Softwood Lumber

[Toro]

We should also use it before we slip accidentally into a situation where we are forced to greatly increase our oil exports to the US in the current emrgency. We would then not be able to return to normalcy if the crunch eases.

I hear this a lot from the Left. Its sheer fiction.

We will! That is what NAFTA is all about. You should read the appropriate provision: it has been commented on in the Press many times, though, so it should be obvious.

I think you should read the provision in NAFTA about energy. There is nothing in there about "forcing" exports to the US.

Here's what it says

Article 605: Other Export Measures

    A Party may maintain or introduce a restriction otherwise

justified under the provisions of Articles XI:2(a) and XX(g), (i)

and (j) of the GATT with respect to the export of an energy or

basic petrochemical good to the territory of another Party, only

if:

    (a) the restriction does not reduce the proportion of the

total export shipments of a specific energy or basic

petrochemical good made available to such other Party

relative to the total supply of that good of the Party

maintaining the restriction as compared to the

proportion prevailing in the most recent 36-month

period for which data are available prior to the

imposition of the measure, or in such other

representative period on which the Parties involved may

agree;

http://www-tech.mit.edu/Bulletins/Nafta/06.energy

Its pretty obvious, as you say.

[I Miss Trudeau]

(a) the restriction does not reduce the proportion of the

total export shipments of a specific energy or basic

petrochemical good made available to such other Party

relative to the total supply of that good of the Party

maintaining the restriction as compared to the

proportion prevailing in the most recent 36-month

period for which data are available prior to the

imposition of the measure, or in such other

representative period on which the Parties involved may

agree;

Thats a whole lot of effort to go to just to concede the point to Eureka.

[Toro]

Thats a whole lot of effort to go to just to concede the point to Eureka.

I'll expand it it up further and explain it then.

(a) the restriction does not reduce the proportion of the

total export shipments of a specific energy or basic

petrochemical good made available to such other Party

relative to the total supply of that good of the Party

maintaining the restriction as compared to the

proportion prevailing in the most recent 36-month

period for which data are available prior to the

imposition of the measure, or in such other

representative period on which the Parties involved may

agree;

So, in other words, if tomorrow, we wake up to find that Canada's reserves are halved, and Canada decides to put on export restrictions, then Canada can restrict half of what it was exporting to the US. Eureka was saying that Canada is forced to greatly increase the exports of oil. That's false. There is nothing anywhere in NAFTA that says Canada must continue to export an absolute amount of energy to the US, let alone increase the volume.

Here's the entire chapter (excluding the addendum pertaining to Mexico). Show me where it says what eureka is arguing

Chapter Six

                      Energy and Basic Petrochemicals

Article 601: Principles

1.  The Parties confirm their full respect for their

Constitutions.

2.  The Parties recognize that it is desirable to strengthen the

important role that trade in energy and basic petrochemical goods

play in the North American region and to enhance this role

through sustained and gradual liberalization.

3.  The Parties recognize the importance of having viable and

internationally competitive energy and petrochemical sectors to

further their individual national interests.

Article 602: Scope and Coverage

1.  This Chapter applies to measures relating to energy and

basic petrochemical goods originating in the territories of the

Parties and to measures relating to investment and services

associated with such energy and basic petrochemical goods, as set

forth in this Chapter.

2.  For purposes of this Chapter, energy and basic petrochemical

goods refer to those goods classified under the Harmonized System

as:

    (a) Chapter 27 (excluding: subheadings 2707.10, 2707.20,

2707.30, 2707.40, 2707.60, 2707.91, 2707.99 (except

solvent naphtha, rubber extender oils and carbon black

feedstocks), and in subheading 2710.00 (only normal

paraffin mixtures in the range of C9 to C15), and in

heading 2711 (only ethylene, propylene, butylene and

butadiene, in purities over 50 percent));

    (b subheading 2612.10;

    © subheadings 2844.10 through 2844.50 (only with respect

to uranium compounds classified under those

subheadings);

    (d) subheading 2845.10;

    (e) subheading: 2901.10 (ethane, butanes, pentanes,

hexanes, and heptanes only);

3.  Except as otherwise specified in Annex 602.3, energy and

petrochemical goods and activities shall be governed by the

provisions of this Agreement.

