Canadian Medical Association Journal 1996; 154: 1549-1551
© 1996 Charlotte Gray
Three weeks, several articles, a couple of speeches and a federal news release later, the issue abruptly disappeared. Yet nobody, in either corner, appears to have changed their minds. What was the fuss all about?
"The issue certainly went from submerged to banner headlines in record time," comments Brian Schwartz, a law professor at the University of Manitoba, who is an expert on trade law and constitutional issues. Why this happened, he says, poses "an interesting question."
One way that it happens is by strategy -- in this case, a strategy devised by the Canadian Health Coalition (CHC). The CHC, which includes church, antipoverty and seniors' groups as well as various health workers' unions, had long been concerned about NAFTA's impact on health care. One of the agreement's requirements was that all provinces and states in Canada, Mexico and the US list every program or service that they wanted exempt from NAFTA by Dec. 31, 1995. The CHC worried that some provinces were not paying any attention to this, and instead were relying on assurances from Ottawa's trade lawyers. Those lawyers said that Canada's health care systems would not be threatened by American competition because they fall under a protective umbrella as "social services established or maintained for a public purpose."
Still, NAFTA was making some provinces, particularly British Columbia and Quebec, nervous; they were concerned that if provinces like Alberta opened the door to US health care corporations, their tentacles would soon spread across the country. Unless Canada presented a united position on how health care services were to be regarded under NAFTA, issues might wind up being resolved by dispute-settlement panels, and the outcomes could not be predicted.
The coalition first wrote to the federal health minister about the issue in 1993 but never received much encouragement. Because of upheavals in Washington, the deadline was extended to Mar. 31, 1996, so the CHC arranged a meeting with former health minister Diane Marleau last January. "We appealed to her not to rely on lawyers in the Department of Foreign Affairs and International Trade, and to get an independent opinion," explains Mike McBane, coordinator of the CHC. "She nodded vigorously, but we weren't sure she would act." So the coalition went to Schwartz and asked him to complete a study.
"The issue had remained submerged so long because of its sheer technical complexity," says Schwartz. "The agreement runs to over 1000 pages, and some of the wording is deliberately ambiguous." Most politicians and Ottawa officials thought it much easier to leave the problem to lawyers than to try and wade through the legalese and estimate its potential impact on the provinces. Ottawa's trade lawyers insisted that the "public purpose" clause within NAFTA would be broadly interpreted, so there was nothing to worry about. "But these lawyers are predisposed to opening Canada up to free trade," argues McBane. "They are not preoccupied with protecting medicare."
In his 21-page legal opinion, Schwartz concluded that there were black, white and grey areas in sections of NAFTA that dealt with health care. Basic insured services are probably protected, because they fit the "public purpose" definition. Services that are not covered by provincial plans, such as dentistry or hospital-laundry services, are exposed to competition from across the border. "The grey area," explains Brian Schwartz, "is the status of services that receive both public and private funding, such as physiotherapy. The level of government intervention in service provision is key to how it would be regarded."
Schwartz describes himself as "both pro-NAFTA and pro-medicare," and his brief was no protectionist rant. In fact, Andrew Coyne, the Globe and Mail's resident neo-con commentator, described his opinion as "sound and sober" -- a phrase that has since become Schwartz's nickname. But he did warn that "the existence of grey areas will likely encourage US providers and their federal government to put political and economic pressure to open up large areas of the health care sector."
This opinion reinforced the coalition's fears that, unlike Ottawa, Washington was hell-bent on the narrowest possible interpretation of "public purpose" -- US trade negotiator Mickey Kantor, who has since been named US commerce secretary, had explicitly said so in Oregon late last year.
The Canadian Health Coalition circulated the Schwartz brief widely. Schwartz has substantial credibility, and because his brief was written for nonlawyers it got wide play in the media. "NAFTA flaws may open medicare to US assault," read one headline in Report on Business. The Financial Post reported the same "fears." Andrew Petter, British Columbia's health minister, said that NAFTA has turned the Canadian border into a 5000-km-long welcome mat. Even if the mat is out, he told an audience of health care unions in Calgary, he wants to make sure the door is closed. "And it has to be closed before the end of the month," he added.
