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Are We Witnessing the Beginning of the End of Globalization?

At the height of the battle over the Canada-US Free Trade Agreement (FTA) the biggest pushers of the deal, the Business Council on National Issues (the 160 largest public corporations) took out full page ads promising the country it would bring “more jobs, better jobs.” It was intended to counter the effective campaign of opponents who warned Canadians that tens of thousands of manufacturing jobs would be lost.  Opponents won the hearts and minds battle but lost the 1988 election on the issue thus making Canada and the US “free trade” guinea pigs. Hundreds of such deals have been signed since in spite of the fact that the critics were right: Canada lost some 270,000 jobs as a direct result.

Since 1988, the promoters of these investment protection agreements have held sway in large part because of massive media support. But almost 30 years after the first experiment there are signs that, finally, citizens around the world are beginning to ask the uncomfortable question: just who do governments govern for? Regrettably, that question is being asked more in the EU and the US than it is in Canada. Nonetheless, opposition to such deals in these two powerhouse economies could save us from more of them– specifically the Trans Pacific Partnership (TPP) and Canada’s proposed deal with the EU – the Comprehensive Economic and Trade Agreement (CETA). If the US-EU deal (the Transatlantic Trade and Investment Partnership – TTIP ) fails CETA is unlikely to survive.

So-called trade deals empower transnational corporations by radically compromising the nation-state’s capacity for democratic governance. This emasculation of democracy is accomplished in large part through the investor-state provisions which allow corporations to directly sue government for profits lost due to environmental, health or other legislation. Governments sign these agreements enthusiastically promising jobs and growth. But, while it has taken almost two generations, millions of American workers simply no longer believe the rhetoric.

Increasing grim inequality as revealed the broken promise and American workers are pissed. That is in large part what drive the mind-boggling Trump phenomenon in the US: it’s not exactly class warfare but Trump supporters sense the system as a whole, political and economic, is truly broken. And the support for Bernie Sanders is as close to class conflict as the US ever gets. For the first time in over 30 years, these corporate rights deals are a hot US election issue with all three remaining candidates opposing the Trans Pacific Partnership (TPP).

But perhaps equally important, the state apparatus itself is showing cracks in its own consensus. This has taken the form of leaks from within the US government about the TTIP and a government study of the benefits of the TPP to the US. Both present genuine threats to the future of these agreements in the US. And defeats in the US could be the death knell for these deals everywhere.

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The leak regarding the TTIP came right on the heels of the typical reassuring noises from the Obama administration regarding protection for labour and the environment standards in the TTIP. According to an article – The Free-Trade Consensus Is Dead – in the New Republic magazine: “..documents leaked by Greenpeace Netherlands revealed that U.S. negotiators working on a trade deal with the European Union have actually been pressuring their trading partners to lower those same standards.”  The leak was a revelation to the French trade Minister who declared that the talks were “likely to stop altogether” as a result. (In 1998 France killed the Multilateral Agreement on Investment – the largest deal ever conceived.)

The second nail in the coffin of free trade consensus in the US came from a U.S. International Trade Commission’s (ITC) analysis   of the benefits the US could expect from the even larger deal, the TPP. The report, released this past week, will be difficult for promoters to explain away:

“…the ITC estimates a worsening balance of trade for 16 out of 25 U.S. agriculture, manufacturing, and services sectors… Indeed, output in the manufacturing sector would be $11.2 billion lower with TPP than without it in 2032… the proposed 12-nation trade deal will increase the U.S. global trade deficit by $21.7 billion by 2032.”

There is no definitive way to identify when an ideology begins to lose its grip on the public discourse but could this clear resistance (it is even more developed and vociferous in EU countries) be the beginning of the end of corporate globalization? I am not suggesting that developed country governments are going to suddenly return to the good old days of the post-war social contract. But what has allowed them to proceed for three decades with political impunity has been the power of ideology to overwhelm evidence and reason. Neo-liberalism has enjoyed hegemonic status for so long it has been almost impossible for ordinary citizens to imagine anything different. But now they can – not just because of political outliers Donald Trump and Bernie Sanders but because of Hillary Clinton, the quintessential purveyor of that very ideology.

Once members of the political elite begin to question the high priests of free trade the spell is broken and all sorts of alternative political narratives present themselves. It takes an accumulation of unlikely suspects breaking with the consensus before that happens and we have already seen some high profile defectors  from the TPP – including Nobel Laureate Joseph Stiglitz, economist Jeffrey Sachs and in Canada RIM co-founder Jim Balsillie. At first the Teflon seemed to hold but there is always a lag time when it comes to cultural change and their interventions are still playing out.

In Canada, regrettably, Balsillie isn’t likely to be joined any time soon by conventional members of our corporate elite. It is the nature of ideology that if the medicine doesn’t work, increase the dose. Unless more Canadians speak out on these investment protection agreements and get behind their counterparts in the US and EU the Liberal government will keep prescribing the same medicine.