.S. decision.”

But that is no guarantee, since the U.S. system is limited in size and the North Korean ICBM force of uncertain number. Unless we are inside the system – and making a contribution – we have no assurances, even if the U.S. command would wish to protect a Canadian target that is remote from a U.S. asset (think Edmonton or Calgary).

Consideration of Canadian engagement on BMD should cover all possible initiatives beyond the simple positioning of anti-missile sites in Canada.

These would range from a government declaration acknowledging the missile threat to Canada; to allocating additional Canadian Forces resources to the North American Aerospace Defence Command; to equipping the Royal Canadian Navy with appropriate gear to detect missiles; to radar arrays in Canada; to writing a cheque to support research. It would also oblige more attention to security in Canada’s North.

If we decide to participate, we do it because it serves Canadian interests and protects Canadians. We do not do it because we are doing the Americans a favour. On the contrary, the U.S. would be doing us a service, having made the initial, and ongoing, investments.

The U.S. is not asking us to join BMD; it did that in 2005, and we said no.

Asking now to be included would probably result in a “yes,” but it would require the U.S. to make changes to a system in which they have invested billions of dollars. Donald Trump being Donald Trump, there would be a cost to Canada.

Canada has participated in NORAD’s missile warning function for decades. Joining BMD would probably result in NORAD and the U.S. Northern Command taking responsibility for continental BMD defence. Bringing BMD into it would strengthen the binational institution that lies at the heart of the Canada-U.S. defence relationship.

Our European allies and Pacific partners employ BMD. It’s time for Canada to reconsider it. Even if the shield is imperfect, we need this additional insurance policy should errant missiles come our way.

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NAFTA could be dead if no major progress in early 2018, warns former Canadian trade negotiator

Source: Xinhua| 2017-11-25 07:01:37|Editor: Zhou Xin

OTTAWA, Nov. 24 (Xinhua) — The future of the North American Free Trade Agreement (NAFTA) could be determined early next year when negotiators from the United States, Canada and Mexico meet in late January for a sixth round of talks to rework the tripartite trade deal, a Canadian official involved in drafting NAFTA has said.

Retired Canadian diplomat Colin Robertson, who also helped negotiate the pre-NAFTA Canada-U.S. Free Trade Agreement (FTA) in the late 1980s, believes that if no significant progress is made on the most contentious issues early next year in the Canadian city of Montreal, NAFTA could be dead and its predecessor FTA could come back into force.

The fifth round of negotiations, which have concluded in Mexico City, produced no movement on such key areas of dispute as rules of origin in the automobile manufacturing industry, and raised the question of whether “the Americans are serious or are looking for an excuse to exit,” Robertson told Xinhua in an interview.

Following the end of the Mexico talks this week, U.S. Trade Representative Robert Lighthizer said in a statement that American negotiators “have seen no evidence that Canada or Mexico are willing to seriously engage on provisions that will lead to a rebalanced agreement” and that “absent rebalancing, we will not reach a satisfactory result.”

Canadian Foreign Affairs Minister Chrystia Freeland told reporters here that Canada “simply cannot agree to” some “extreme proposals” from the the United States.

“Our approach is to hope for the best and prepare for the worst and Canada certainly is prepared for every eventuality,” she said.

Mexico, Canada and the United States have been renegotiating NAFTA since August, at the request of U.S. President Donald Trump, who has alleged that the 23-year-old agreement has harmed his country and has threatened to withdraw from it.

The Trump administration wants to raise the minimum threshold for autos to 85 percent North American content from 62.5 percent as well as to require half of vehicle content to be from the United States.

Canada and Mexico as well as all North American carmakers and autoworkers unions oppose both proposals.

The Americans also want to eliminate the dispute-resolution mechanism under NAFTA, which has implications for Canada regarding its ongoing cross-border conflict with Washington over Canadian softwood lumber exports to the U.S. and the Boeing-Bombardier feud that affects both countries’ aerospace sectors.

In addition, the United States seeks to have a five-year sunset clause included in NAFTA in which the trade pact could terminate if all three countries fail to renew the revised agreement after five years.

Robertson said that such a clause could discourage investment from companies that typically seek a 15-to-25-year timeframe to realize some returns.

Canada’s participation in the Trans-Pacific Partnership, its trade agreement with the European Union (EU) and Prime Minister Justin Trudeau’s upcoming trip to China to advance exploratory talks for a trade deal could “send a signal to the U.S. that Canada has other options” for trade agreements, said Robertson.

Should NAFTA fall apart and the Trump White House rejects the Canada-U.S. FTA, both countries would revert to most favored nation status.