Article 603: Import and Export Restrictions

1.  Subject to the further rights and obligations of this

Agreement, the Parties incorporate the provisions of the General

Agreement on Tariffs and Trade (GATT), with respect to

prohibitions or restrictions on trade in energy and basic

petrochemical goods.  The Parties agree that this language does

not incorporate their respective protocols of provisional

application to the GATT.

2.  The Parties understand that the provisions of the GATT

incorporated in paragraph 1 prohibit, in any circumstances in

which any other form of quantitative restriction is prohibited,

minimum or maximum export-price requirements and, except as

permitted in enforcement of countervailing and antidumping orders

and undertakings, minimum or maximum import-price requirements.

3.  In circumstances where a Party imposes a restriction on

importation from or exportation to a non-Party of an energy or

basic petrochemical good, nothing in this Agreement shall be

construed to prevent the Party from:

    (a) limiting or prohibiting the importation from the

territory of any Party of such energy or basic

petrochemical good of the non-Party; or

    (b requiring as a condition of export of such energy or

basic petrochemical good of the Party to the territory

of any other Party that the good be consumed within the

territory of the other Party.

4.  In the event that a Party imposes a restriction on imports

of an energy or basic petrochemical good from non-Party

countries, the Parties, upon request of any Party, shall consult

with a view to avoiding undue interference with or distortion of

pricing, marketing and distribution arrangements in another

Party.

5.  Parties may administer a system of import and export

licensing for energy and basic petrochemical goods provided that

such system is operated in a manner consistent with the

provisions of this Agreement, including paragraph 1 and Article

1502 (Monopolies and State Enterprises).

6.  In addition, the Parties recognize the provisions of

Annex 603.6.

Article 604: Export Taxes

    No Party shall maintain or introduce any tax, duty, or

charge on the export of any energy or basic petrochemical good to

the territory of any other Party, unless such tax, duty, or

charge is also maintained or introduced on such energy or basic

petrochemical good when destined for domestic consumption.

Article 605: Other Export Measures

    A Party may maintain or introduce a restriction otherwise

justified under the provisions of Articles XI:2(a) and XX(g), (i)

and (j) of the GATT with respect to the export of an energy or

basic petrochemical good to the territory of another Party, only

if:

    (a) the restriction does not reduce the proportion of the

total export shipments of a specific energy or basic

petrochemical good made available to such other Party

relative to the total supply of that good of the Party

maintaining the restriction as compared to the

proportion prevailing in the most recent 36-month

period for which data are available prior to the

imposition of the measure, or in such other

representative period on which the Parties involved may

agree;

    (b the Party does not impose a higher price for exports of

an energy or basic petrochemical good to such other

Party than the price charged for such energy good when

consumed domestically, by means of any measure such as

licenses, fees, taxation and minimum price

requirements.  The foregoing provision does not apply

to a higher price which may result from a measure taken

pursuant to subparagraph (a) that only restricts the

volume of exports; and

    © the restriction does not require the disruption of

normal channels of supply to such other Party or normal

proportions among specific energy or basic

petrochemical goods supplied to the other Party such

as, for example, between crude oil and refined products

and among different categories of crude oil and of

refined products.

Article 606: Energy Regulatory Measures

1.  The Parties recognize that energy regulatory measures are

subject to the disciplines of:

    (a) national treatment, as provided in Article 301;

    (b import and export restrictions, as provided in Article

603; or

    © export taxes, as provided in Article 604.

2.  Each Party shall seek to ensure that in the application of

any energy regulatory measure, energy regulatory bodies within

its territory avoid disruption of contractual relationships to

the maximum extent practicable, and provide for orderly and

equitable implementation appropriate to such measures.

Article 607: National Security Measures

1.  No Party shall maintain or introduce a measure restricting

imports of an energy or basic petrochemical good from, or exports

of an energy or basic petrochemical good to, another Party under

Article XXI of the GATT or under Article 2102 (National

Security), except to the extent necessary to:

    (a) supply a military establishment of a Party or enable

fulfillment of a critical defense contract of a Party;

    (b respond to a situation of armed conflict involving the

Party taking the measure;

    © implement national policies or international agreements

relating to the non-proliferation of nuclear weapons or

other nuclear explosive devices; or

    (d) respond to direct threats of disruption in the supply

of nuclear materials for defense purposes.

