A Trump-Inspired Holiday Reading List... Humbug!!!!

There's no other way to put it, 2018 sucked. I still put a lot of faith in what James Madison wrote in the Federalist Papers about "ambition being made to counteract ambition" as an antidote to the "mischiefs of faction." Even if Trump's election in 2016 signalled the status quo was no longer acceptable (a judgement of voters I understood), I slept well at night knowing the the famous "checks and balances" and the "separation of powers" would limit any of the worst impulses of an inexperienced, incompetent narcissist such as we have.

Some Election Day Non-predictions

Today is U.S. midterm election day. I've been doing a lot more thinking about U.S. politics of late than writing about it, in part because it's become such a depressing, rapidly changing dumpster fire. Rather than a bunch of predictions about the outcome, or an effort at scenario forecasting, I simply wanted to get a few things on paper that I'll be focusing on starting Wednesday November 7

Time to Vote

1) The States, in particular, who controls governors' mansions and the state legislatures. If the Democrats can show some signs of life in places they've neglected while the GOP has placed a strangle-hold, the makings of significant change could be on the horizon.

2) The 2020 Presidential Campaign begins Wednesday morning. The Democratic bench still seems worryingly thin, although there will likely be no shortage of entrants. Who, if anyone, will challenge Trump in the GOP primaries?
2a) Primary season may kick off with the first debates among candidates as early as the spring of 2019 (good grief).

NAFTA2.0,... Ahem, USMCA?

So, we have a deal. But what's in it? Is the North American sky about to fall as I argued in my last post? Has the North American Idea been thrown overboard by Donald Trump, once and for all? Is the new NAFTA2.0 a retrograde descent into economic nationalism?

Name will take getting used to

Here are a few quick (possibly inaccurate) thoughts on some of the provisions of what's officially being called the United States Mexico Canada Agreement.

What's in a Name?

The first thing to change is the name of the Agreement. Trump thinks the NAFTA label came with too many negative associations. Indeed, NAFTA1.0 has been a political football from the start. The irony of Trump's complaints about the NAFTA name is that he contributed mightily in a very short time to creating those negative associations; worst agreement ever negotiated, our negotiators were really stupid, the world is ripping us off...

I don't think USMCA is going to stick, except among public officials who are compelled to use the name. Moreover, I am a little worried that if things go sideways at any point, this particular acronym will be framed as "United States Made Canada do it."

Requiem for the North American Idea

There are many things about the Trump Presidency that keep me awake at night. After Trump was elected, I was among those who turned to James Madison and the Federalist Nos. 10 and 51 for solace. I was certain the same institutional design that intentionally put so many barriers in the way of "getting things done" would constrain Trump's worst (but then not fully appreciated) excesses. My alarm at the damage being done grows by the day. In fact, as great as Madison's design is, I'm not sure it was designed to constrain this kind of aberrational president, nor the sustained assault on the core institutions of American democracy.

I openly wonder who is going to put the toothpaste back in the tube? Can it be put back? Trump didn't create this mess so much as he's a manifestation of a host of problems that have been simmering for a long time. Indeed, one of the most insightful comments I read during all of the memorials around Sen. John McCain's death is that in selecting Sarah Palin as his running mate in 2008, he played a significant role in laying the foundation of today's populist assault on the truth in the GOP

Rock Paper Scissors for Trade

To Trade or Not to Trade?

Of course, one of my interests is the global trading system and my alarm at the damage being done here is also acute. The amount of damage Trump has done to America's leadership credibility in global trade is going to take a very long time to repair. It's unclear to me that it can be repaired since, in my view, Trump has arrived at the most inopportune moment for resolving important problems within. Smarter, more thoughtful voices were already calling for significant changes to how the global trading system's rules were written. Of note here, the basis for the long-stalled Doha Round of the WTO launched in late 2001 was development; hence the name Doha Development Round. Indeed, issues important to the developing world were to be the center-piece of the Round, starting with agriculture. We know what has happened there.

Much as I turned to Madison to ease my concerns about the erosion of American political institutions during Trump's reign, I similarly sought solace in the rules of the global trading regime. "We'll be able to ride this out," I thought. Moreover, "we've seen this movie before." Indeed, xenophobia in the hands of anti-trade populists has been the weapon of choice for centuries. Yet, I reasoned that rules largely designed and underwritten by U.S. leadership would, even in the face of nonsense from Trump, not quickly be tossed aside.  It was in America's interests to stick to the rules. Not only had the United States been a financial beneficiary of open, rules-based trade, the political prestige and leadership benefits of being the "indispensable" country for that system would surely appeal to Trump's better senses (or at least his ego).

