Chrétien Sings a Familiar Tune

Defenders of former Prime Minister Brian Mulroney often argue how unfair it is that he remains disliked by Canadians, while Jean Chrétien, who has pursued many of the same policies, appears to enjoy great popularity.

I've always felt this was a fundamental misunderstanding of why people dislike Mr. Mulroney. It wasn't just his policies; it was his deferential attitude towards Washington and U.S. corporate power that grated on us. Mr. Mulroney's keenness to please the powerful - captured in that photo-op of him singing "When Irish Eyes are Smiling" with Ronald Reagan - left us feeling vaguely embarrassed about being Canadian.

But what's fascinating is how Jean Chrétien manages to get away with a Mulroney-style deference to Washington without being seen in the same grovelling light. I think it's one of those things that people just don't notice about him. When someone other than Joe Clark loses luggage, who notices? When someone other than Brian Mulroney knuckles under to the Americans, who's paying attention?

So, for instance, it's barely been noticed that, in the aftermath of the Quebec Summit, the Chrétien government has retreated from the critical stance it was taking towards some aspects of NAFTA, the North American Free Trade Agreement. The new tune coming out of Ottawa sounds surprisingly like "When Irish Eyes are Smiling."

Up until the summit last April, Mr. Chrétien allowed his Trade Minister, Pierre Pettigrew, to express publicly reservations about NAFTA. Like other critics, Mr. Pettigrew singled out NAFTA's controversial Chapter 11, which gives foreign corporations the right to bypass domestic courts and challenge the laws and regulations of democratically elected governments before secret international tribunals.

Mr. Pettigrew's criticisms were careful and fairly mild. In an op-ed piece in the Post last March, he argued that the rights of corporate investors should be protected against arbitrary actions by governments. But he went on to argue that some of the NAFTA tribunal rulings seemed to go too far in favouring investors, and risked limiting the power of governments to defend the public interest. "[W]hen investors' interests run contrary to the public interest, public policy - as long as it is openly arrived at and fairly applied - should prevail," Mr. Pettigrew wrote.

Now this seems like pretty straight-forward stuff. My guess would be that most Canadians would certainly agree that, in a clash between the rights of foreign investors and the protection of the Canadian public interest, the public interest should prevail.

Mr. Pettigrew pointed to the case of Metalclad, a U.S. company that used NAFTA to sue the government of Mexico after the company was denied a permit to build a toxic waste facility in the Mexican town of Guadalcazar. The permit had been denied because the people of Guadalcazar feared the toxic waste might seep into their water - not an unreasonable fear, when you think about it. Still, the NAFTA panel ruled that Metalclad's rights had been violated and ordered Mexico to pay US$16-million in damages, When the case was appealed by Mexico (and ultimately upheld), the Canadian government intervened to express its concerns that such rulings could compromise the ability of governments to pursue important objectives, like environmental protection.

All this had fuelled hopes that Canada might take on a leadership role in pushing for changes to rein in the sweeping power corporations enjoy under NAFTA. Instead it was Mr. Pettigrew who got reined in.

After Mr. Chrétien spent a few days with George Bush at the Summit in April, he apparently got a much clearer sense of how deeply pleased Mr. Bush and corporate America are by NAFTA and particularly Chapter 11. Indeed, the United States released a copy of a letter, signed by 29 of the largest U.S. corporations and business lobby groups, indicating that they wanted NAFTA's investor protections retained as is, and similar protections built into future trade deals.

Yes, sir! Since then, both Mr. Chrétien and Mr. Pettigrew have fallen into line, playing down any dissatisfactions with NAFTA or Chapter 11. Although the three NAFTA trade ministers are scheduled to meet next month - the perfect venue to press for changes - Mr. Chrétien has made it clear that Canada won't be pressing for anything. He cheerfully told the House of Commons that Chapter 11 "has been quite positive for Canada." This kind of enthusiasm from the Prime Minister is likely to encourage more companies to bring NAFTA lawsuits against Canada, argues trade analyst Scott Sinclair.

It also brings back memories of Mr. Mulroney. In the the original Canada-U.S. free trade negotiations in the late '80s, one of Washington's top priorities was to get Canada to revise its laws to provide greater patent protection for U.S. brand-name drugs. Although the changes meant Canadians would face much higher drug prices, Mr. Mulroney was willing to oblige. The only issue was how.

Anxious to make it appear that Canada was not simply capitulating to U.S. pressure in the trade talks, the Mulroney government introduced the requested changes months before the final trade deal was announced, suggesting that it had intended to make the changes anyway. This little ruse was exposed when the United States later released a summary of the key features of the trade deal, and inadvertently included changes in Canada's drug patent laws.

Mr. Chrétien's capitulation is just as profound, and the implications even more far-reaching. Mexico is too weak to challenge the United States over provisions in NAFTA, leaving Canada the only partner with enough political and economic clout to push for changes. And if no country objects now, the same investor protections will be incorporated into the hemisphere-wide trade deal currently being negotiated.

Interestingly, Mr. Chrétien has been under attack in Canada in recent weeks for supporting a large pay increase for himself. Personally, I have no objections to paying a high salary to our Prime Minister; defending the interests of Canada is something that takes skill, tenacity and boldness. On the other hand, if the job simply requires caving in to Washington, maybe we should rethink that compensation package.

Originally published by the National Post. Linda McQuaig's column appears every second Monday.

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