Robertson said that under that basic trade arrangement, “tariffs would be applied to most things Canada sells to the U.S.” and vice versa, and it could mean that it would be cheaper for Canada to buy tariff-free goods from Europe through the free trade agreement Canada has with the EU.

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NAFTA and Softwood Lumber Chapter XIX

Stacks of lumber are pictured at NMV Lumber in Merritt, B.C., Tuesday, May 2, 2017.

JONATHAN HAYWARD/THE CANADIAN PRESS

Canada’s decision to turn to the North American Free Trade Agreement for a solution to the latest softwood lumber dispute proves how critical the agreement’s dispute resolution mechanisms are to this country, a Canadian international trade expert said Wednesday.

Canada on Tuesday asked a review panel under Chapter 19 of NAFTA to investigate the countervailing duties imposed on Canadian softwood imports into the United States.

The U.S. argues Canada unfairly subsidizes its lumber industry, and the question for the panel will be whether the duties are legal under U.S. laws.

This is the fifth Canada-U.S. softwood lumber dispute since 1982, and the third in which Canada has sought relief under the dispute mechanisms of free trade agreements with the U.S. They have largely ruled in Canada’s favour in the past.

Colin Robertson, a former Canadian trade diplomat, said Wednesday it’s no surprise Canada made the application despite political battles with the U.S. over the very existence of the Chapter 19 dispute mechanism.

“It would not be logical for us not to use it and we had to use it within a certain time frame so of course we’re going to apply it,” said Robertson.

Chapter 19 of NAFTA means Canada can get a panel made up of U.S. and Canadian trade experts to decide if the duties follow U.S. trade law, rather than going to the U.S. court system.

Robertson said trade agreements were pursued by Canada in the first place largely to create a dispute settlement mechanism “to give us some relief from unfair application – and I stress unfair – of American trade law.”

“In a psychological fashion from a Canadian perspective (this) kind of underlines why Chapter 19 is essential,” he said.

However U.S. President Donald Trump wants Chapter 19 eliminated, and he has support from many U.S. industries who feel it is unconstitutional and that the American courts are best equipped to determine whether U.S. law is being upheld.

The Canadian government has indicated eliminating Chapter 19 is a non-starter.

Robertson said the negotiations on NAFTA are largely parallel to this particular dispute, and Canada and the U.S. almost certainly knew when the last softwood agreement expired in 2015, that we’d end up back at Chapter 19 eventually.

In the past, NAFTA panels have told the U.S. its laws did not allow it to determine whether Canada’s pricing system for wood was fair using U.S. market prices, or that if there was a subsidy at play it was never as big as what the Americans tried to suggest with their duties. In 2005, a NAFTA panel unanimously agreed the U.S. industry had not been injured by Canada’s stumpage fee system.

Canada would hope to have similar findings again.

NAFTA rules require a panel decision on this complaint be made no later than the end of September 2018.

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Why Halifax International Security Forum matters

What to expect from the 2017 Halifax International Security Forum

Participants will talk North Korean nuclear weapons and women in international security


Defence Minister Harjit Singh Sajjan at last year’s Halifax International Security Forum.   Katie Short

Participants from 91 democratic countries are in Halifax this weekend for the Halifax International Security Forum (HISF).

From Friday to Sunday 300 people will gather at the Westin Nova Scotian, including prominent politicians, military officials, business leaders, journalists, academics and NGO workers from around the world. Canadian Defence Minister Harjit Sajjan will host the event.

Robin Shepherd, the senior adviser for HISF, said this year’s main discussion topics will be ISIS, Russia, the NATO alliance, North Korean nuclear arms and women in international security.

“This is a sort of conference that has a set of core values that we believe in, you know, liberal democracy, and that certainly does make it different from other conferences,” he said.

Attendees participate in on-the-record panels as well as smaller, off-the-record talks, which Shepherd says allows for more frank and productive dialogue.

“You can be sick to death of conferences and summits where diplomats just give the official line,” said Shepherd, who previously worked as the Moscow bureau chief for The Times of London. “It’s really refreshing to have the opportunity to really delve deep into issues and try to shift the terms of debate.”

Shepherd will moderate sessions featuring the Secretary General of NATO, the chief executive of the Islamic Republic of Afghanistan, and the executive chairman of Alphabet Inc., Google’s parent company.

‘All about jaw-jaw’

Since 2009, the forum has seen more than 300 participants from 91 democratic countries and their international delegations come to Halifax. Canadian Defence Minister Harjit Sajjan travelled to Nova Scotia to host this year’s event.

Since it began in 2009, the conference has hosted a number of high-profile keynote speakers. Last year, U.S. Senator John McCain was tipped off about a dossier that contained potentially incriminating links between president-elect Donald Trump and the Russian government.