Nope.

The Trade and Tariff Trumpster Fire

I've been searching high and low for sources of solace about the state of global affairs with Trump in the White House. They are depressingly hard to come by. I've found a sliver of solace in, believe it or not,... trade policy.

Progressive Trade Policy, Redux

Last November, the Government of Canada launched what it called a "Progressive Trade Policy" agenda. I wrote a little piece offering a few critiques (linked here). The punchline was that I thought it was devoid of much substance, starting with default proposition that trade liberalization as practiced was not progressive. Trade liberalization is inherently progressive. Always has been.

Trump, Trade, and Train Wrecks

I have noted in a few posts over the past year and a half how frustrating it is to try and follow the chaos and incompetence that is the Trump Administration. Apart from being completely exhausted (and exasperated) by nearly everything, it hasn't gotten any easier to see anything resembling coherence or a grand plan.

Competence Need Not Apply

Just after Trump's election in November 2016, I'd have to characterize my outlook as a kind of hopeful resignation. I was resigned to the fact that nativist populism had carried the day and that Trump had put forward too many policy positions on the campaign trail I simply couldn't support. However, I was hopeful that there would at least be a modicum of competence in their implementation. "Perhaps I'm wrong," I thought. "Perhaps those who voted for Trump saw something in his messaging I was missing?" "Perhaps voters in the UK had seen something similar months earlier when they narrowly voted to exit the European Union?" I was well aware that there were voters out there, under pressure economically, anxious about their status in the global economy, and disgusted by the evident ineptitude of our political leadership to do anything about it.

A NAFTA 2.0 Breakthrough? Don't bet on it yet....

The Sounds of Compromise?

There were some small glimmers of hope floated last week (March 19-23) that the NAFTA 2.0 talks were moving in a constructive direction. The source of that hope was testimony by USTR Robert Lighthizer before the House Ways and Means Committee on March 21 and Senate Finance on March 22. Specifically, Ambassador Lighthizer suggested there had be a convergence of positions on some of the most pernicious issues in the talks, notably on America's nonsensical position on rules of origin.

NAFTA, Frisco Style

I made a quick trip to the Bay Area last week to give a presentation to a group of University of Alberta alumni. In one of the surest signs of my getting older, I keep seeing more and more former students at these things. Apart from that, however, it's gratifying to see them come out and to learn about the interesting things they are doing.

The topic of my presentation was the NAFTA2.0 negotiations. The timing was good. The 5th round of negotiations had just concluded in Montreal the previous week and Canadian Prime Minister Justin Trudeau was going to be in San Francisco in the following couple of days touting the merits of trade as well as the high-tech sector for Canada.

In future I might try and record some of what I say at these things. Now and then I say something interesting only to wish I had written it down somewhere. Actual PowerPoint presentation is linked here. However, I thought I'd try and reconstruct a bit of what I said with an "annotated" form of that presentation.

Is Dispute Settlement a Hill Worth Dying On?

Those of us following the progress (or lack thereof) through the first several rounds of talks aimed at renegotiating the NAFTA have lamented the difficulty posed for Canada and Mexico by a number of American negotiating positions; among them, tough positions on government procurement, investment protections, and rules of origin. Yet it is the American position on Chapter 19 dispute settlement that seems to be giving Canada one of the biggest cases of heartburn. Frankly, I am not sure why?

There are two reasons for my skepticism. First, Chapter 19 is far more limited in it's capacity to "adjudicate" disputes than is commonly believed. Second, data indicate that the incidence of NAFTA disputes is low, not because of dispute settlement, but because North America has become so integrated that the scope for these disputes is falling.

I'm not suggesting that Canada and Mexico should simply acquiesce to American demands on Chapter 19. But I do think Chapter 19 has become more of a psychological barometer of their relationship with the United States than a mechanism delivering sufficient value to be worth scuttling the talks. I'm not sure Chapter 19 is a hill worth dying on.

What is Chapter 19?

