The 2013 Alternative Federal Budget, released this week by the Canadian Centre for Policy Alternatives, argues the Harper government's trade policy is not working for most Canadians. It describes the Canada-EU trade deal, Trans-Pacific Partnership and Canada-China investment treaty as "fundamentally illegitimate and anti-democratic" in how they "alter key domestic policies through the back door of international trade treaties." And it recommends that Canada "shift its focus from negotiating new bilateral and regional free trade agreements to the promotion of Canadian trade, especially high value-added exports of goods and services, including cultural services."
Effect of free trade on Canadian economy
"Modern trade and investment treaties are less about trade and more about limiting how societies organize themselves democratically and restricting the authority of governments to influence their national economies," starts the AFB chapter on trade. It lists some of the less talked about impacts of the North American Free Trade Agreement on Canada's economy and policy space:
- Increased dependence on production and export of unprocessed or semi-processed natural resources, with all of its environmental costs (ex. tar sands, shale gas);
- Declining manufacturing base and worsening trade balance in this area;
- Declining productivity to the point Canada is ranked 30th of 34 OECD countries;
- Rising inequality in Canada with top earners taking home the biggest share of wealth;
- A weakened capacity to regulate at all government levels, mostly due to "investors using the NAFTA's notorious investor-state dispute settlement mechanism."
Next generation trade deals
The AFB trade chapter turns to CETA, the Canada-China FIPA and the TPP as next generation free trade and investment deals with few real economic benefits to Canada and many new threats, including:
- The impact that new patent protections will have on the cost of pharmaceutical drugs in Canada;
- The effect that extending NAFTA-like investor rights to European firms will have on the "right to regulate";
- The loss of municipal autonomy to use public spending as an economic development tool;
- The possible erosion of Canada's supply management system;
- "The curtailment of Canada's ability to create new public services or to reverse failed privatizations, without facing litigation and demands for compensation from affected foreign investors."
Under the FIPA, says the report, "if an established Chinese investor objects to stronger environmental regulation over the oil sands or shale gas fracking, it would be left up to an unaccountable arbitration tribunal to decide if these new measures are 'necessary' or applied in an 'arbitrary' or 'unjustifiable' manner."
(The NAFTA investor disputes against Canada by Windstream Energy, for a temporary moratorium on offshore wind in Ontario, and Lone Pine Resources, for a Quebec moratorium on hydrofracking, both claim that the precautionary policies were "arbitrary, irrational and discriminatory.")
Why does Harper like these deals?
Unfortunately for us, the Harper government "views these sacrifices of basic interests or key policy flexibility as desirable, but unpopular, domestic reforms," says the AFB trade chapter. "Similarly, the most vociferous corporate supporters, such as the brand-name pharmaceutical companies or agri-food corporations, advocate trade and investment treaties as a way to change Canadian domestic policies."
The CCPA makes the following commitments related to Canadian trade and investment policy:
1. "That Canada follow Australia's lead and refuse to sign any further bilateral or regional trade and investment agreements that include investor-state dispute settlement."
2. "That Canada reject demands by the EU in the CETA and by the U.S. in the TPP to extend patent terms for brand-name pharmaceuticals (averting cost increases in drugs estimated at hundreds of millions of dollars annually)."
3. "That the Department of Foreign Affairs and International Trade shift its focus from negotiating new bilateral and regional free trade agreements to the promotion of Canadian trade, especially high value-added exports of goods and services, including cultural services."
To read the Alternative Federal Budget, visit the Canadian Centre for Policy Alternatives website.