Charting a new course on trade policy – Dias


By Jerry Dias

global-investing-competition

If there is one glimmer of good news from the last U.S. election it’s that a bright political spotlight has been shone on global trade policy – including in Canada.

Trade agreements have long played a central role in Canada’s economic strategy. Trade and investment treaties, we are told, are crucial tools to boost economic prospects and secure preferential access to markets, improving our export performance.

In 2007, the federal Conservative government launched its Global Commerce Strategy. It was an initiative designed to enhance Canada’s competitiveness in part by negotiating more bilateral free trade treaties. Then Minister of International Trade Ed Fast said the strategy led to “seven different free trade pacts with no fewer than 37 countries” – proof of its “resounding success.”

Trade is vital to Canada’s economy, but negotiating more free trade deals, alone, doesn’t constitute successful trade policy.
In fact, Canada’s trade performance has weakened since the Global Commerce Strategy was launched. The 2008 financial crisis played a role, but despite eight new free trade pacts since 2007, the rate of Canada’s import growth has gone up twice as fast as export growth.

In 2016, Canada posted a $16-billion trade deficit in goods (that includes manufacturing, agriculture and resources). It’s a far cry from the consistent surpluses from 1993 to 2007, more in line with a medium-sized, export-dependent economy like ours.

One of the big prizes for Canada under this strategy was the 2014 free trade pact with South Korea. Not only was it seen as a beachhead into the Asia-Pacific, Canadians were told the deal would increase exports “by 32 per cent” and create “thousands of jobs.” In truth, for Canada, the deal has been a bust. In two years, Korea increased exports to Canada sizably – by 47 per cent, while exports to Korea limped ahead by a meager 5 per cent. That’s hardly a “resounding success.”

Korea is just one example. According to former Unifor economist Jim Stanford, Canada’s trade performance is worse with our free trade partners. Between 2001 and 2014 annual export growth between Canada and its free trade partners was just over 1 per cent, far behind that with non-FTA partners (nearly 7 per cent).
What gives? Why pursue a trade policy that has been a demonstrable failure? Why, in the face of massive manufacturing sector job loss, stagnant wage growth, increasing income inequality and rising precarious work, is there still a gravitational pull for politicians toward free trade agreements?
Trade unions and other progressive groups have long argued that trade treaties have more to do with protecting the rights of trans-national corporations and private investors than working people. This claim would have gained less steam if trade was flourishing, jobs were plentiful and there were clear signs of global grassroots economic development. But that is not what has happened.

Nearly 30 years into NAFTA and there are more Mexicans living in poverty than before the deal was signed. More U.S. states have anti-union Right to Work laws, partly as a tool to attract investment (which, for some reason, has not been deemed a trade-distorting measure by the World Trade Organization or other body). Corporations use the flexibility and extraordinary rights that trade treaties afford to challenge our laws, and dampen the demands of workers in collective bargaining.

These unfortunate realities reflect the broken promises of free trade policy; one that’s in major need of an overhaul. Donald Trump crafted a campaign strategy playing on working class anxieties, including the failings of free trade. Bernie Sanders, originally a long-shot candidate, garnered tremendous support for his policies to rethink trade. Even the Trudeau Liberals attempted to distance themselves from Harper’s trade policy, promising greater public consultation and input into trade deals as well as a more careful look at the Trans-Pacific Partnership. Ministers Freeland and Champagne continue to define the government’s approach as a “progressive trade agenda.”

The political messaging around trade signals a popular appetite for reform. And the time to do that is now. Canada is about to embark on an important renegotiation of NAFTA. The Trudeau government has also committed to explore free trade talks with China, a notorious human and labour rights offender and global export juggernaut, as well as securing deals with India and Japan. Champagne also signaled interest in reviving the TPP (a deal that’s been subject to major public backlash) and is overseeing implementation of the Canada-EU CETA – an agreement that aims to restrict local economic policy-making, among other concerns.

If the Liberal government wants to make a fresh start of trade policy (as they should) they could start by defining, more clearly, what constitutes “progressive trade” for Canada. It can draw on a wide range of voices, from unions to small businesses; from indigenous people to anti-poverty organizations. It can be an example of true, collaborative policy-making and priority setting – a welcome break from the past.

Many of our largest trading partners, including the U.S. and the E.U., have well-established negotiating mandates setting out key trade priorities and spelling out what is out of bounds on domestic matters. Canada’s doesn’t take this sort of approach, but it could.

A true progressive trade agenda might serve as our trade mandate – prioritizing strong and enforceable labour rights, human rights, environmental standards and gender equity, offering no special privilege to private investors, and enshrining our right to regulate in the public interest, among other objectives.
Taking this bold step would make for good policy, and good politics. Canada mustn’t ignore the plight of working people, who’ve watched factories close and hundreds of thousands of jobs lost in recent decades. Canada mustn’t ignore the benefits in fostering a world class manufacturing and processing industries.
Let’s not let inaction on trade policy breathe oxygen into any homegrown versions of the Donald Trumps or the Nigel Farages of the world. By defining a truly progressive trade agenda we can chart a new course for global trade and economic development. We can be a beacon to the world. We can do better.

Jerry Dias is National President of Unifor

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