Trade buffs will know that NAFTA Chapter 19 set up a dispute panel system to deal with the application of domestic anti-dumping and countervailing (anti-subsidy) duties levied against imports from NAFTA members.  The idea was to take review of the application of these duties out of the national court systems and place them in some kind of quasi arbitral system. Anti-dumping and countervailing duty laws exist everywhere and are designed to protect domestic industry from the effects of dumping by foreign firms and/or subsidies to those firms conferred by foreign governments.

Progress So Far

In principle, such trade remedy laws are designed to level the competitive playing field. The reality is that national legislatures write these laws in ways obviously favourable to domestic commercial interests. More to the point, trade remedy laws are written in ways giving administrative agencies broad latitude in their application so as to defend domestic interests. To state the obvious, trade remedy statutes are among the most politically sensitive in any country; second only perhaps to agriculture and entitlements.

A dispute settlement system, it was thought, might take some of the air out of the politics, making the application of those duties fairer and less arbitrary. Moreover, by moving legal challenges to these laws away from domestic court systems and into bi-national dispute panels, some believed the legal process would be fairer as well.

Hills 1987 and 1993

In the fall of 1987, Canada and the United States were facing an October Congressional deadline for completing bilateral free trade negotiations. Among the final sticking points was dispute settlement around trade remedy laws. In the midst of a late September round of negotiations in Washington, the Canadian delegation got up and walked away (pictured below) from the table over American unwillingness to have trade remedy laws subject to dispute settlement. For a short time, the entire deal seemed dead.

A "Trade Time Out" 1987 Style

Canada wanted the agreement to permanently exempt each country's products from the application of trade remedy laws-- indeed, this was initially a red-line bargaining position for Canada. Maintaining the applicability of trade remedy laws in the context of a trade agreement ostensibly aimed freeing trade strikes many as inherently contradictory. For the U.S., both exemption from trade remedy laws and the creation of a supranational dispute settlement process with extra-judicial powers were both off the table.

When Canada came back to the negotiations, the two sides agreed to something that fell quite some distance short of what Canada wanted. Instead, Chapter 19 of the Canada-U.S. Free Trade Agreement included a bi-national dispute settlement mechanism to which Parties agreed to have disputes heard. However, the panel system's scope was limited in two very important ways: 1) panels could only investigate and rule upon whether administrative agencies actually applied domestic law as it was written. In other words, had they followed their own rules, and 2) rulings were essentially advisory. The panel had no enforcement power to force agencies to change anything.

Nevertheless, when the NAFTA negotiations began in 1990, Mexico figured it would give exemption from trade remedy a second try. Canada was rightly skeptical of Mexico's efforts, but both were eventually lucky just to get Chapter 19 enshrined in the NAFTA. As limited as it is, American legislators and subsequent administrations have had grave doubts about Chapter 19 from its inception; many arguing it created an unconstitutional, extra-judicial process by which foreigners could challenge U.S. law.

But Does it Work?

If Canada and Mexico are currently angst-ridden over America's NAFTA 2.0 position on Chapter 19, that must be because America is always losing cases, right? Perhaps Chapter 19's limitations are not so limiting after all? In 2002, Patrick Macrory argued that Chapter 19 had been successful in dissuading some of the more arbitrary applications of U.S. trade remedy law to Canadian and Mexican products. Yet, Chapter 19 has also been an abject failure in resolving disputes like softwood lumber. Indeed, every adverse determination by a Chapter 19 panel against American duties comes a new round of administrative investigations and Chapter 19 panels, eventually resulting in a politically negotiated settlement. As long as there's no supranational police power enshrined in dispute settlement mechanisms like Chapter 19, there will always be scope for one side to ignore the mechanism's findings.

Recent data presented by the Petersen Institute's Chad Bown suggests that the real reason for the apparent "effectiveness" of Chapter 19 may be connected to the process and depth of North American integration. Indeed, Bown demonstrates that between 1994 and 2016, the application of trade remedy laws by NAFTA countries against one another has declined and remained low (softwood lumber being an obvious outlier). One reason, Bown argues, is that growth of cross-border intra-industry trade has inherently undercut the rational for private actor claims of injury due to dumping or subsidy by a NAFTA partner. Moreover, each of the NAFTA countries is increasingly applying their trade remedy laws to the same non-NAFTA products from the same non-NAFTA countries.

In other words, it's North American integration itself-- not the dispute settlement mechanisms themselves-- that are driving the decline in anti-dumping and countervailing duty cases by NAFTA parties against NAFTA parties.