Colin Robertson is a former Canadian diplomat and current vice president of the Canadian Global Affairs Institute—he has attended HISF multiple times and will again this year. He said the forum is about conflict prevention.

“I do think it’s something Canada has done that really makes a difference,” said Robertson. “As Churchill said, ‘it’s always better to jaw-jaw than war-war, and this is all about jaw-jaw.’”

Robertson suggests the big draw is access to other participants. He said the formal plenary sessions are interesting, but “almost incidental” to smaller bilateral meetings. In groups of 15-20, participants leave the Westin on Saturday night for dinners at restaurants around Halifax, he said. Those talks are off-the-record.

‘Not some innocent confab’

Allan Bezanson, spokesperson and organizer for the local activism group No Harbour for War, opposes what Bezanson calls “militarist solutions” to international security issues. The group is planning an “anti-war rally” for Saturday afternoon.

Bezanson does agree with Robertson on one point—participants come to HISF to talk to each other, informally.

“The important thing about these conferences is it gets these people together so they can mingle in the hallways and in the hospitality suites, and all that, and work out their plans,” said Bezanson.

While both Robertson and Shepherd point to this mingling as a productive and convivial feature of the forum, Bezanson considers it suspect.

“It’s not some innocent confab; it’s very serious,” he said.


The HISF is held at the Westin Nova Scotian in downtown Halifax.   Cory Funk

Public and private sponsors

HISF was created in 2009 with funding from the Canadian government and the German Marshall Fund, a Washington, D.C.-based non-profit. The event was initially the “vision” of former Canadian defence minister and Nova Scotia MP, Peter MacKay, according to a 2015 media release.

In a phone interview, MacKay said he and HISF president Peter Van Praagh wanted to replicate similar forums from around the world.

“Among my various travels I had attended security forums in places like Munich and Brussels and Estonia and the Baltics, and these big international gatherings to me seemed like a very good forum to have discussions,” he said.

The Canadian government was a sponsor from the beginning, but MacKay wanted HISF to move away from that funding model.

“The intention was always that it would become completely independent of government funding, and more arms length,” he said.

According to their website, HISF became an independent non-profit organization in 2011. Today, it receives funding from public and private sponsors, including the Canadian Department of National Defence and Air Canada.

The forum is paid for by a public-private partnership, including the Atlantic Canada Opportunities Agency (ACOA) and the Department of National Defence. The defence department allotted $3.3 million for this year’s forum, while ACOA contributed $250,000.

Halifax impact

Former Canadian defence minister Peter MacKay said it’s a boon for the community of Halifax.

“People who probably wouldn’t be coming to this city otherwise, you have a weekend where the hotel is full, taxi cabs are being used, restaurants are being used,” he said in an interview Friday. 

Glenn Bowie, area director of sales and marketing at the Westin, agreed with MacKay that the security forum has an impact on the local economy.

He said last year rooms were booked at 12 different hotels for the weekend. This year, 20 private planes refuel at Halifax Stanfield International Airport, pilots and crew book hotel rooms for the weekend, tables are reserved at 21 restaurants and more than 20 vehicles are chartered for moving delegates from one place to the next.

“It’s so good for our city and a lot of (other) cities would love to have it,” said Bowie.

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NAFTA

Nafta Negotiators Set to Look for Small Wins After U.S. Threats

  • Talks on trade pact set to resume Wednesday in Mexico City
  • Mexico warns Nafta death will impact U.S, security cooperation
NAFTA is in real trouble, says Gregory Valliere, chief global strategist at Horizon Investments.

As Donald Trump pushes to overhaul U.S. trade ties abroad, negotiations with his two biggest export markets are resuming in hopes of finding new common ground on easier subjects — leaving the most contentious U.S. demands for later.

The fifth round of North American Free Trade Agreement talks starts Wednesday in Mexico City, two days earlier than initially scheduled. It’s the first meeting since U.S., Mexican and Canadian negotiators extended talks to March and added more time between sessions, abandoning Trump’s previous deadline.

U.S. Trade Representative Robert Lighthizer capped the last session by chastising Mexico and Canada for balking at certain demands — it was the U.S. that sought the extension, according to two government officials familiar with the proceedings who spoke on condition of anonymity. The most contentious U.S. demands are on dairy, automotive content, dispute panels, government procurement and a sunset clause.

Mexico is warning talks could impact immigration cooperation with the U.S., while Canada is effectively holding up the Trans Pacific partnership — a deal Trump quit, that was also effectively a Nafta update — as it pushes for improvements. Lighthizer has complained that Mexico and Canada aren’t agreeing to what was already in TPP.

One government official said Nafta negotiations this week are expected to focus on smaller issues related to modernizing the deal, and the thorniest discussions will be put off until later rounds. Many observers expect the same.

