Letters From The Inside
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20 November 2003
Mr.. Peter McKay, M.P.
Leader of the Progressive Conservative Party of Canada
House of Commons
Ottawa on K1A 0A7
Dear Mr. McKay:
The purpose of this letter is to confirm my resignation from the committee you established to examine Mr. Mulroney's bilateral agreements with the US on October 30th and state the reasons for doing so.
I agreed to be a member of the committee for two reasons: first, it was an opportunity to dig into the bilateral agreements and identify rights and obligations impinging on Canada's interests and second, report findings and recommendations to a PC policy convention early in 2004 for discussion and action.
A serious examination of the bilateral agreements would require considerable time. The agreements comprise big complex issues tangled in a mass of interrelated detail. Since there are diverging and conflicting interpretations of the agreements it would be necessary to identify relevant contractual rights and obligations and their consequences. In addition, it would be necessary to examine related multilateral rights and obligations because they covered our trade with the US from 1947 to 1986 and are the benchmark for assessing the costs and benefits of bilateralism.
Additional evidence a serious review of these agreements would require much time is provided in the attached list of issues I intended to examine in some detail. Five issues are annotated to further illustrate the time consuming complexity of a thorough review.
After working through these issues, I planned to pull together facts pertinent to three additional issues: the environment, Canada's power vis-a-vis the US and our independence – without independence and power nothing can be achieved. With this information on the table, I planned to proceed to (a) identify costs and benefits of trading with the US bilaterally and multilaterally, and (b) assemble the advantages and disadvantages for Canada of the status quo, renegotiating the bilateral agreements to reflect our vital interests and returning to trading with the US under the multilateral system and abrogating Mulroney's agreements.
But you permitted five months to pass before the committee held its first meeting. Instead of honouring your commitment to David Orchard and about twenty-five percent of the delegates who elected you leader, you covertly rendered the trade agreements' review innocuous by running out the clock; arranged to terminate the Party of MacDonald, Borden, Bennett and Diefenbaker; and joined Canada's American or Republican party (alias Reform and Alliance).
You have also cancelled the PC Party's Policy Convention. This means the Review Committee's report will be submitted to you and probably Mr. Harper. You and Mr. Harper have decided that free trade is a principle of the American party and I interpret “free trade” as code for Mr. Mulroney's bilateral agreements. No more need be said.
Yours sincerely,
M.G. Clark
2336 Hillary Ave
Ottawa on K1H 7J3
Tel: 613-523-0564
cc D. Orchard
15 April 2003
Right Honourable Jean Chrétien, P.C., M.P.
Prime Minister
House of Commons
Ottawa on K1A 0A6
Dear Prime Minister:
Your agreement with provincial governments directed to reviving and nourishing Medicare, draft legislation prohibiting corporations and unions from contributing to political parties and decision to spend more money to improve the lives of children as well as ratification of Kyoto justify hopes that Canadians would place you with their respected Prime Ministers, if Mr. Mulroney had not preceded you.
Mr. Mulroney's bilateral agreements with the United States changed the benchmark for measuring Prime Ministers. Serious historians will dig into his agreements and their consequences as Donald Creighton mined the British North America Act, its genesis and results when writing his biography of Sir John A. MacDonald. The evidence they find is almost certain to have two results; first, push aside your good work and focus attention on the fact you accepted the FTA and implemented NAFTA, just as Marshal Petain's collaboration with Germany in WWII overwhelmed his distinguished service in France in WWI; and second, demote you to stand beside Mulroney at the bottom.
Serious historians will extract evidence from Mulroney's agreements that will prove beyond reasonable doubt they stripped Canada of much of its independence, gave the US hegemony and that increasingly a fictitious sovereignty cloaks American rule. Much of the evidence will be irrefutable because it consists of contractual rights and obligations set out in the agreements and their documented consequences. Essential facts and conclusions derived from them are summarized in three paragraphs below. The facts can be sustained by citing related American rights and Canadian obligations.
