By Canadian Press

Save NAFTA’s Chapter 19, says Mulroney: ‘We had quite a fight in 1987 to get it’

Sep 22, 2017 | 3:30 PM

TORONTO — Former Prime Minister Brian Mulroney says it’s worth saving a key NAFTA dispute-settlement mechanism that he fought hard to include in the original bilateral free-trade deal, as the U.S. now calls for its elimination.

Mulroney says this system of private-arbitration panels in the North American Free Trade Agreement known as Chapter 19 has served “all three parties brilliantly for many years.”

“Some people disagree with that assessment, but they can make their case at the bargaining table and we see where it comes out,” he said.

“But I think it’s a valuable instrument in achieving objectives, legitimate objectives, for both sides.”

Mulroney made the comments as members of the original NAFTA negotiation team met with Foreign Affairs Minister Chrystia Freeland for two hours in Toronto on Friday.

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The meeting of the old guard and the new guard comes as Canada, the U.S. and Mexico head into the third round of NAFTA negotiations in Ottawa on Saturday. It’s the first set of talks to be held north of the border.

One issue likely on the bargaining table is Chapter 19, a third-party arbitration system to decide whether punitive duties are being applied unfairly.

It regulates disputes between companies over dumping, used successfully by Canada in cases such as the battle over softwood lumber. However, Washington critics have long detested Chapter 19, and have called for the arbitration system to be overhauled.

Chapter 19 was seen as Canada’s ultimate prize in the original bilateral free trade deal negotiated 30 years ago, the result of a tense call on the final night of negotiations involving Mulroney himself.

“We had quite a fight in 1987 to get it for Canada,” Mulroney said. “And it was incorporated into the NAFTA and subsequently into the World Trade Organization. And now into the (Trans-Pacific Partnership) .… It’s got to be pretty valuable for all those people to want to have it.”

Former ambassador to the U.S. Derek Burney, who also participated in the meeting with the foreign minister, said Chapter 19 was a way of “rectifying the power imbalance” between Canada and the U.S. economy.

“We wouldn’t have done the original agreement if we didn’t have it,” he said in Toronto on Friday.

“It gives us an opportunity to keep the Americans true to their own trade laws, just as they keep us adhering to our trade laws — that’s the beauty of it.”

When asked about his perspective on NAFTA now, Mulroney said it has generated “a lot of prosperity.”

“I was saying in there that I think that the three countries involved in NAFTA, I think they have seven per cent of the world’s population, and they generate 29 per cent of the entire wealth of the world,” he said.

“So that’s got to tell you how successful NAFTA has been for the three countries involved.”

However, U.S. officials have been vocal critics, with the latest salvo coming from President Donald Trump’s commerce secretary Wilbur Ross, who on Friday pointed to a new study that he says proves the need for tougher rules on auto-parts, a contentious issue on all sides.

Mulroney questioned how U.S. critics of NAFTA can declare that international trade is “harmful” given its low unemployment rate.

“There are nine-million jobs in the United States that are created by NAFTA,” he said.

“We’re all entitled to our opinions and I’m not surprised with different views because they’re leading up to a negotiation. So Mr. Ross takes his position, and we take ours, and the Mexicans take theirs. … I think it will all come out in the wash.”

Armina Ligaya, The Canadian Press