CETA “not about trade”

By: Marilyn Reid | February 17, 2014. Newfoundland and Labrador, The Independent

In the first of this 5-part series: What the North American Free Trade Agreement has taught us, and the implications of another treaty based on the neoliberal “free trade” ideology

Cutting through the spin on CETA is a 5-part series examining the reticent nature of a treaty that threatens Canada’s economic sovereignty. Since 2006 our federal government has signed trade agreements with 37 different countries. Negotiations are nearing conclusion for others, most notably CETA (the Canada European Comprehensive Economic and Trade Agreement). Initiated five years ago, CETA has still not been presented to the public for full discussion in any kind of transparent way – and may never be. There’s a good chance the federal government will avoid any meaningful public discussion of this treaty before ratifying it in parliament. This five-part series, focusing primarily on CETA, will look at what’s at stake for our country with the new generation of trade agreements.

Lessons from NAFTA

Our current government tells us trade agreements will create wealth and jobs for Canadians, yet family farmers have a precautionary story to tell us. In the 10 years following the North American Free Trade Agreement (NAFTA) deal between Canada, the United States and Mexico, Canadian farm exports increased by 300%. However, during that same period the debt load of Canadian family farmers doubled and farm income fell by 24%. NAFTA also devastated the livelihood of Mexican farmers who were unable to compete with the influx of heavily subsidised corn from the U.S.

Contrary to all the rhetoric presented to us, for the average Canadian NAFTA was also a disappointment on the employment front. Although better educated than their parents’ generation, post-NAFTA young Canadians entering the job market found it increasingly difficult to find employment commensurate with their education. Both contractual and part-time work accelerated from the 1990s onward and has now become a norm.

Of course it’s unfair to blame the deteriorating job situation entirely on NAFTA. But the neoliberal “Free Trade” ideological package, of which NAFTA is a part, certainly had a central role. We were told that, unfettered by trade barriers like tariffs, countries would gravitate to where they had a natural competitive advantage. For the United States and Canada, that was supposed to be our knowledge-based industries.

Well that didn’t work out well for Nortel and other high tech corporations, did it?

One reason, of course, is the faster pace with which the middle classes of developing countries have developed expertise in high tech industries. More significantly, however, the failure to retain our knowledge-based advantage can be attributed to the enthusiastic movement offshore of “our” transnational corporations. The best example to illustrate this point is the premier American corporation, Apple. Apple has been responsible for the creation of almost 750,000 jobs, but close to 700,000 ended up outside of North America.

North American factories have become an endangered species, a fact that becomes clear when you look at our trade with Europe. The top 10 Canadian exports to Europe are now gold, crude petroleum, diamonds, iron ore, uranium, nickel, aircraft, soya beans, coal and copper. Our top imports from Europe are: drugs, luxury cars, light and crude petroleum, wines, medical instruments, motor vehicles, aircraft and machinery parts, and wind generators. In the first eight months of 2013 Canada ran a trade deficit with the EU of $14 billion.

Wabush Mines closure a sign of things to come?

 Could that deteriorating (growing?) deficit have something to do with the fact that all but one of the value-added products in our mutual trade are European-based, while all but one of the raw materials are Canadian? CETA, if signed, will probably exacerbate our respective competitive advantages. The recently announced closure in our province of Wabush Mines should sound warning bells about moving further in that direction; do we really want to relegate ourselves further to an economy dependent on the extraction of our resources? Isn’t that the very restriction that has left the economies of developing countries vulnerable to volatile market forces beyond their control for so long?

Trade Minister Ed Fast is apparently unconcerned about the direction “free” market forces are taking us. He continually refers to the $12 billion increase in GDP he expects under CETA and equates it to the production of 80,000 jobs. Not only does this imply a highly dubious and artificial cause-effect relationship, but the alleged $12 billion GDP increase is based on a flawed 2008 study that even the corporate sector is uncomfortable with.

