Canada’s Quiet Free Trade Agreement

In June, Canada’s International Trade Minister David L. Emerson gave a speech in Ottawa to Canada’s business, government, and academic elite to celebrate International Trade Day.

"I have no reservations about saying that we have not been aggressive enough and focused enough on ensuring that Canada keeps up with the rapid, almost competitive, expansion of bilateral free trade agreements," said Emerson. "Canada is the only major trading nation that has not negotiated a single free trade agreement in the past five years."

One of the agreements the Canadian government is trying to finalize is the Central America Four Free Trade Agreement (CA4TA) with Guatemala, Honduras, El Salvador and Nicaragua.

Talks were suspended in February 2004 over a failure to resolve a few issues of contention, though one Canadian Trade official said the talks were "very well advanced." Canada is now informally talking with these Central American countries to resolve a few remaining issues, he said, one of them concerning market access for exports.

"My assumption is that it is an opportunity for governments to work out differences so that in official meetings they can just rubber stamp the deal and send it through," said Nadja Drost, Co-ordinator of the Americas Policy Group.

A point of contention with Drost and about 150 civil society groups throughout the hemisphere is the refusal to release a draft of the agreement.

The Canadian Trade official, who wished to withhold his name, said that the Canadian government wanted to release the draft but that it would be inappropriate to do so unilaterally since consensus on the issue couldn’t be released. Drost countered by pointing out that it was the Canadian government who convinced the countries’ of the hemisphere to release a draft of the Free Trade Area of the Americas (FTAA) in 2001.

"Now they are saying that they can’t get four small Central American countries to do it," she added.

As it stands, the text won’t be released until the deal is signed and submitted to parliament for ratification. Although the economic impacts of the deal may not be profound, there are concerns about sovereignty, human rights and democracy based on experiences from past deals like the North American Free Trade Agreement (NAFTA).

"I think transparency is a major, major issue," said Drost. "I think the public would feel a lot more assured if they knew their concerns about democracy and human rights were being addressed."

Because of the secrecy behind the details of the deal, critics are using NAFTA, and the United States’ narrowly passed Central American Free Trade Agreement (CAFTA) as references for their concerns. Both trade agreements were attacked for failing to promote and enforce human rights, as well as for undermining democracy with unbalanced investor rights provisions.

The investor rights provisions of free trade were first introduced in Chapter 11 of NAFTA. It essentially allows corporations to sue local, state or federal governments for labor, environmental or other public interest laws that they deem unfairly impede their ability to maximize profits.

For example, the Canadian government was fined for entering an international agreement that prompted it to close its borders to toxic substances. Under Chapter 11, Canada was ordered to pay U.S.-company S.D. Meyers $4.8 million for "lost business opportunities." Thus far, tens of millions of dollars have been awarded to corporations, while billions of dollars worth of claims are still pending.

The Canadian government, in 2004, responded to some of civil society’s concerns about NAFTA’s Ch. 11 by revising its negotiating template for Foreign Investment Protection Agreements (FIPA). Although some issues are addressed, according to a policy review commissioned by the Canadian Council for International Co-operation and written by the editor of Investment Treaty News, the reforms fall short.

For example, the template restricts host countries from requiring foreign companies to purchase some supplies locally. These requirements would bolster local economic development, but might ultimately inhibit companies from maximizing profits.

Free trade critics are also concerned with the lack of provisions to address and redress weak labor and human rights laws in the Central American countries.

The Canadian Association of Labour Lawyers (CALL), an association of over 350 progressive lawyers that has worked to promote legally enforceable rights for workers in the Americas, has "serious reservations that the proposed CA4FTA will benefit workers in Central America or Canada." It uses past trade agreements, such as NAFTA and CAFTA, to point out historical deficiencies in the area of workers’ rights when it comes to international trade.

Under CAFTA, Central American countries are only obligated to enforce domestic labor laws. This is problematic, considering various reports by the U.S. State Department, The International Confederation of Free Trade Unions (ICFTU), and human rights organizations point out not only inadequacies with current laws but institutional failures in enforcing these laws. In the Central American countries included in CA4TA, child labor is pervasive, worker blacklists are made, foreign companies have closed their doors after being informed that workers wanted to form a union, and worker wages are a fraction of what Canadian workers make. According to the ICFTU, in Honduras, Francisco Cruz Galeano, the Regional Coordinator of the General Confederation of Workers (CGT), was shot over twenty times and killed.

As of now, Canadian citizens will not learn how CAFTA addresses human rights issues until the deal is finalized and submitted to Parliament for approval. The text will then be available for public, media and government scrutiny. But any amendments proposed, to address potential shortcomings, would have to be reviewed by the Central American partner governments.

Pressure will undoubtedly be put on members of Parliament to pass the agreement as is so that Canada doesn’t fall farther behind in the race to secure new free trade agreements—something Canada’s Trade Minister has already said needs to be remedied. The same approach was used in the United States to push through CAFTA, which was narrowly ratified by a mere two votes, despite widespread opposition by civil society in the United States, as well as Central America.

Cyril Mychalejko is assistant editor of, an online magazine uncovering politics and activism in Latin America. This article will be featured in the forthcoming Foreign Policy issue of The Dominion.

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