Wasn't there a G20 meeting happening in Mexico this week? You'd be forgiven if you lost sight of it with the Harper government's focus on negotiating and then apparently securing a spot at the Trans-Pacific Partnership table, pending Congressional approval in the U.S. and other negotiating countries. We put out a press release late this morning anticipating the announcement, which will be reported by most news sources as a coup for Harper, no matter what the entry fee in terms of up-front concessions, or the final make-up of the agreement. We live in a strange world.
Anyway, without going into too much detail, here are some quick thoughts on the TPP and what it means for Canada. (See my blog at www.canadians.org for hyperlinks.) We're fighting on two very big fronts now - CETA with Europe and the TPP with Obama. Thankfully there is a very strong international movement working to stop the TPP negotiations which we will be able to tap into.
First, this is not a breakthrough for the Harper government. As hard as it was, and as many men and women as Harper threw into the effort, in terms of actual economic gains from a completed TPP we are talking peanuts. The U.S.-based East-West Center estimated them at about 0.12 per cent of GDP by 2025. That's ten years after the earliest point the deal could come into effect. It's not literally peanuts (since we don't export peanuts) but figuratively it's not far off. For a link to that study, see the Triple Crisis blog by economist Kevin Gallagher, which comments on the similarly minute GDP gains for other TPP countries.
Second, as Erin Weir, an economist with the United Steelworkers, points out in the union's submission to the Government of Canada on the TPP, "Canada already has free trade deals with three (it's now four with Mexico at the table) of the current TPP members. The other six TPP members combined account for below one percent of Canada's exports. Any conceivable increase in exports to these markets would be almost insignificant in terms of total Canadian output and employment."
Third, related to the basic economics of the pact, is this deal going to increase exports relative to imports, worsening Canada's trade deficit with TPP countries?
Canada's past free trade deals have not fared so well in that area, as explained so well by Jim Stanford, CAW economist. Whatever the government says to the contrary, there are employment consequences to importing more of what you used to produce. Just look at manufacturing in Canada, which has taken a big hit over the past twenty years.
Not only was this partially a result of free trade, but these deals give companies far more rights than they give the public so that if a firm like Caterpillar wants to pick up and leave, throwing out workers and leaving it up to the government to pick up pension costs, they can do it no questions asked. Has the government even bothered to do an assessment on employment of the TPP? (Or of NAFTA for that matter?)
We need answers
Fourth, while we're talking about unanswered questions, we need to ask what the concessions were for Canada to be allowed into the TPP fold. As Inside U.S. Trade reported several times this week:
Canada was initially worried that the conditions for entry as outlined by TPP partners would essentially mean that it would participate in the talks as something less than a full negotiating partner. In negotiations with the U.S., Canada stressed that it absolutely could not agree to any terms that give it inferior rights in the talks, sources said.
These conditions were outlined in a June 15 letter to Canada, which stipulated that new entrants would not be able to reopen any existing agreements reached by the current nine TPP partners, unless those nine members also agreed to revisit them, sources said.
Observers said it was not exactly clear what Canada's precise objections were, but some hinted that the letter included other conditions that Canada may have found objectionable.
Michael Geist, a law professor at the University of Ottawa who writes frequently about the intersection of trade and copyright policy, suggested we need to be asking five questions about these conditions. They include what happened to the Harper government's TPP consultations earlier this year, to which Geist, the Council of Canadians, the Canadian Labour Congress and other groups critical of the talks submitted reports. We should also be asking about copyright, Geist says:
Last night, the House of Commons passed Bill C-11, the copyright reform bill. Yet leaked versions of the TPP intellectual property chapter suggest that Canada would be required to re-write much of the bill due to the TPP. For example, the leaked TPP draft requires an extension of the term of copyright, new statutory damages provisions that would undo the C-11 approach, even tougher digital lock rules than those found in the bill, and new Internet provider liability provisions. Having just passed legislation it claims strikes the right balance, is the government already prepared to go back to the drawing board on copyright based on new U.S. demands?
The same question should apply to Canada's patent regime for pharmaceuticals. In the Canada-EU trade talks, Big Pharma demands pushed by the EU are predicted to increase drug costs in Canada by almost $3 billion annually by extending the amount of time it takes to bring cheaper generics onto the market.
The U.S. intellectual property demands in the TPP, which are being fiercely opposed by the other participants (Chile in particular), would make it even more difficult than it already is for generic drug makers in Canada to export cheap drugs to developing countries. We wrote about it in our own submission to the government opposing Canada's entry to the TPP.
Extending investor rights to sue governments
Fifth (I think we're at five), according to a TPP investment chapter leaked last week by U.S. group Public Citizen, the deal will include a NAFTA-like investor-to-state dispute settlement mechanism that has resulted in hundreds of millions of dollars in penalties and government settlements with corporations in Canada and globally.
In the past two months, investor-state disputes have moved ahead against Germany's decision to phase out nuclear power, and El Salvador's refusal to grant a Canadian mining firm an environmental approval to build an unpopular gold mind. Canada also lost a landmark case against Exxon Mobil Oil and Murphy Oil which could cost the country $65 million or more once the award details are made public.
Exxon is the richest company in the world but the firm didn't feel it should have to invest some of its profits into research and development in Newfoundland and Labrador. Why would we be trying to expand this excessive process in either the TPP or the Canada-EU CETA negotiations?
Australia of all the TPP partner countries is resisting including an investor-to-state dispute process in the pacific pact. Will Harper follow suit? Doubtful. It's more likely he'll help Obama squeeze Australia into submission.
And there you have the real point of these deals - to get governments out of the way and let corporations make money when, where and how they see fit. Is that a coup for Harper? We called it a coup for the 1 per cent in our press release, though the two - the Conservative government and the corporate elite - are barely distinct groups. Harper's key dealmaker in the TPP affair, Chief of Staff Nigel Wright, is a former senior executive with Onex Corporation, an important Bay Street private equity firm.
Considering all of this, is it even possible for Harper to get a good deal for Canada in the TPP trade talks? We don't think so, which is why we'll be raising the volume on the TPP over the coming year. Canada won't be allowed into the TPP negotiations for a little while and our focus must stay on the Canada-EU negotiations. But the TPP presents us with a uniquely awful corporate rights package that needs to be stopped, even if it costs us 0.11 per cent potential GDP growth over the next decade...
For more on the TPP or CETA, see www.canadians.org/CETA.
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