Canada’s Free Trade Debacle

by MURRAY DOBBIN

Stephen Harper’s no-longer-secret agenda to implement a revolution from the right and dismantle Canada has one major impediment that must really stick in his craw. He is constrained in what he can do by the constitutional division of powers which gives the provinces so much political authority. The really big social items on the political agenda – health, education, social services – are matters of provincial jurisdiction. To be sure he can severely damage all of these by destroying the decades old principle of universality and slash federal funding. But he can’t get rid of them. The provinces also have a mandate on protecting the environment and regarding labour rights, most working Canadians are in sectors that come under provincial jurisdiction. Lastly, the third level of government is also a creature of the provinces. While municipalities depend on the federal government for financial help, Ottawa has no political authority over them.

These constraints may help to explain why Harper is so enthusiastic about the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). CETA, if Harper can persuade the provinces to accede to its provisions, does what Harper can’t do by himself. Like other trade agreements this one systematically weakens the democratic decision-making authority of all levels of government. As such, it is Harper’s Trojan horse: in the guise of expanding “trade” with the EU, he makes progress in his goal of emasculating democratic governance.

The frantic rush to get CETA signed has opened up a new front in the stop-Harper movement – the Council of Canadians and others are focusing on a major vulnerability of the deal: its potential impact on provincial and municipal authority to make their own decisions. Two of the most egregious impacts have to do with Medicare and government purchasing. The Europeans are demanding that all government procurement be part of the deal – meaning that any effort by any government to give preference to local or provincial firms would be deemed a violation of the agreement.

Like other “trade” agreements this one is in fact a corporate rights agreement, giving the world’s largest transnational companies ever-greater power to trump democratic authority. The deal would make the privatization of local services – water, electricity and transit – much easier. Privatization incursions into Medicare, education and even social services would increase as well.

The procurement provisions – giving EU corporations unobstructed access to the public spending of municipalities, schools boards, hospitals, universities and crown corporations – is especially threatening given the critical role such public spending plays in a time of virtually zero private investment. The strategic use of public spending for economic development and support for local businesses or sectors (such as green energy) would also be effectively banned. Others worry that if the EU gets its procurement deal the US will want similar treatment – an even greater threat given its proximity to Canada.

A report released just last week by the Canadian Centre for Policy Alternatives reveals the impact on manufacturing jobs. The report’s author John Jacobs calculates that some 70,000 Ontario jobs would disappear, most of them in them manufacturing sector. “CETA locks trade partners into their current pattern, which is imbalanced. It would box Ontario into exporting non-renewable resources such as gold, nickel and uranium – privileging EU’s current dominance of value-added exports to Ontario and leaving the province in a virtual straightjacket while bleeding jobs.” Investor-state provisions, like those in NAFTA, would expose all governments to increased litigation producing the chill effect which has seen virtually no new environmental legislation in the country since NAFTA came into effect in 1994.

On the Medicare front CETA would immediately add $3 billion to the provinces’ drug plans as EU pharmaceutical companies are seeking to extend their patent rights by several years, delaying the introduction of cheaper generic drugs. This would also increase the cost for private company plans.

An interesting twist to the negotiating position of the EU and Canada seems to reinforce the notion that Harper sees CETA more as a means to dismantle the activist state than as a means of enhancing trade and investment. The EU has negotiated a blanket exemption to protect their water, energy, and public services – including health care – while the Harper government has left those same elements completely vulnerable to privatization.

One of the most alarming aspects of the deal is the government’s secretive effort to use CETA to push the Anti-Counterfeiting Trade Agreement (ACTA).Ostensibly aimed at patent-busting piracy it is a draconian treaty that effectively criminalizes the normal use of the internet – making internet providers legally responsible for what their users do on line. It goes beyond the internet and could also be used to stop generic drugs from competing with brand names and stop farmers from using certain seeds. While it is not well known here, there has been a huge fight in the EU to stop it. In July, the European Parliament voted against the treaty. European Parliament PresidentMartin Schulz stated “concern about its impact on consumers’ privacy and civil liberties, on innovation and the free flow of information” caused the defeat.

The Harper government has already signed ACTA as has the US and Japan, two of the EU’s biggest trading partners, and is still trying to get it included in CETA. That has attracted the fierce anger of internet activists in Europe – and they could make passing CETA much more difficult.