2.  The Parties recognize the provisions of Annex 607.2.

Article 608: Miscellaneous Provisions

1.  Canada and the United States shall act in accordance with

the terms of Annexes 902.5 and 905.2 of the Canada - United

States Free Trade Agreement.

2.  The Parties agree to allow existing or future incentives for

oil and gas exploration, development and related activities in

order to maintain the reserve base for these energy resources.

3.  Canada and the United States intend no inconsistency between

the provisions of this Chapter and the Agreement on an

International Energy Program (IEP).  In the event of any

unavoidable inconsistency between the IEP and this Chapter, the

provisions of the IEP shall prevail to the extent of that

inconsistency as between Canada and the United States.

Article 609: Definitions

For purposes of this Chapter:

consumed means transformed so as to qualify under the rules of

origin set out in Chapter Four (Rules of Origin), or actually

consumed;

restriction means any limitation, whether made effective through

quotas, licenses, permits, minimum or maximum price requirements

or any other means;

energy regulatory measure means any measure by federal or sub-

federal entities that directly affects the transportation,

transmission or distribution, purchase or sale, of an energy or

basic petrochemical good;

first hand sale refers to the first commercial transaction

affecting the good in question;

Independent Power Producer (IPP) means a facility that is used

for the generation of electric energy exclusively for sale to an

electric utility for further resale;

investment means investment as defined in Chapter Eleven

(Investment);

total supply means shipments to domestic users and foreign users

from:

    (a) domestic production;

    (b domestic inventory; and

    © other imports, as appropriate; and

total export shipments means the total shipments from total

supply to users located in the territory of the other Party.

http://www-tech.mit.edu/Bulletins/Nafta/06.energy

[Guest eureka]

How does that contradict me? Canada's production of oil will increase with the Tar Sands development. The US proportion will increase. Canada cannot reduce that proportion under the terms of the Agreement. It is rather simple, really, and should not be expanded into legal jargon.

That is only on the energy front, too.

Rather than going into Wheat, lumber, steel, and other products that have all suffered at the use of the NAFTA provisions by the USA, let me just give a short paragraph indicative of the relationship and its effect on Canada.

US companies can sue the Canadian government to overturn Canadian Laws related to trade exports and pricing. Conversely, the US can amend its trade laws without Canada's agreement - and has done so several times. The dispute mechanism can only decide on whether the US has applied its own law correctly.

In short, Canada has surrendered its sovereignty to American corporate inteersts and it has ceded control of its economy to those interests with legal support from an Agreement that can in every important dispute, be interpreted only in teh light of American Law.

We get nothing of advantage from the Trade Agreements. The very modest increases in trade that followd would likely have occurred anyway. As an example,wrt to the sityation that has spurred the current anger, before Free Trade, 90% of Canadian Lumber entered the US tariff free.

The Agreement is all about American protectionism and Canadian capitulation to American corporate interests.

The Agreement is already at an end in any real sense. Once the US broke the contract, the contract was at an end. Any penalty should legally be borne by the US. None can be assessed against Canada.

[Toro]

How does that contradict me? Canada's production of oil will increase with the Tar Sands development. The US proportion will increase. Canada cannot reduce that proportion under the terms of the Agreement. It is rather simple, really, and should not be expanded into legal jargon.

This is exactly what you wrote

We should also use it before we slip accidentally into a situation where we are forced to greatly increase our oil exports to the US in the current emrgency. We would then not be able to return to normalcy if the crunch eases.

We are not "forced" to greatly increase our oil experts. That is flat out wrong. There is absolutely no where in the agreement that says what you are arguing. You said that Canadians don't understand what's in the agreement, then when I post the actual agreement, you say its legal jargon.

US companies can sue the Canadian government to overturn Canadian Laws related to trade exports and pricing. Conversely, the US can amend its trade laws without Canada's agreement - and has done so several times. The dispute mechanism can only decide on whether the US has applied its own law correctly.

Show me where in the agreement it says that Canada cannot reciprocate. Here's the agreement.

http://www-tech.mit.edu/Bulletins/nafta.html

Where does it say that the US companies can sue the Canadian government to overturn laws but Canada can't do likewise?

Where does it say that the US can amend its trade laws that would violate the NAFTA agreement?