Having generated some public heat, a CHC delegation visited the new health minister, David Dingwall. To their pleasant surprise, he had read the legal opinion and was ready for action. "He went to the prime minister and explained how vulnerable Canada was," says McBane. Dingwall suggested to his colleagues that the US government might bend to corporate America's argument that Canada's medicare system offers an unfair competitive advantage. For-profit American corporations might contend that NAFTA gave them a right to "national treatment" -- a level playing field -- within Canadian health care.
Two political factors weighed heavily in the coalition's favour. The first was the recent cabinet shuffle, which had changed the chemistry around the cabinet table. Because of the departure of Roy MacLaren, the pro-NAFTA trade minister, and the arrival of Lloyd Axworthy, an economic nationalist, as foreign affairs minister, criticism of NAFTA fell on sympathetic ears. Secondly, the US-Canada dispute on softwood lumber was continuing, and Ottawa knew it was going to have to concede to Washington's demands. A victory, however small, surrounding the protection of medicare would offer a nice counterbalance.
With the prime minister's backing, Dingwall got cabinet to instruct the new trade minister, Arthur Eggleton, to take some action. By the end of the month, Canada had negotiated with its two trade partners a "short general reservation" covering all existing health and social services that will protect them from NAFTA's foreign-investment rules. This was a "major victory" for the Canadian Health Coalition, says Mike McBane.
But was it?
The general protection for all of Canada's current public health care services will certainly stop any nibbling at the edges by US health companies. Trade lawyers argue that this was never a real threat, but why should we believe them? In 1988, while opponents of the free trade agreement argued that Canada would lose half a million jobs, the same lawyers insisted that employment would increase. They were wrong.
The general-reservation clause was a political victory for the CHC, because it successfully shifted the debate from trade lawyers to the cabinet table. "This is a healthy precedent," suggests McBane. "Depart-ments shouldn't always rely on trade lawyers within the bureaucracy, because there are often conflicting priorities between departments, as there were here." The furore necessitated some fancy footwork among the three countries, proving, suggests McBane, "that NAFTA is not a done deal." Continued vigilance is essential, he says, and cannot be left to the Department of Foreign Affairs and International Trade.
Schwartz says the outcome was gratifying. "I've given lots of legal opinions, but usually there is so much inertia in the system that even when you have something interesting to say, nothing happens." In this case, something did happen.
However, all parties agree the new clause will have limited impact. It covers only those services that were wholly in the public sector in 1994, when NAFTA was signed by Canada, the US and Mexico. Since then several services have been delisted, which means they are no longer shielded. The NAFTA clause protects our health care services from external, but not internal, threats.
There is still some doubt about what the NAFTA drafters meant when they exempted all social services "provided for a public purpose." For his part, Schwartz says "the debate is not dead. There are a lot of things we will only discover as provinces experiment with health care delivery. If Alberta continues to privatize services, for instance, it will affect the system across the whole country. We may find ourselves asking, `When does a difference in the degree [of privatization] become a difference in the kind of system we have?' "
That is a debate, adds McBane, that must be held in public. "The future of our social programs should be decided by the people and their governments, not by trade lawyers and secret agreements."
The carefully orchestrated media coverage signalled the political risks; this helped the coalition catch ministers' attention. Dingwall, who is determined to wear the mantle of "medicare's saviour," provided the political leadership for which the coalition was angling. Neither he nor most of his colleagues regarded the invasion of US health giants as a real threat -- but they didn't want to lose the public-relations battle because they know health care will be a major issue in the next federal election. The rapidity with which the NAFTA question grabbed the headlines was simply another reminder of this.
"Canadians are incredibly sensitive about medicare," remarks Schwartz. "The system is under enormous stress, but it retains huge public support."
The March debate about NAFTA was yet another indication that medicare issues can detonate political explosions. The government's reaction is another sign that no one wants to be caught in the fallout.