A Psychological Barometer

Hence, I think one of the more important components of NAFTA Chapter 19 for Canada is psychological. Chapter 19 has become a touchstone, of sorts, for Canada in terms of how it's being treated by the United States generally. For example, every time there's a Chapter 19 ruling in Canada's favor in the softwood lumber dispute and America more or less ignores it, a loud hue and cry in the Canadian press immediately goes up; American flouting the rule of law, America ignoring trade rules, or America is violating the spirit of the NAFTA.

In essence, Chapter 19 has become a symbol of access to American decision-making, a lever to be pulled to make Canada's case on trade issues that are invariably more important north of the 49th parallel than they are to the south. Chapter 19 is a formalized forum in which to drag the American side to the table to hear Canada's complaints about their treatment.

Moreover, Chapter 19 dispute settlement is something that the Americans have never extended in any other trade agreement... EVER. Canada (and Mexico) are special. Hence, given my doubts about the utility of Chapter 19 in resolving disputes, it's likely that it's become symbolic of the "special-ness" and regard with which Washington views its relationships with Canada and Mexico. For Donald Trump, Mexico certainly isn't "special," but neither is Canada.

How Red a Red Line?

So,... exactly how hard should Canada and Mexico push to preserve Chapter 19 in NAFTA 2.0? Should they demonstrate their resolve and stage a walk-out similar to that staged by Canada in 1987? My answer is no! Let it go! There are bigger fish to fry in these talks. Preserving and facilitating the deepening of North American integration is the greater, more long-lasting solution to any harassment from trade remedy laws. Even the dreaded softwood lumber dispute will eventually go away as firms, workers, and the supply of wood products both transcend and move unimpeded across borders.

What is "Progressive" Trade Policy?

The TPP Lives (mostly)

Earlier this month, on the sidelines of the APEC Summit in Vietnam, the 11 remaining signatories to the Trans-Pacific Partnership trade pact agreed to move ahead without President Trump's America. Withdrawing from the U.S.-backed TPP was, of course, one of Trump's very first actions upon assuming office this past January. That the TPP lives on signals many things, not the least of which is a decline in the importance of American leadership in the Asia-Pacific Region.

Not Voting Their Interests

It is my belief that America's withdraw from the TPP was a strategic mistake and my hope that sometime after 2020, a new U.S. administration will rejoin the fold.

Nevertheless, the TPP-11 emerged with a curious new mouth-full of a name: The Comprehensive, Progressive, Agreement for Trans-Pacific Partnership (CPTPP).

So, what exactly is "progressive" trade policy, anyway?

What's in a Name?

The name change was evidently made to mollify Canada regarding some previously unexpressed objections to the text (link). Indeed, Canada seems to have engaged in a strange bit of 11th hour gamesmanship for no particular reason other than the name-change. But what's in that name change? Negotiators of the original TPP agreement would certainly balk at Mr. Trudeau's suggestion that it was not "comprehensive" Indeed, at nearly 600pgs of basic text (never mind annexes), the TPP-12 was nearly twice as long as the basic text of the 1994 NAFTA-- easily the biggest, most comprehensive multilateral trade agreement concluded since the WTO. Moreover, most analysts agreed that the TPP-12 contained some major advances in a number of the most controversial areas of contemporary trade policy; notably, labor, investment disputes, and the environment.

Interestingly, the CPTPP signatories announced the suspension of a number of provisions of the TPP-12 text, including some covering express delivery services and intellectual property.

Yet, it's the "progressive" label that intrigues most. While a lot of critics don't see it this way for some reason, trade liberalization is inherently progressive. Indeed, for a good part of human history, the protection of markets by the powerful and privileged at the expense others (foreign or domestic) has been the default. Eliminating barriers to trade has been an unqualified boost to global economic activity, raised the living standards of billions around the globe, undercut the power of monopoly, and unleashed the "creative destruction" of capitalism to re-order the strictures of privilege in many societies.

To be sure, all of this comes with the narrowly focused, and politically potent, adjustment costs predicted by economic theory. Here And our failure to deal with all of that adequately has, in part, paved the way for the Trump wrecking ball. Indeed, the political failure to "purchase" additional social and political license for the "losers" by using some of the broadly based proceeds from the "winners" to compensate them has given great cover to the xenophobic populists that now dominate debates over trade.

