<html><head><meta http-equiv="Content-Type" content="text/html charset=utf-8"></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space;" class=""><div class="WordSection1" style="page: WordSection1;"><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><a href="https://www.thestar.com/opinion/star-columnists.html" style="color: rgb(149, 79, 114);" class=""><b class=""><span style="font-size: 15pt; font-family: Helvetica, sans-serif; color: rgb(0, 101, 164); letter-spacing: -0.25pt;" class="">Toronto Star</span></b></a><span style="font-size: 15pt; font-family: Helvetica, sans-serif; color: rgb(64, 64, 64);" class=""><o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><b class=""><span style="font-size: 24pt; font-family: Helvetica, sans-serif; color: rgb(51, 51, 51); letter-spacing: -0.3pt;" class="">On NAFTA, Canada agrees to discuss the unthinkable<o:p class=""></o:p></span></b></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><b class=""><i class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">Sometimes governments talk tough on trade to divert attention when they are preparing to cede ground, writes Thomas Walkom.<o:p class=""></o:p></span></i></b></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Helvetica, sans-serif; color: rgb(115, 115, 115); letter-spacing: -0.2pt;" class="">By </span><a href="https://www.thestar.com/authors.walkom_thomas.html" style="color: rgb(149, 79, 114);" class=""><b class=""><span style="font-size: 15pt; font-family: Helvetica, sans-serif; color: rgb(0, 101, 164); text-transform: uppercase; letter-spacing: -0.25pt;" class="">THOMAS WALKOM</span></b></a><b class=""><span style="font-size: 15pt; font-family: Helvetica, sans-serif; color: rgb(51, 51, 51); text-transform: uppercase; letter-spacing: -0.25pt;" class=""> </span></b><span style="font-size: 15pt; font-family: Helvetica, sans-serif; color: rgb(115, 115, 115); letter-spacing: -0.2pt;" class="">National Affairs Columnist<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Helvetica, sans-serif; color: rgb(115, 115, 115); letter-spacing: -0.1pt;" class="">Sun., Jan. 14, 2018<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Helvetica, sans-serif; color: rgb(115, 115, 115); letter-spacing: -0.1pt;" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">Canada seems to be quietly backing down on the North American Free Trade Agreement. It is now willing to bargain U.S. demands that the Liberal government had formerly dismissed as deal-breakers.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">That seems to be the gist of several days of confusing messages on the NAFTA negotiations coming out of Ottawa.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">Foreign Affairs Minister Chrystia Freeland set the table last week when she told reporters that Ottawa has come up with “creative” ideas for dealing with the impasse in the three-way talks between Canada, Mexico and the U.S.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">The talks, which are due to resume later this month in Montreal, have been stalled on U.S. demands that Canada and Mexico have called so outrageous as to be not worth discussing.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">One would gut portions of the agreement that allow independent panels to rule on disputed trade and economic policies. Another would require autos imported to the U.S. from Canada and Mexico to contain at least 50 per cent American content.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">Yet others would bias government procurement rules in America’s favour and add a sunset clause stipulating that the treaty automatically expire after five years unless explicitly renewed.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">Canada called these ideas deal-breakers and, to the irritation of the Americans, refused to provide counterproposals.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">At the time, the Liberal government was excoriated by former Conservative prime minister Stephen Harper as unduly stubborn. In effect, he said that if Canada wants any kind of trade treaty with the U.S., it may have to accept one that is significantly worse than the current NAFTA.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">The Liberals pooh-poohed Harper then. But now they appear more receptive to his advice.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">The Globe and Mail reports that Canada will propose technical changes to auto content rules in order to mollify the Americans. The newspaper also reports that Canada is mulling over proposals to change three dispute settlement chapters in order to make them more acceptable to Washington.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">One, Chapter 19, allows signatories to challenge trade practices before independent panels. These panels can rule only whether the alleged offender is following its own trade laws. They do not have the power to change those laws.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">But the Americans hate Chapter 19 anyway. Conversely, the Canadians love it, arguing that a trade deal without something like Chapter 19 would be pointless.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">Another, Chapter 11, allows foreign investors to challenge and ultimately overturn host country laws that interfere with their profitability. It has been used successfully several times against Canada, but all attempts to use it against the U.S. have failed.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">Yet for some inexplicable reason, the Canadians want to keep Chapter 11 while the Americans, quite sensibly, want to give governments the right to opt out of it.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">Chapter 20, which gives governments the right to challenge other signatories that have failed to adhere to their NAFTA commitments, is rarely used. The Americans want it killed nonetheless.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">How much Canada is willing to compromise on its so-called red line demands in order to accommodate U.S. President Donald Trump remains unclear. Perversely, one indication that the Liberal government may be preparing to cave on NAFTA is its decision to take a harder rhetorical line against the U.S. in the separate softwood lumber dispute.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">Ottawa is challenging the U.S. decision to impose punitive duties on Canadian softwood lumber at the World Trade Organization. That in itself is not unusual. What is unusual is the tough-guy rhetoric accompanying it.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">“When you stand strong in sending a message that says … we’ll stand up for Canadian workers, you get respect,” Trade Minister Francois-Philippe Champagne said last week about the WTO challenge. “When people see that you’re firm, you get respect.”<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">Sometimes governments talk tough when they are tough. But sometimes they do it to distract attention when they are preparing to cede ground.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">We shall see which holds here.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><b class=""><i class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></i></b></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white;" class=""><b class=""><i class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class="">Thomas Walkom</span></i></b><i class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""> appears Monday, Wednesday and Friday.</span></i><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><o:p class=""></o:p></span></div><div class=""><i class=""><span style="font-size: 15pt; font-family: Georgia, serif; color: rgb(64, 64, 64);" class=""><br class=""></span></i></div></div></body></html>