Minister Freeland propagates a neoliberal myth on free trade's benefits

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Image: Flickr/Center for American Progress​

I'd rather be writing about Trump (believe me) but we Canadians, for our sins, have been afflicted with free trade deals. They rise again, like bad meals. Currently being rebirthed? NAFTA. We may not shirk, it's our destiny.

So start with Chapter 19, the Dispute Resolution Mechanism. For my own sins, I actually recall how it began. It was the sole justification for initiating free trade with the U.S. In the 1980s there was panic in the land each time the U.S. "slapped" grossly unfair charges on Canadian imports, such as fish or lumber. We were told we needed a procedure to halt the carnage or our economy would gag. That was it, raison d'être.

After years without result, with days to the deadline, Canada's negotiator, Simon Reisman, who Chrystia Freeland recalls in the fond tones Hillary Clinton uses for Henry Kissinger, walked. Why? Because the U.S. wouldn't agree to a "mechanism" that superceded U.S. law. Ottawa was grim. Without a deal, we'd perish. The U.S. negotiator said: Canada needs a "face-saving gesture." President Reagan told his team to get creative.

They did. They didn't replace the U.S.'s unilateral right to impose costs on Canadian stuff with a neutral process to decide what's fair. They created a process to decide only whether the U.S. was accurately enforcing its own rules. That left everything as it was but called it dispute resolution.

Even if the U.S. lost a ruling, it could simply change its rules, then impose them. Canada bought it. Now, the U.S. wants out of even this weasel clause, and Canada says we'll go to the wall for it. It's like we've learned to love Big Brother, free trade version.

Onward, to Chapter 11. This is ISDS: investor-state-dispute-settlement. It allows U.S. companies to sue Canada's government if it does anything, such as regulate the environment, which might cut into a company's expected profits. Please read that again, it is as it says. They've done so and received hundreds of millions in Canadian public funds. It's a global corporate wet dream. Not even Canadian firms get to do that.

Freeland wants to add a clause, likely in a "preamble," saying governments have the right to act in the public interest -- as was placed in the Canada-Europe trade deal. But preambles aren't legally binding.

The only authentic solution is eliminating the chapter, and the right. Why? Because it's outrageous. But that won't happen because the money guys want it there. This proves that these deals aren't really about trade; they're about investment: the rights of investors to take their money and put it wherever profits will be biggest.

Final point. Liberals like Freeland are partly neo-liberal, in that they ardently support free trade deals. But they're also partly social democratic: they're willing to run deficits and redistribute wealth via social programs. So they're trying to square a circle that Stephen Harper never had to wrestle with.

But no matter how many numbers Freeland plucks to show the economy's mighty growth in the free trade years, in those same years, most people's lives have hardened: income stagnated; infrastructure declined; universities became debt traps -- the growth was distributed entirely upward. This is politically toxic.

She said Monday, "Too many working people feel abandoned by the 21st century global economy, and have voted accordingly." So, "We must share the fruits of trade..." It's "the all-important, connecting piece, the tie between free trade and equitable domestic policy...They need to advance together."

This is not irrational, it's just impossible. Why? Because the whole purpose of the deals was to undercut the gains of the majority, who'd benefitted since the Second World War, by shifting jobs to poorer places (like Mexico) so as to extract concessions and raise profits. Why would those who backed the deals for those reasons, give that up? Using trade deals to benefit everyone is a nice idea but, like that spider, it's not their nature. You're trying to reengineer their souls.

Final, final point. I knew Freeland when we both worked at The Globe and Mail and found her, in one of her favoured terms, very smart. Beyond that, when my son and I were in Ukraine/Russia last month on a "roots" trip, she was unnecessarily generous in suggesting contacts we might like to meet there. So I make these comments with no personal animus, or rather, with some personal regret.

This column was first published in the Toronto Star.

Image: Flickr/Center for American Progress​

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