Stephen Harper is hardly the first prime minister to fraudulently use trade agreements to accomplish the neo-liberal objective of hobbling government. Mulroney ushered in this Trojan horse strategy with the FTA and NAFTA. Jean Chrétien used Paul Martin to take great advantage of the new “free trade era” to implement his labour flexibility policies – the most deliberate, and devastating attack on workers’ power and standard of living ever undertaken by a modern government.

And just as with those regimes, the Harper cabal has to be fought vigorously on this front while there is still time. Once these deals are signed it is next to impossible to get out of them. Fighting CETA at the national level, however, may be fruitless. Parliament is effectively dead – its institutions assaulted and eroded at every turn by a prime minister openly contemptuous of democracy and willing to bend or break any rule to achieve his ends.

The key to defeating CETA now lies with the junior levels of government, the provinces and municipalities. The Council of Canadians campaign
has been most successful at the municipal level where they have persuaded some eighty municipalities to either call for a complete exclusion (40 governments) or passed resolutions expressing concern. Most of these are in BC and Ontario and include some of the largest ones like Toronto, Hamilton, Mississauga and Victoria. Harper is worried about the growing opposition – so worried that last April he dispatched eighteen ministers on a propaganda blitz to sell a deal that supposed to have been kept as secret as possible. As the list grows longer EU negotiators may well wonder if the Canadian government can deliver even if it does sign.

The provinces are a harder nut to crack. Their governments – whether Liberal, Conservative or NDP – have all been far too willing to follow the policy advice of their trade bureaucrats most of whom are more aggressive neo-liberals than most corporate CEOs. (The one exception was the Glen Clark government in BC which opposed and held public hearings into the MAI – the Multilateral Agreement on Investment.)

The Ontario government, despite dozens of municipal resolutions, has shown little concern and even the Ontario NDP while sympathetic, doesn’t see the issue as one that can gain them any traction with voters. The NDP governments of Nova Scotia and Manitoba continue to be captive of their trade departments partly because they have never faced a trade challenge under NAFTA.

With the PQ now in (precarious) power in Quebec the provincial front may change. According to the Council’s trade campaigner Stuart Trew, the PQ in opposition was seeking greater transparency and a carve-out for crown corporations (Hydro Quebec and their liquor board). But now that it is the government some believe it will throw a wrench into the works. The Globe recently observed that the PQ’s intention of favouring Quebec companies in public tendering for major procurement items like subways and power plants “…strikes at the heart of the deal, [and]could be a big obstacle.”

The new government is also reportedly planning to create a new department of foreign affairs and international trade with the goal of signing its own trade deals – befitting its view that Quebec is a nation with the right and obligation to deal with other nations as such. Beyond its nationalist and social democratic philosophy, the PQ will be fighting the Harper government on several fronts and it may be tempted to hold it to ransom on CETA if it doesn’t make progress on other issues.

Having one of the countries largest provinces balk at the deal will at the very least make negotiations (allegedly “final” negotiations take place in mid-October) more difficult. Quebec’s opposition might also get the attention of other provinces. One of the biggest worries for Harper is that constitutionally there is little he can do if the provinces don’t go along. According to Trew: “Harper can just sign the deal and it would apply to the provinces but the provinces just don’t have to cooperate. There is nothing in law that could force the provinces to comply. They just voluntarily bring themselves in line with whatever they promised Ottawa.” In other words, they could break their promises with impunity.

That means the country’s third largest province, BC, could be very close to reversing its promises. There will an election in May next year and virtually everyone expects the NDP’s Adrian Dix to become premier. Dix is on record opposing CETA for all the reasons its critics have identified: “[it] will block our access to less expensive generic drugs, restrict municipalities from purchasing services and goods from local businesses, and put at risk public control of the water supply.”

So CETA, which looked like a sure things when Harper got his majority, now looks increasingly iffy. While the October talks will be final, it will take many months for the EU to get all its member states to pass and implement it. Major provincial governments balking and more and more municipalities seeking exclusion could create a lot of skepticism and undermine support. If more provinces demand dropping the protection of drug patents, Harper might be forced to withdraw that provision – a possible deal-breaker for the EU. Another potential deal killer could be the tar sands. If the EU decides to declare tar sands oil “dirty” (a decision is expected in the spring) and bans its importation, Harper himself might walk away from the deal.

MURRAY DOBBIN, now living in Powell River, BC has been a journalist, broadcaster, author and social activist for over forty years.  He now writes a bi-weekly column for the on-line journals the Tyee and rabble.ca. He can be reached at murraydobbin@shaw.ca

Will Falk moved to the West Coast from Milwaukee, WI where he was a public defender.

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