At the December 2013 meeting of the Parliamentary International Trade Committee, John Curtis of corporate think tank the Fraser Institute admitted it was doubtful there would be immediate job gains under CETA. He said job losses often followed soon after trade agreements were implemented. According to a study by the Canadian Centre for Policy Alternatives, job losses could range from 28,000 to 150,000, depending on currency fluctuations.

There is a disconnect here between government statements and economic reality.

Sector by sector

 With the fisheries we know there will be an increase in shellfish exports, accompanied by substantial job losses because of the abolition of minimum processing requirements in our province. The situation is reminiscent of the farmers’ NAFTA experience.

In agriculture, there’s good reason to doubt the government’s projections of increased exports; Canadian beef and hog producers use drugs like ractopramine, which are banned in Europe. Furthermore, the European position on GMOs is not likely to change so it’s doubtful there will be any market for grains like Canadian canola except as a biofuel product.

In our value added sector, government has tried to make political capital about the increase from 25,000 to 100,000 in the quota limit for Canadian cars entering Europe, which sounds good until you learn that Canada only exported 12,000 cars to Europe last year. This is unlikely to change much since North American car companies already have branch plants in Europe.

What all of this means is there will be very little increase in our exports with CETA. At the same time, the elimination of tariffs on European imports means those goods will cost less, which threatens Canadian jobs. In Quebec it will put the livelihood of cheese producers in peril. Meanwhile, Ontario is worried about how cheaper luxury cars from Europe will impact the auto industry.

Losing control of some really important things

 Then there are the non-tariff related measures. The Canadian generic drug industry will shed well-paying jobs because of the 18 months of additional patent protection given to the big pharmaceutical corporations under CETA. That, in turn, means Canadians will pay between $850 million and $1.645 billion more each year for medicine.

CETA will also oblige elected bodies right down to the level of school boards to open up procurement to European corporations. The threshold amount for this is $340,000, which sounds high until you consider how much one city transit vehicle actually costs. Around 90 municipalities have protested CETA’s denial of their right to have “Buy Local” and “Hire Local” policies. Fifty have actually asked to be exempted from the treaty.

What is interesting is that it isn’t just the big municipalities like Toronto and North Vancouver that have taken a stand. Many small municipalities that have probably never had – and never will have – a “Buy Local” policy have also stood up for the principle of the right to promote and protect our own industries. It’s disappointing that there are no Newfoundland and Labrador municipalities among this group. I think there is a temptation here to think that CETA will have little impact on us outside of fisheries issues. This is a mistake.

A substantial part of our available work force is employed seasonally outside this province. The money these workers make comes back into our communities in a variety of ways. It’s important money. If global opposition to Tar Sands extraction were to cause it to shut down, the effect on the economy of rural Newfoundland could be profound, especially if workers had no other jobs to turn to. The point is that our economic reality is not, and should not be, considered separate from that of the rest of our country.

“The façade of trade”

 At present, there are roughly six unemployed Canadians for every job vacancy. The biggest challenge facing our governments today should be the stimulation of those parts of the economy that will create good, skilled, value added jobs for this generation and the next. The trade benefits of CETA are so dubious and the restrictions so hostile to the promotion of local economies and local jobs that you have to ask why the federal government is pushing so hard for this treaty.

They are pushing it because CETA is not about trade. Trade is the camouflage. Hidden under the façade of trade are some very unpleasant directions that government does not want to talk about, and which we know about only through leaked documents. The next instalment in this series on trade agreements will focus on those directions related to investments. I hope you’ll continue reading.

The next Citizens Against CETA meeting is Tuesday, Feb. 18 at 7 p.m. in the Community Room at Sobeys on Merrymeeting Road in St. John’s. The group welcomes those with ideas about how to jump start public interest in the CETA story. If that’s you, or if you would like more information on CETA, please join us. Citizens Against CETA can be contacted at noto…@gmail.com. Visit the group’s website at citizensagainstceta.blogspot.ca.


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