Addressing this fundamental problem would be a far more "progressive" approach to trade policy than the semantic changes made to the TPP's title..... But let's explore this further.

The Skeptical Progressive

Birds of a Feather

When Prime Minister Trudeau says Canada's trade policy is "progressive," my spidey-senses tingle. What the Government of Canada actually means by this in practice is rather murky, but the outlines were advanced by Chrystia Freeland, Canada's foreign minister, in a speech given August 14, just before the start of the NAFTA re-negotiations:

... Here, then, are some of Canada’s core objectives.

First, we aim to modernize NAFTA. The agreement is 23 years old. The global, North American, and Canadian economies have been transformed in that time by the technology revolution. NAFTA needs to address this, in a way that ensures we continue to have a vibrant and internationally competitive technology sector and that all sectors of our economy can reap the full benefits of the digital revolution.

Second, NAFTA should be made more progressive. We will be informed here by the ideas in CETA, the most progressive trade deal in history, launched by Conservatives and completed, proudly, by our government.

In particular, we can make NAFTA more progressive first by bringing strong labour safeguards into the core of the agreement; second by integrating enhanced environmental provisions to ensure no NAFTA country weakens environmental protection to attract investment, for example, and that fully supports efforts to address climate change; third by adding a new chapter on gender rights, in keeping with our commitment to gender equality; fourth, in line with our commitment to improving our relationship with Indigenous peoples, by adding an Indigenous chapter; and finally by reforming the Investor-State Dispute Settlement process, to ensure that governments have an unassailable right to regulate in the public interest.

One reason that these progressive elements, particularly on the environment and labour, are so important is that they are how we guarantee that the modernized NAFTA will not only be an exemplary free trade deal, it will also be a fair trade deal. Canadians broadly support free trade. But their enthusiasm wavers when trade agreements put our workers at an unfair disadvantage because of the high standards that we rightly demand. Instead, we must pursue progressive trade agreements that are win-win, helping workers both at home and abroad to enjoy higher wages and better conditions....

Don't worry,.... be happy!

I've underlined the key elements; labour, environment, gender, Indigenous peoples, and ISDS. As we know, the NAFTA negotiations have not gone well. Indeed, the 5th Round of talks in Mexico City just wrapped up with seemingly little progress to report. Several days ago, USTR updated its negotiating objectives for NAFTA 2.0. The Trump administration wants to get rid of dispute settlement altogether, including ISDS (which I've written about elsewhere). Unsurprisingly for the Trump administration, gender and Indigenous peoples didn't make the cut.

Is Trade the Right Forum for These Issues?

These are all important issues, but except for ISDS, I'm not completely sure trade agreements are the right forum for dealing with any of these issues. For those seeking to have these issues raised in prominence, trade agreements are obvious targets for doing so. At bottom, trade agreements are rules-based arrangements designed to foster transparent cooperation on all of the issues covered. Indeed, simply getting new issues attached to trade agreements is a big victory since it indicates their status.

On the other hand, one concern with trying to have trade agreements become vehicles for more and more issues is that we already expect such agreements to do more than they reasonably can. Indeed, one of the biggest problems for the NAFTA has always been that its proponents over-sold what the Agreement could do while critics overstated the negative byproducts.

Adding a whole range of issues (however desirable it might be to address them) to trade expands the scope of agreements that have already become hideously complex and a lightening rod for populist critics. Trade agreements like the NAFTA are actually quite limited in what they do; they liberalize flows of trade, services, investment, and some categories of people. As a comparatively shallow preferences agreement, the NAFTA never contemplated the kind of supranational institutions (pooled sovereignty) that would be needed to deal with the kinds of political and social questions implied by Canada's progressive agenda. None of the proposals put forward for the modernized NAFTA2.0 involves the pooling of sovereignty. Hence, asking NAFTA2.0 to be "progressive" is asking too much of it. 

Labor and Environment

For evidence, look no further than the original NAFTA. In the midst of the 1992 U.S. Presidential campaign, then-candidate Clinton was pressed on the campaign trail to take a position on the nearly complete NAFTA negotiations. In classic Clinton style, he found a way to sit on the fence. He was "for" the NAFTA so long as there were proper protections for labor and the environment.

I've written about this elsewhere, but the punchline is that -- for good or for ill-- President Clinton permanently attached labor and environmental issues to the process of trade liberalization with the creation of the so-called NAFTA Side Agreements. The Commission on Environmental Cooperation (CEC) has become a surprisingly robust organization for the exchange of information about North America's shared ecosystems by scientists, civil society, and interested citizens. It wasn't meant to be such.

