Soon, Justin Trudeau's Liberals will have to decide whether Canada will join the Trans Pacific Club. Murray Dobbin writes that recent studies indicate that the cost of membership in these so called free trade clubs is high:
By focusing exclusively on exports and abandoning any policy initiative aimed at strategic industrial development, Canada's economy has been going backwards in terms of value-added industries. According to the National Post's John Ivison, "the oil and gas sector's share of total exports has increased to 23 per cent in 2014 from 6 per cent a decade earlier, just as a manufacturing industry like the automotive sector has slipped to 14 per cent from 22 per cent." The trade deficit for 2015 was dismal. From October 2014 to October 2015 it reached $17.4 billion, the worst one-year total on record.
That's because, despite all the hype about free trade, these deals have always been -- first and foremost -- about investor protection:
Investment protection agreements are not primarily about trade -- they provide "investors" (that is, transnational corporations) with extraordinary rights that trump the sovereignty of those countries that sign them. But it only works at all if you have a capitalist class that actually takes advantage of these rights -- by taking risks, investing in innovation and engaging in aggressive overseas marketing -- such as the nine non-North American countries that are partners in the TPP. Otherwise we simply agree to become a punching bag for transnational corporations doing business here in Canada.
Rather than investing in other countries, Canadians have lost control of their own companies to foreigners:
As for foreign direct investment (FDI) positive numbers presented by "free trade" supporters are also extremely misleading. While most people assume that foreign investment means new production and jobs, in Canada it doesn't. In 1998, the Investment Review Division of Industry Canada prepared a report that looked at FDI in Canada. In 1997, it reached $21.2 billion -- the second-highest total on record. However, according to the study, fully 97.5 per cent of that total was devoted to acquisitions of Canadian companies. And 1997 was not an aberration. On average, between June 1985 and June 1997, 93.4 per cent of FDI went to acquisitions. In 2001 the figure was 96.5 per cent (Mel Hurtig, "How Much of Canada Do We Want to Sell?" Globe and Mail, 5 February 1998).
History tells us that, on balance, free trade has not been good for Canada. The simple truth is that the big countries -- most importantly, the United States -- set the rules in their favour. Some don't dispute this fact. But they insist that Canada still needs to join the club for defensive reasons.
Gus Van Harten, who teaches trade law at Osgoode Hall, disagrees. There are, he writes, seven good reasons for Canada not to sign on to the TPP:
1. The TPP would give special protections to foreign investors at significant public cost, without compelling evidence of a public benefit.
2. When the TPP refers to "foreign investors," we should understand that to mean large multinationals and the super-wealthy.
3. The TPP is worse than existing agreements such as NAFTA.
4. Anything new and apparently better in the TPP, compared to NAFTA, is very likely lost because the TPP adds to, instead of replacing, existing trade agreements.
5. The TPP would make it easier for global banks to resist regulation.
6. The TPP is incompatible with the rule of law.
7. The TPP is disrespectful of domestic institutions, including the courts.
Put simply, Mr. Trudeau and Company should take a pass on the TPP.