Observing the Rules: Canada-U.S. Trade and Environmental Relations (1997)

*A list of acronyms used in this article is provided on page 29. ...[For] Canada, it is better to have clear rules and fair-minded referees on the playing field than to be scrambling on someone else's terrain and playing, as often as not, according to their rules and without any referees at all. (1) Many other Canadians have made similar pleas for Canadian-American relations to be rules-based. The assumption is that if bilateral dealings on particular issues were more or less formally regulated, the asymmetry in power between the North American neighbors would tend to be ironed out. The result would be greater equity in treating matters of mutual concern, whether the two countries were competing or cooperating (or both at the same time). The rules would usually be elaborated and enforcement would be supervised by an appropriate organization established by formal agreement between the two states. In such an organization, Canada might participate on a par with its more powerful neighbor in deciding matters under the auspices of that entity. How has this worked out in practice? This study focuses not on the negotiating phase but on implementation of particular bilateral agreements in order to determine if a system does in fact diminish the general inequality of influence in the relations between a great power and the adjacent middle power and, if so, when. It will examine experience under the Canada-United States Free Trade Agreement (FTA), which went into force in 1989, and its successor, the North American Free Trade Agreement (NAFTA), which the two partners concluded with Mexico in 1993. (The Mexican relationship will be omitted in this study.) In addition to trade issues, the study will investigate environmental issues mostly related to the Great Lakes Water Quality Agreement of 1972, revised in 1978 and amended by a protocol in 1987; the Air Quality Agreement of 1991; and the North American Agreement on Environmental Cooperation under NAFTA. Annette Baker Fox is an associate research scholar at the Institute of War and Peace Studies, Columbia University. She is the author of The Power of Small States: Diplomacy in World War II (1959), The Politics of Attraction: Four Middle Powers and the United States (1977), Settling U.S.-Canada Disputes: Lessons for NAFTA, Canadian-American Public Policy II: September 1992, co-author of NATO and the Range of American Choice (1967), and co-editor of Canada and the United States: Transnational and Transgovernmental Relations (1976). In 1987 she received the Donner Medal for her contributions to Canadian Studies in the United States. Why should Canadians care about rules-based systems? Aside from the widespread sense of being vulnerable to the behavior of their super-power neighbor, segments of Canada's population have frequently experienced specific American trade actions which were clearly arbitrary and harmful to their interests. Aggressive unilateralism has often marked United States foreign relations. Disregard for interests beyond the United States borders looks like caprice even when there was no intent to assert an extraterritorial jurisdiction. Since foreign trade amounts to over forty percent of Canada's economy (well over three times its significance in the American GOP), this issue area is of very great importance to Canadians. Although each country is the other's largest trade partner, the ratio of total Canadian trade going to the United States (about eighty percent) is far higher than the ratio of total United States exports going to Canada (about twenty-two percent). For geographic and demographic reasons, environmental damage to Canadians from American sources is generally greater than that flowing in the opposite direction, especially when it consists of acid rain and other toxic substances. Thus in both environmental and trade areas, it was primarily Canada which sought a bilateral agreement. Trade and the environment are only two of the many kinds of relationships between the two North American countries, but they are covered by more formal agreements than most other issue areas except for defense and fisheries. …