Canada Caught! Canada In Violation of NAFTA! NAFTA Possibly In Jeopardy. Free Republic Exclusive.

Free Republic, CBS MarketWatch, Blakes.com Law Review | 3/29/04 | Southack

[Southack]

Canada is in violation of the NAFTA treaty.  Per Chapter 11, Article 1102 of NAFTA, each signatory nation of the NAFTA treaty must offer an equal or preferable investment playing field to the investors of all other signatory nations (see below).

Evidence of direct violations of this NAFTA requirement is provided below from CBS Marketwatch, though they don't catch the violations themselves.

These violations of NAFTA are due to Canadian law that currently mandates that Canada's mutual fund trusts must be run for predominantly Canadian, rather than U.S. or Mexican, shareholders. Economic penalties for failing to comply with this Canadian law, or with losing "mutual fund trust" status include, among other things, higher Canadian taxes for foreign investors (or even the outright loss of non-Canadian investors' ownership rights).

Such a law may have been acceptable prior to NAFTA being signed and ratified, but it clearly doesn't permit a level or advantageous investment playing field to investors from other NAFTA signatory nations.

This breech of NAFTA by Canadian law is so egregious that if it remains uncorrected could lead to an international declaration that said treaty is now null and void.

 

NAFTA

Chapter 11

Article 1102: National Treatment 1. Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments.

http://www-tech.mit.edu/Bulletins/Nafta/11.invest

 

 

CALGARY, Mar 26, 2004 /PRNewswire-FirstCall via COMTEX/ -- (PWX)(PWI) - PrimeWest Energy Trust (PrimeWest) today announces that ...

PrimeWest has reviewed its current level of non-resident ownership and has determined that, as of March 22, 2004, more than 50% of its trust units were owned by non-residents.

PrimeWest continues to qualify as a mutual fund trust by way of an exception in the Income Tax Act, however, one of the measures introduced in the Canadian federal government's budget address on March 23, 2004 would effectively eliminate that exception, with the result that PrimeWest now has until January 1, 2007 to comply with the [existing] requirement that it not be maintained primarily for the benefit of non-residents. PrimeWest intends to pursue alternatives over the coming two and a half years to mitigate the impact of this change.

http://cbs.marketwatch.com/tools/quotes/quotes.asp?symb=pwi&siteid=mktw&dist=mktwqn

 

CALGARY, Alberta, Sep 17, 2003 (BUSINESS WIRE) -- Provident Energy Trust (Provident) (PVX)(PVE.UN) today announced Canadian unitholders have approved an amendment to its Trust Indenture providing that residency restriction provisions need not be enforced while the Trust continues to qualify as a Mutual Fund Trust under Canadian tax legislation.

Provident qualifies as a Mutual Fund Trust under the Canadian Income Tax Act because substantially all the value of its asset portfolio is derived from non-taxable Canadian properties, comprised principally of royalties and inter-company debt. To allow Provident to remain a Mutual Fund Trust and to execute a business plan that maximizes unitholder returns without regard to the types of assets the Trust may hold, the approved amendment provides for Provident's board of directors to have sole discretion to determine whether and when it is appropriate to reduce or limit the number of trust units held by non-residents of Canada.

http://cbs.marketwatch.com/tools/quotes/news.asp?siteid=mktw&doctype=2007&nx=37894.3655439815-807406475&property=sid&value=2007&symb=pvx

Blakes.com Canadian Non-Resident Investment Law Review: http://www.blakes.com/english/publications/tax/taxSept03/restrictions.asp

[Southack]

[Southack]

FYI

[Southack]

[Stentor]

Bump.

[thoughtomator]

So is there anyone left in our government who is not so bought-out by foreign and/or corporate and/or ideological interests, that they will defend the economy of the United States from international predation under the guise of free trade?

[Dog Gone]

This breech of NAFTA by Canadian law is so egregious that if it remains uncorrected could lead to an international declaration that said treaty is now null and void.

I have trouble with that conclusion.

[Southack]

"So is there anyone left in our government who is not so bought-out by foreign and/or corporate and/or ideological interests, that they will defend the economy of the United States from international predation under the guise of free trade?"

Oh yes. Bush will smash NAFTA if Canada doesn't undue its March 23 change.

Free trade is fine, after all, but what Canada is trying to pass off as their new law isn't what anyone would call "free trade."

[Stentor]

I have trouble with that conclusion.

Don't know about your trouble but your profile page is ROF funny.

[templar]

So is there anyone left in our government who is not so bought-out by foreign and/or corporate and/or ideological interests, that they will defend the economy of the United States from international predation under the guise of free trade?

If I had to put money on it, I'd have to go with no.

[Southack]

"I have trouble with that conclusion."

Understood, but all that has to happen is for a single non-Canadian court to declare Canada in breech of NAFTA during a ruling that favors the plaintiff and then suddenly you've got "an international declaration that said treaty is now null and void."

[pointsal]

ping...for the maple sugar explanation...