First, Mulroney's agreements transferred from Canadians to Americans control over water, oil and gas; the right to use countervailing duties to force us to sell them our forests, abolish the Canadian Wheat Board and privatize Medicare; and the right to require that our cultural policy (i.e., printing, publishing, broadcasting, films and recordings) is consistent with American interests. In these areas the Agreements cancelled government powers, provincial and federal, that were used to build Canada as well as prevent American encroachment. They then gave American corporations the right to sue our government for non-compliance. And they left Canadians defenseless. Ceding these powers amounted to a huge increase in American power over us and loss of Canadian independence.
Second, Mulroney's agreements gave Americans control over our exports by transferring them from the multilateral agreement that covered trade between us for 40 years to bilateral ones. By 1980 multilateral negotiations had
(a) eliminated 80 percent of US tariffs on our industrial exports and reduced others to 5 percent or less on an additional 15 percent of such exports;
(b) placed effective constraints on American misuse of countervailing and dumping duties and many other non-tariff measures and;
(c) established a dispute settlement system that was insulated from national bias, eliminated power disparities between litigants and found in favour of the weaker power if it had a good case. The bilateral agreements, in contrast, placed our exports under US trade law which
(i) gave Americans the unfettered right to initiate a countervail or dumping action against all goods imported from Canada that almost always results in protection of one type or another;
(ii) established a system to consider Canadian complaints that is controlled by Americans (i.e., panels are restricted to deciding if American officials interpreted American law correctly and, if a panel finds in Canada's favour, Americans can nullify its decision by amending their trade law without our agreement); and
(iii) blocked us from using our multilateral rights to eliminate illegal American protection. Again Canadians are defenceless and Americans have taken advantage of the situation with predictable results; bilateral panels have removed duties in two of 36 cases Canadians initiated and pressed to a conclusion between January 1989 and January 2000 (i.e., raspberries and salt cod). More frequent use of countervailing and dumping actions against imports from Canada plus control of the dispute system has more than offset the loss of remaining tariffs and resulted in an important net increase in US protection. And companies who have collided with protection, or whose American competitors are likely to seek it, are reduced to three options – don't export, either stop or do not begin; transfer production to the US; or pay US customs millions or ever billions of dollars, pull their competitive punch or revert to exporting raw materials (e.g., logs instead of lumber).
Ditching our multilateral agreement with the US for bilateral ones resulted in an even more crippling loss of power and independence. Compared to pre-war bilateralism, Canadian power vis-a-vis the US increased greatly from 1947 to 1984 when our trade was covered by GATT. Four sources of power were especially advantageous; the international trade law GATT embodied; the fact the law was established by negotiations between the contracting parties including Canada and our interest in limiting the misuse of American trade law was shared by other countries, including the EC and Japan, which increased our leverage; as noted, the law the interpreted by a dispute settlement system that eliminated the power difference between the US and Canada, and found in Canada's favour when it had a good case; and a balance of power that contained the US – unilateralism did not work. Mulroney's agreements not only deprived Canada of this power, but increased US power over us by a commensurate amount.
You are well aware the case for Mulroney's agreements is that bilateral free trade was the prime cause of the large increase in exports to the US during the 1990s. But the case contains two very large holes. First, the agreements did not establish free trade. Instead they raised US barriers against our exports by equipping it with more protectionist weapons than it possessed before 1947 and GATT and, since 2000, has permitted the US to pay bounties to those who use them. Second, the main cause of the increased exports was the largest sustained growth in history of the American economy, stock markets and wealth and the largest devaluation in history of the Canadian dollar.
Serious historians may well find you and Mulroney guilty of folly They could justify this conclusion on the grounds you met the three tests for such misgovernment established by Barbara Tuchman in her epic study of blundering statecraft from Troy to Vietnam, the March of Folly; the disastrous consequences of the bilateral agreements were foreseen by millions of Canadians; a feasible and infinitely better alternative was, and still is, available; and these facts were ignored by both of you.