“Instructions are ‘let’s keep the ball moving, let’s not have fireworks,’” said Welles Orr, a former assistant U.S. Trade Representative under George H. W. Bush who is now a senior international trade adviser in law firm Miller & Chevalier’s international trade practice in Washington. U.S. lawmakers are fully focused on tax reform and that’s left little bandwidth to push quickly for a Nafta deal, Orr said.

He expects a handful of deals “on noncontroversial items to at least keep the pace of negotiations going and so that they can at least claim they’re making progress.”

‘Litmus Test’

Nafta covers more than $1 trillion a year in trade and government officials have described essentially two sets of negotiations — one focused on modernizing a 23-year-old agreement for an Internet era, and another where Mexico and Canada essentially rejected high-profile U.S. demands on subjects that bear Trump’s finger prints, like dairy and autos.

The negotiations, which started in August, cover 28 areas of trade. The countries have so far reached substantially or fully completed deals on chapters covering competition rules and small- and medium-sized enterprises. Chief negotiators are expected to arrive Friday and the ministers — Lighthizer, Chrystia Freeland and Ildefonso Guajardo — will join next week. A spokeswoman for Lighthizer declined to discuss the upcoming round.

Canada and Mexico are the first- and second-largest buyers of U.S. goods, but the U.S. still has a $53.1 billion merchandise trade deficit with Mexico through September of this year, and a shortfall of $12.4 billion with Canada. Trump has regularly criticized trade deficits and wants to reduce them; Canada and Mexico have said they’re not the best way to measure the success of a trade agreement.

“Nafta has become kind of a litmus test of U.S trade intentions” for other U.S. trading partners in Asia and Europe, said Colin Robertson, senior adviser at the Dentons LLP law firm and a former Canadian diplomat. The U.S. demands signal they’re seeking “a substantial redo” of a pact, and those kinds of negotiations typically take years, he said.

Remove Exports

The willingness to fight in public was obvious at the last round. Lighthizer said he was “surprised and disappointed by the resistance to change,” while Guajardo said Mexico has limits to what it can accept. Canada’s Freeland criticized a “winner-take-all mindset.” While Canada and Mexico may be able to compromise, the real question is whether the U.S. can too.

“What they’re asking of the Canadians and Mexicans is to take away their exports,” said Chad Bown, senior fellow at the Peterson Institute for International Economics. “It’s really back to the Trump administration to decide for itself how serious they are about those proposals. If they are serious about them, I don’t see a serious outcome.”

Mexican Foreign Minister Luis Videgaray warned over the weekend that Mexico will be less likely to cooperate with the U.S. on security and immigration if Nafta talks collapse. “It’s a fact of life and there is a political reality that a bad outcome on Nafta will have some impact on that,” he said in an interview Saturday at the Asia-Pacific Economic Cooperation summit in Vietnam. “We don’t want that to happen and we’re working hard to get to a good outcome.”

When asked on Nov. 2 about a deal, National Economic Council Director Gary Cohn offered conciliatory words. “We’re trying,” he said in Washington. “Negotiators are continuously meeting, and we’re continuously trying to get to a point where we think that American- based companies and American-based manufacturers are treated fairly in the agreement.”

Trump may have wiggle room after U.S. automakers urged him to keep Nafta, a pact he has said has led to one-sided trade and cost jobs.

Nafta Impact

Linda Hasenfratz, chief executive officer of auto parts maker Linamar Corp., said in an earnings call last week she sees four key areas of dispute — auto rules, the sunset clause, the dispute panels and government procurement. “There’s an opportunity to come to resolution on each of these issues if all parties want that to happen,” Hasenfratz, who sits on Canada’s Nafta advisory council, said on a Nov. 7 earnings call.

An American proposal for 50 percent U.S. content in vehicles has “no chance” of being agreed to, she said, but the overall content requirement could be raised from the current threshold, which requires 62.5 percent of a vehicle be sourced from the three Nafta countries.

If that happens, “there’s a chance we could win some new work,” Hasenfratz said. If Nafta dies, she said it’s likely they’d revert to World Trade Organization tariffs of between 2 and 2.5 percent. “The bottom line is, one way or another, we would deal with the 2 percent,” she said. “No one is going to spend billions of dollars shifting work to different countries for 2 percent.”

Reverting to WTO tariffs would cut Canadian GDP growth by a total of about 1 percent over five to 10 years, Royal Bank of Canada said in a report Friday. “The odds that NAFTA will be torn up, not simply amended, appear to be increasing,” Senior Economist Nathan Janzen wrote. “The end of NAFTA would be a negative outcome for the Canadian economy, but a manageable one.”

— With assistance by Kristine Owram, and Randy Woods

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