Where does it say that the dispute mechanism can only decide on whether the US has applied its own law correctly. Here's the link to Chapter 20

http://www-tech.mit.edu/Bulletins/Nafta/20.dispute

[Guest eureka]

If Canada increases its production, then it increases the proportion that is exported to the US. That remains so. So it is not flat out wrong.

As for whether Canadians do not understand what is in the Agreement, I have posted in earlier discussions a couple of gems that have elicited no respons to this time but are now showing up.

One is, the American Chief Negotiator, Fred Yeutter was, I think, the name, wrote in a memo to his superiors, that, "We have got everything we wanted. The Canadian economy will be integrated into the American within twenty years." Those may not be the exact words but they are close.

The second is that Sylvia Ostry said that the Canadian negotiators had no mandate to negotiate but were to give the Americans what they wanted. Again, I do not recall the exact words but that was the tenor.

For the rest, I have no time to go through the words of the Agreement. I do, however, have two or three books on the Agreement, including Orchard's, and other books of essays that include many on the Trade Agreements. I don't know of one that does not say what I say other than a few essays that say nothing about these aspects and are by the Continentalists.

Mel Clark, the Canadian Chief negotiator for the GATT also says the same in greater detail.

I prefer their summaries to any quick perusal of the NAFTA agreement. Clark says it categorically.

[mirror]

Boys & girls in the oil patch, hang onto your hats because there is going to be a big push to use our supply of oil to fight back against the softwood lumber tariffs.

There is a world demand for our oil so, if it were me I would start contacting other buyers for Canada's oil and begin now to make alternate arrangements than selling to the US. Either the oil patch is part of Canada, and works together with the lumber industry on this, or it is not:

Link

Federal NDP leader Jack Layton said Canada should stop being the "poster boy for good behaviour" in international trade.

Layton said while retaliatory duties on crops like U.S.-grown corn might help persuade them to drop punitive duties on Canadian softwood lumber, his personal preference is oil.

"I continue to believe that would be most effective," he said during a visit to London, Ont. "Believe me, oil is the one thing the U.S. is interested in above all else."

[Riverwind]

Boys & girls in the oil patch, hang onto your hats because there is going to be a big push to use our supply of oil to fight back against the softwood lumber tariffs.

A big push from Layton does not mean much - the decision is made by the gov't ministers not parliment and Martin would never do something that would piss people off in Alberta even more than they are now (he may be a ditherer but he is not a blithering idiot). Any tariffs will be broad based and affect all regions and most likely have the side benefit of helping the Canadian industry.

That said, you might see some memorandums of understanding between the Chinese gov't and Canada regarding a pipeline across the Rockies. That would likely get the US gov't attention because they think Alberta oil sands exclusively belong to the US and will not like the idea of competition from China.

[mirror]

Right, and the Layton New Democrats with only 19 members, managed to get

$4.6 billion in funding for social democratic priorities in the last session of Parliament. What makes you think it is going to be any different in September? It isn't, and it may get even get a lot worse for the Liberals in the Fall.

The biggest problem with the Liberals is their arrogance. It caused them to come within one vote of having their government defeated in the Spring. They need to pay a lot of attention to what Layton says. Remember they are in minority government. They seem to forget they no longer have a majority government, and they no longer call the shots without the approval of another political party. I think they are about to be reminded quite soon.

[Toro]

If Canada increases its production, then it increases the proportion that is exported to the US. That remains so. So it is not flat out wrong.

Not necessarily. If Canadian consumption is rising faster than American consumption, then the proportion going towards American exports falls. Also, increased production can also mean exports to other countries increases, which has nothing to do with exports to the US.

The agreement, of course, has nothing to do with production. It has everything to do with proportion of exports and reserves. That's not production. What the agreement says is that if Canada imposes an export restriction Canada must maintain the proportion of exports to reserves over the past 3 years. So we are not forced to increase exports to the US at any time, for any reason. There is nothing that says America can keep can keep a higher proportion of Canada's energy supply. Nothing at all. That's a myth.

What we cannot do is one day arbitrarily cut off supply. That's not unreasonable. And the only reason why Canada would do that is because its resources are depleting and there is an energy crisis. And, if that were the case, then the volume of exports to the US that would need to be maintained, if the government imposed an export restriction, would fall anyways. As long as there are 180 billion barrels of oil reserves in Canada, that is not going to happen in our lifetime.