Canada and the Trans-Pacific Partnership

By Mel Watkins | 2016-07-01 12:00:00

This critique of the Trans-Pacific Partnership is dedicated to the memory of my friend and colleague Stephen Clarkson, who mourned for Canada when the Canada-US Free Trade Agreement came into effect in1988 by wearing a black arm band.

Let’s talk trade. It can be good; how else does one who lives in we-have-no-bananas land get bananas?

It can be bad for everybody when transport of goods increases carbon emissions, a fact which proponents of trade-enhancing trade agreements are disinclined to admit, since it exposes the growing ecological footprint—which George Monbiot calls a “boot print”—inherent to globalization.

In corporate talk, trade is win-win. So too in economics lingo, between countries and within countries, though this is not necessarily so. Wages can rise in a low-wage country and not rise or even fall in a high-wage country. (Think the US and China.)

Some countries can adjust better than others to trade-driven change, where doing so can depend on whether there is a social safety network facilitating adjustment. Countries with some social democracy (Canada) do better in this regard than those without (US).

There is also, in theory and fact, a conflict between labour and capital, between people and the corporation, which is everywhere in evidence, though rarely the subject of corporate-dominated public discourse. Trade is the business of the corporation, its power masked by the market.

What happens when there are trade agreements, with more of them every year, each giving corporations more rights? By defining the rules, such agreements should facilitate trade, while exacerbating those tendencies we’ve been talking about.

They are called “free trade” agreements, the international manifestation of laissez-faire, but as the social historian Karl Polanyi observed about the nineteenth century with its spreading commitment to free trade, free markets, and free enterprise, “laissez faire was planned.” The state does it, coached by the corporations. The result is trade agreements that are properly described as charters of rights and freedoms for the corporation as it pretends to be a person. (As we know, in the extreme case of the US, the corporation has an unlimited right, as part of its “freedom to speak”—money talks—to fund elections.)

Who or what is Donald Trump, the Republican presidential contender: a person or a company? We’re in a situation where a corporation could be elected leader of the Free World. Who knows what will happen to trade agreements?

Thousands of Pages

This is no left-wing rant; corporations truly have power. As for free trade, you might imagine that it could simply be proclaimed, but in fact free trade agreements run to thousands of pages. The reason for that is that trade agreements are about managing trade.

They are about much more than trade, narrowly conceived. Corporations do­m­i­ciled outside Canada that make an investment in Canada have to be compensated if they can show that Canadian governments have damaged their profitability by, for instance, imposing tougher environmental regulations. The phenomenon is called, revealingly, investor-state disputes. Trade agreements provide for their resolution, not in our courts, but through arbitration by an offshore tribunal of experts in trade agreements. The foreign investor is given legal status equal to that of a government. We are literally talking about the creation of corporate sovereignty and the loss of national sovereignty—though not to the point where we cannot stop the TPP if we have the will. A ­­domestic investor has no similar right to sue its­­­­­­­­­ government, so the foreign investor is specially favored.

As well, so-called trade agreements also deal with what in corporate talk is called “intellectual property”—which does not mean the brilliant ideas that you and I have, but rather copyrights and patents. A major benefactor is Big Pharma, which is already too powerful; it blocks consumer access to generic drugs, driving up prices and increasing the cost of pharmacare for seniors (like myself).

Governments sign them, not only because corporations lobby them but because they seem like an attempt, albeit vain, at more certainty—put it in writing, print it in full—in a world of chaos and uncertainty.

These agreements, like the Trans-Pacific Partnership currently under discussion in this country, are at the core of contemporary globalization, which is really corporate globalization rather than the fullness of global connections and consciousness. Such globalization calls into being reactive counter-movements and outbursts like Donald Trump and Bernie Sanders in the US, the head office of globalization. The American empire might be thought to benefit Americans, but is clear that large numbers of them are not sharing the imperial spoils.