[mitchbert]

Ummm...there's a proper dispute mechanism to deal with these things, just as is done with stuff like softood lumber and other things. Historically it's worked okay, too. One great kudo to both the U.S. and Canada in these regards is that they generally stay focused on the particular issue and don't engage in spurious linkages that could have broader negative implications for both sides.

There's a process for this stuff...let's give it a chance before we start abrogating the Treaty of Ghent, eh?

Cheers!

[AgThorn]

How is this any different than showing the rights that Mexicans have in buying land up here but we have no such rights down there?

Face it -- NAFTA'a great if you are Mexican or Canadian but sucks if you are the USA - so enough already, end it until it's truly fair and balanced.

[mitchbert]

sorry...softood s/b softwood

[Dog Gone]

NAFTA has a dispute resolution mechanism which certainly has to be explored before withdrawal from the treaty, or some stupid judicial ruling that it's null and void.

I'm getting pretty tired of judges who rule as if they are kings. The fact that I can't invest fairly in a Canadian mutual fund is troubling in principle, but not something that's keeping me awake at night.

[albertabound]

The Dispute Mechanism Works. Rarely does Uncle Sam get the shitty end of the stick.


DAVID CRANE

Canada's victory in the softwood lumber dispute at the World Trade Organization this week is likely to be followed soon by a similar finding from a NAFTA dispute-settlement panel. This should pave the way for the eventual withdrawal of U.S. protectionist measures and the return of money seized by the United States in the form of what have now been shown to be illegal trade penalties on Canadian shipments.

The WTO dispute panel concluded the U.S. International Trade Commission had not been "objective or unbiased" in ruling the United States faced an imminent surge in Canadian shipments, a ruling the country used to justify protectionist actions against Canada.

The WTO panel finding in Canada's favour demonstrates the importance of seeing such reviews through to their conclusion. In the past, Canada has launched appeals to the world trade body, then caved in to U.S. pressures before the panels ever reported.

This approach prevented us from knowing what the trade rules would actually find. Even this time there was strong pressure from Canada's department of international trade to settle before the dispute panel findings were available.

If we are optimists, we can be reasonably hopeful the Canada-U.S. softwood lumber dispute, which dates back to 2001, will be resolved, removing an unnecessary irritant in Canada-U.S. relations.

This case also underlines the importance of dealing with each Canada-U.S. issue on its own merits, rather than attempting to link different issues, as NDP leader Jack Layton did recently when he argued Canada should restrict energy exports to the United States until the softwood lumber issue was settled. We would not want the United States to adopt this approach in a dispute with Canada.

Last month, another WTO decision found in Canada's favour in another trade dispute with the United States. After losing a succession of past efforts to cripple the Canadian Wheat Board through trade actions, the United States launched yet another last year at the WTO, claiming the wheat board was acting contrary to Canada's WTO obligations.

The WTO found the wheat board's practices were consistent with Canada's international trade obligations. The panel did find some grain sector policies were inconsistent with our WTO obligations. But the major outcome was to reinforce the legitimacy of the Canadian Wheat Board.

Our attention now should turn to U.S. restrictions on beef. Canada's beef industry is hemorrhaging, as this week's announcement of nearly $1 billion in aid to Canadian farmers showed. Here, Canada and the United States appear to be co-operating. As Canadian Agriculture Minister Bob Speller announced earlier this month, the United States had reopened a comment period on a rule to make it easier to allow certain classes of Canadian cattle to be imported into the United States for the first time since last May. The comment period will close April 7, so a decision should be possible shortly after that.

These, to be sure, are not the only Canada-U.S. issues that need to be resolved. Border issues remain critical. As Janice Stein of the Munk Centre for International Studies recently told Microsoft Canada's CAN WIN 04 conference, "the United States is now in a period where it is actually thickening its borders and I think that will be with us for the next five years."

The onus on Canada will be to invest in cross-border infrastructure and achieve agreements on pre-border clearance of shipments of goods.

The Bush administration is seeking an agreement with Canada and Mexico on what it calls "North American energy security." What exactly is meant by this is not clear and no plan has been discussed in Parliament to draw out Canadian views and possibilities.

The United States is also anxious for Canadian participation in ballistic missile defence, which is almost certainly aimed against China, despite claims to the contrary. But the issue has not been properly debated before parliamentary committees and Canadians are sharply divided on the issue.

Prime Minister Paul Martin has made improved Canada-U.S. relations a priority. But it would be a mistake for him or his aides to create the expectation that just because he is a more acceptable face in Washington that somehow Canada-U.S. relations will be transformed.

A good working relationship at the top certainly helps, but each issue has its own dynamic and has to be treated on a case-by-case basis and resolved according to each country's interests and obligations. Chumminess is not a substitute for the substance of issues.

[AdamSelene235]

Hey !! That's what we were discussing concerning the PVX problem.....

Friggin provincials....

[spyone]

You are completely wrong.

[Southack]

"Hey !! That's what we were discussing concerning the PVX problem..... "

Right. We discussed back in September that Canada was in breech of NAFTA, but I only got around to running the net searches today to prove it.

[suzyq5558]

I just had to go peek at your profile page after another poster was laughing their rear off. you are good! LOL LOL...