Amid rumours of a Brexit intervention from Barack Obama, Boris Johnson has taken issue with the US president’s “outrageous and exorbitant hypocrisy”. After all, he points out, the US would never submit to overseas control in the way the UK must as a member of the EU.
He cites NAFTA, the North American Free Trade Agreement, which the US formed with Canada and Mexico in 1994 – though Johnson names it incorrectly as the “North Atlantic Free Trade Agreement”. Would the US, he asks, “submit to a NAFTA court of justice – supreme over all US institutions – and largely staffed by Mexicans and Canadians whom the people of the US could neither appoint nor remove?”
In fact, NAFTA does provide for courts whose rulings are binding in domestic law. Under Chapter 11 of the NAFTA Agreement, investors may take a case to a UN or World Bank-based arbitration mechanism. These are an alternative to domestic courts, but their decisions are enforceable. Under Article 2011, arbitration panels must include members from other NAFTA countries. And their decisions have had an impact, for example when the court outlawed a Canadian ban on a supposedly harmful petrol additive.
Like other member countries, the US is also bound by the rulings of the World Trade Organization (WTO). Canada and Mexico recently complained to the WTO over US country-of-origin labelling rules for beef and pork. Faced with the prospect of a billion-dollar penalty, the US Congress backed down. A recent review found similar investor dispute settlement arrangements in 93% of bilateral investment treaties.
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With a small secretariat and intergovernmental decision-making, NAFTA’s structures are less intrusive than the EU’s. While the NAFTA court does erode sovereignty – for example undermining national ability to pass environmental measures – it hears far fewer cases than the EU’s own court of justice. But that is because NAFTA’s trading arrangements are less comprehensive than the EU’s. For example, unlike their EU equivalents, exporters within NAFTA have to obtain onerous certificates of origin to prove products qualify for lower tariffs.
The features of the EU that Brexiteers do not like are not a conspiracy with political union as the ultimate goal. They are common to all free-trade arrangements, as NAFTA shows. The deeper you want your trading relationship to be, the more you have to be prepared to pool sovereignty.
Edited by Alan Wheatley