The United States and Japan are central to the agreement, which also includes Australia, New Zealand, Sing­apore, Vietnam, Malaysia, Mexico, Chile, Peru, South Korea and Canada. The omissions are noteworthy: China, India, Indonesia, the Philippines. With the United States as the main proponent, the absence of China gives the whole project a geopolitical cast which could cause more trouble than it is worth.

Obama Wants it

Its actualization depends on American support. President Obama wants the agreement and is seriously pushing for it, in spite of increasing opposition among Democrats. Trump is opposed to trade agreements as presently constituted—which are the only ones on offer: just one of many areas in which a Trump presidency defies prediction.

Hillary Clinton was supportive of the TPP but, under pressure from Sanders, now opposes it and insists that if she becomes president she will not sign it. The first Clinton was likewise opposed to NAFTA during the 1992 election but signed on as president after cosmetic changes. It is theoretically possible that Obama, as a lame duck president after the election, could sign it and get it through Congress if the Republicans are still in control there, but that does seem like a bit of a stretch.

In Canada, Trudeau seems likely to sign if he gets the chance, and the opposition Conservatives actively promoted it under Harper. The NDP opposes, fearing loss of jobs.

From Mulroney on, every Canadian Prime Minister has been willing to enter into every possible trade agreement.

Why? Repeat after me: We are a trading nation. For both fish and fur as staples, trade preceded settlement and production for the domestic market, and this got us off to a bad start. The conventional wisdom, as implied by governments and business, is that the ability to export is the proof that you can play the glamorous macho game of corporate globalization. It turns out to be a game where companies and countries compete by squeezing labour and imposing austerity that risks making all of us losers.

In defence of the Free Trade Agreement (FTA) between the US and Canada, which morphed into the North Am­­erican Free Trade Agreement (NAFTA) by adding Mexico, we are told that Canada’s trade (exports plus imports) increased but that says nothing about whether Cana­dians became better off. What was always implied was that our manufacturing sector, above all, would benefit and we would have a more mature, balanced economy.

h2, Zero payoff?

In fact, the agreement was also about guaranteeing market access for our resources, that is, creating a more resource-biased economy than already existed. This explains why Peter Lougheed as Premier of Alberta was a leading advocate of the FTA deal. That did not stop Obama from vetoing the Keystone pipeline that Alberta badly needed, reminding us that US power was in no way lessened. Calling today’s TPP deal a “partnership” won’t make an iota of difference.

Evidence is that trade deals do actually increase the resource bias of the Canadian economy—miring us in what economic historians have labeled a “staples trap”—an argument that the Canadian Labour Congress made about the FTA. Our existing exports to the TPP are mainly unprocessed and semi-processed goods; the TPP will increase that comparative advantage.

Within that resource bias, the oil and gas companies thrive, and Alberta and Canada become petrostates pushing for pipelines and unable to deal effectively with climate change.

The TPP has been called “NAFTA on steroids” and “the worst of all trade agreements.” The C.D. Howe Institute, a pro-business think-tank, estimates that its implementation will increase real GDP by a whopping 0.02 percent in 2018—which, given probable errors in estimation, rounds to zero; it says the reason for this “modest” payoff is that there is “an already highly open global economy.” According to the eminent American economist Joseph Stiglitz, it’s big-big: a “big deal” and a “big mistake.”

The chaos rampant in American politics may carry the benefit of killing the TPP. Should that happen, it will be to our benefit. We need to pay less attention to authoritarian top-down corporate trade deals, with all their baggage, and more attention to deep globalization built on the democratic ground-up foundation of local communities.

Mel Watkins was the advisor on the FTA to the Canadian Labour Congress 1987-88. He wishes to acknowledge the valuable work over the years of the Canadian Centre for Policy Alternatives, particularly Scott Sinclair, from which he has benefited greatly.

Peace Magazine Jul-Sep 2016

Peace Magazine Jul-Sep 2016, page 24. Some rights reserved.

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