Indeed, the CEC was never given any real enforcement power and has instead relied on being able to "shame" member governments into taking action. In many ways, it has become a pleasant, and still relatively unknown, institutional surprise.

The North American Agreement on Labor Cooperation never really got off the ground, in part, because it was never given any institutional teeth. My read of the text of the NAFTA Side Agreements is that the three governments were committed only to paying lip-service to these issues, first, by sticking them in texts outside the NAFTA, and second, by leaving them devoid of institutional teeth. It is noteworthy in this context that nothing like the CEC has ever been part of a U.S. FTA negotiation subsequent to the NAFTA.

In spite of these weaknesses, the Side Agreements permanently planted labor and the environment on the international trade agenda such that there are now provisions on labor and the environment in nearly every global trading agreement. For the most part, however, the language in these agreements is merely designed to ensure states adhere to internationally agreed standards of worker protection (International Labor Organization, for example) and do not manipulate or relax aspects of their domestic labor and environmental regulations for the purposes of gaining advantage in their trading relationships (See text of Chapter 19 of the TPP-12 Agreement).

Interestingly, nothing like the CEC has ever been re-created alongside U.S. FTAs subsequent to the NAFTA.

Smells Like Progressivism, Looks Like Protectionism?

A big reservation I have about the future of labor and the environment in the context of trade is how readily professed concern for these issues can slide into protectionism. Labor and environmental

standards are a major source of political cleavage in the global trading system. Developed country labor and environmental standards are generally well above those maintained in developing states. Developing states argue they are doing their best to raise the bar in these areas, but that raising living standards must take precedence over higher labor and environmental controls. Critics say development and the establishment of high standards can happen simultaneously. Developing countries argue that richer societies can better afford such controls and that it's hypocritical for developed states to push this approach when for many decades their own development evolved on the basis of much lower labor and environmental standards-- today's Pittsburgh is very different in both of these areas than it was in the 1940s.

Moreover, the insistence of high standards for labor and environmental standards as a condition of trade strikes a number of developing states as nothing but veiled protection. It sounds nice and progressive to insist upon and use trade liberalization as a means for ratcheting up standards. But beneath it is less a concern about labor and the environment in developing states than a means of making the products of those countries less competitive in developed states.

Don't Mess with Flipper

Some of the earliest experience with this cleavage came in the late 1980s when the WTO was still the GATT. In 1990, the United States banned imports of tuna caught by Mexican fishers because the methods used to catch the tuna did not include safety measures to prevent dolphins from also being caught. The U.S. measure was subsequently modified to allow tuna imports provided Mexican suppliers could prove no dolphins were harmed. Mexico complained to the GATT arguing that restrictions on imports could only be applied to "products" and that U.S. measures were being applied to the "process" by which tuna were being caught. A similar case was brought against the U.S. by Malaysia, Pakistan, and Thailand in the late 1990s over U.S. restrictions on shrimp harvested without the use of turtle exclusion devices on fishers' nets. At issue again was whether restrictions could be placed on imports under WTO rules on the basis of "process" rather than just "product."

Trade and Climate Change

My concern about the global trading regime becoming a vehicle for dealing with the growing importance of climate change is all about this "product vs. process." I imagine there are voices who would very much like to have the terms of trade agreements reach into various parts of a nation's production chain, deem certain processes unsustainable, or dirty (high CO2 content in production), and use trade sanctions to raise those standards. Yet, what sort of moral high ground would we really be standing on when the effects of new sanctions would fall most heavily on those who can least afford them?

It would be easy to use the lure of U.S. market access, for example, to try and impose rich-country labor and environmental standards on developing countries that wanted to sell their goods to Americans. Yet, I wonder greatly how many rich country labor unionists or environmental advocates really care about what goes on in developing countries apart from the impact it might have on their jobs at home? That's probably too cynical. But I certainly think venturing very far down this road risks deepening the cleavage between rich and poor countries in the global trading regime.

There are already lots of measures available to WTO members to limit trade through safeguard measures, negotiated quotas, for conservation or national security purposes, or health and safety-- all of these measures apply to end "products." I wonder how long we'd credibly be able to claim our policy was "progressive" if we adopted trade rules that effectively threatened countries with trade barriers because of productive "processes" we didn't like?