Historians worth their salt will point out that Mulroney negotiated but Chrétien implemented and ask what to make of you? When searching your record for an answer they will find, inter alia, the following:
- You were warned against bilateralism by six previous prime ministers – Macdonald, Borden, King, St Laurent, Trudeau and Turner – plus a former leader of the Liberal Party, Robert Blake;
- you were the Minister of Trade during the concluding part of the GATT Tokyo round which eliminated many US tariffs on our industrial exports and reduced many others to five percent or less, eliminated certain non-tariff measures as well as strengthened constraints on the misuse of countervailing and dumping duties and codified the dispute settlement system as well as make it more effective;
- you were a member of Prime Minister Trudeau's cabinet when it examined our trade policy, decided multilateralism best served Canadian interests and rejected a bilateral agreement with the US:
- you were also a member in the Trudeau Cabinet in 1982 when American lumber companies first petitioned for countervailing duties that American administrators rejected probably because they knew there was a high probability the Trudeau government would invoke Canada's GATT rights to establish a panel which would find US duties illegal and also use the Employment Support Act to keep the Canadian industry viable until the duties were removed;
- in 1985 you explicitly and unequivocally opposed Mulroney's first agreement for three reasons: “Canada could not survive politically” because “we would be threatened by the sheer power and numbers of the United States,” there is no guarantee…that we won't be left to export our natural resources south while the new jobs will be created there,” and “we probably would be clobbered because the Americans would be able to do whatever they want;”
- In the 1988 election you campaigned against the agreement;
- as Leader of the Opposition you often criticized the bilateral agreements, voted against the second agreement in the House of Commons and, when the 1993 election approached, promised Canadians you would renegotiate the agreements and abrogate them “if satisfactory changes” could not be obtained;
- as Prime Minister you have retained our post war multilateral policy on international political issues and recently invoked it to oppose the American-British invasion of Iraq, but on all issues embedded in Mulroney's agreements you performed a spectacular U-turn, embraced bilateralism and faithfully stuck with it despite the fact it is costing us our independence.
Closure cannot be applied to history. Sooner or later your decision to swallow Mulroney's bilateral agreements will establish your place in Canadian history. You will be held responsible for accepting American hegemony and then permitting them to enlarge it during your ten year stewardship of our affairs. Sir Winston Churchill would not be regarded as the greatest Briton of the twentieth century if, after becoming Prime Minister on May 10, 1940, he had discarded his promise to fight for Britain's independence and approved the Foreign Secretary's proposal to accept German hegemony.
Abrogation would liberate Canada from American hegemony, restore our independence and promote you from standing beside Mulroney to a place with the Prime Ministers who have done the most to build this country – in my view Macdonald, Borden, King and Trudeau with St. Laurent receiving an honourable mention. As you know we can abrogate Mulroney's agreements six months after giving notice of our decision without meeting any conditions and our trade with the US will again be covered by multilateral trade law and the WTO. By returning to the Jean Chrétien we knew in the 1980s, a vast majority of Canadians will support you because they want to be free to run their country. The published of Straight from the Heart reminds us you were perceived “as one of the most popular politicians of our time” who had “won the hearts of Canadians with your unabashed patriotism,….tireless pursuit of federalism, and faith in ordinary people”. If the Alliance challenges you to call an election – possibly supported by some members of your caucus – I urge you to accept, call on your dormant qualities, win another large majority and then use it to consolidate our restored independence as well as to ensure your successor will nourish it.
I know the odds are overwhelming your staff will not place this letter before you. If you read it, I expect you to resent it, at least initially, because that is a natural reaction especially by persons accustomed to power. I assure you, however, the letter has more worthy objectives than to annoy you.
Yours sincerely,
M. G. Clark
2336 Hillary Avenue
Ottawa Ontario
K1H 7J3
(613) 523-0564
Passed on to CDM by Mel Hurtig
@ November 27, 2003