Moreover, those in glass houses should not be throwing stones. For that, look no further than the asbestos industry. In 2001, France banded the importation of asbestos and products containing it. Canada went to the WTO in an effort to overturn that ban and lost. Canada is also a major fossil fuel exporter and parts of its heavy industry are based upon fossil fuel consumption. Would Canada necessarily be a beneficiary of an evolved set of trade rules that could be used to police "process" issues in the manufacture of dirty goods?

Gender and Indigenous Peoples

This brings me to the final two pillars of Canada's current efforts to pursue "progressive" trade policy. Like labor and the environment, gender and issues involving Indigenous peoples around the world are extremely important. Societies everywhere are better off depending on the degree to which they are able to make advances on each of them. But is the global trade agenda the correct place for this?

In some ways, absolutely! As I noted above, trade liberalization inherently breaks down the power of privileged interests and opens economic opportunity to people for whom it may normally be closed. Trade empowers minorities, women, and the poor.  As noted in a 2015 World Bank publication titled "The Role of Trade in Ending Poverty," trade is responsible for cutting the number of people living in extreme poverty in half since 1990 to just under a billion people.

As part of its pursuit of gender as a focus of "progressive" trade policy, Canada and Chile recently amended their 1995 FTA to include a new chapter on gender. It lays out a number of lofty goals with respect to gender equality and economic empowerment, including a number of ideas for cooperative initiatives.

However, Article N bis-06 is also clear that "A Party shall not avail itself of the dispute resolution mechanism provided for in Chapter N (Institutional Arrangements and Dispute Settlement Procedures) with respect to any matter arising under this Chapter." In other words, like the NAFTA's labor and environmental Side Agreements, the amended Canada-Chile agreement has no institutional teeth. Wouldn't a more genuinely progressive agenda between Chile and Canada entail modernization that went further in eliminating barriers to trade, including those entrenching differential access to international markets for women?

Could the new Gender chapter evolve in the same way as the Commission on Environmental Cooperation and become far more robust than the governments intend? Perhaps, and there are important agenda-setting qualities to having such text formalized in an agreement.

But how far down a road toward making labor rights, the environment, gender, or Aboriginal peoples subject to dispute settlement mechanisms and sanction in the context of trade are we prepared to go? Do we really want the mechanisms of the WTO or of regional agreements like the Canada-Chile FTA to reach behind borders into "processes" of one sort or another to sanction inequities or right past injustices we find upsetting? I think trade can be an important vehicle for raising awareness of all these issues. But I am unsure how deeply we should venture into using trade mechanisms to sanction behavior we think should be more "advanced" when not directly tied to trade?

Should the threat of trade sanctions be used as a way to forcibly improve the production "processes" in developing countries? As Canada's experience with asbestos suggests, rich countries are not without a few skeletons in their closets. Canada is big and pristine looking, but its management of the environment in the harvesting of softwood lumber leave much to be desired. Should trade rules be reconfigured to make failure to enforce part of the "subsidy" provided to lumber companies? What about trade sanctions for gender inequality, the lack of workplace pay-equity laws, or lax enforcement? How would Canada stack up there? And, finally, what about Indigenous peoples? Could trade somehow be used to remedy past wrongs in a number of different countries? Should it be? Could the very same rules Canada puts forward regarding Aboriginal peoples in the context of trade be turned against Canada in ways that compromise reconciliation processes?

I'm inclined to think we ought to just let trade be trade.

In no way do I intend to minimize the importance of these "progressive" issues. Rather, I merely question the utility of adding them to a trade agenda already paralyzed by cleavages between rich and poor countries; it would be nice to first deal with agricultural subsidies. Moreover, the entire global trading regime is teetering under the challenge from populists in both Europe and North America who feel too much sovereignty has already been ceded to unaccountable institutions like the EU or WTO.

I am all for advancing "progressive" policy positions. But trying to attach them to trade policy strikes me as cowardly and empty-- especially without institutional teeth. The cynic in me thinks Trudeau's rhetoric about all of this is largely for domestic consumption. Moreover, before launching moralistic volleys about "progressive" trade policy, the Trudeau Government would do well to think about how those same volleys might be used by others in ways that complicate the ability of Canadians to advance on things like the environment, gender, or Indigenous peoples at a pace of their choosing.