Plan C for Canada
The bureaucrats at International Trade Canada seem to think that their job is to negotiate “free trade” deals with anyone who is willing to sit at the table opposite us. For years they have salivated at the idea of a Canada-EU trade agreement; they were among the first to hop on the WTO’s Doha Round bandwagon; and they were perhaps the biggest cheerleaders for a Free Trade Area of the Americas. It’s time to put down the pom-poms.
What’s dangerous is that the feds seem to think that all trade agreements are “good” and that by signing them they are doing us all a favour in spite of any negative impacts they may bring. The context for what our trading relationship actually is with another country (or group of countries) and how that might be improved is veiled by a leap of faith in free trade. Jim Stanford has made this point repeatedly in the context of negotiations for a Canada-Korea free trade agreement. The elite consensus that more trade and investment are always a good thing is a utopian vision that exaggerates the benefits of trade, while downplaying, or completely ignoring, any costs of integration. That there are costs as well as benefits, and losers as well as winners, must have a fuller role in the public debate, and cannot be swept under the ideological carpet.
Don’t get me wrong. I like DVD players and other gadgets as much as the next guy. And Canada has lots of stuff that other countries want, too. So yes, we should trade â€“ I don’t think anyone is arguing that we should build a wall around Canada â€“ but let’s avoid deals that undermine our public services, that restrict our ability to regulate in the public interest, that force the elimination of programs and Crown corporations that benefit farmers and artists, that allow foreign corporations to sue us, that increase copyright and patent protectionism, and that strip us of the ability to engage in good industrial policies.
Part of the problem is that our negotiators … how should I say this … suck. A good history of this is in the memoirs of a former negotiator of the Canada-US FTA, Gordon Ritchie, called Wrestling with the Elephant: The Inside Story of the Canada-US Trade Wars. Ritchie documents nicely how Canadian negotiators got caught flat-footed by wily American negotiators, and ended up not getting the guaranteed market access the talks had promised, while giving up major concessions to the US. The recent debacle over softwood lumber has its roots there.
Perhaps the Plan B move to sign on to an APEC FTA is just bureaucratic inertia: a department that has grown around negotiating trade deals needs new negotiations to keep the bicycle upright (they actually use that metaphor, too). Instead, let’s rethink our strategy, and blow right past this Plan B: call it Plan C for Canada. Start with making climate change a national project â€“ our own Manhattan project â€“ and turn it into a major industrial strategy, then think about what trade deals we might sign. If we do sit at a trade negotiating table, it should be to cut trade deals that improve human rights, labour standards and environmental protections (internalize the externalities of international trade rather than exacerbate them), and that carve out spaces for democratic governance.
The key questions are which rules for global commerce and to whose benefit. The current â€œtrade uber allesâ€ approach puts commercial imperatives over all other legitimate social and economic goals, including standards for labour, environmental protection, consumer protection and the democratic choices over economic development. An alternative take on trade and investment must move in the opposite direction. It must strive to raise the floor for quality of life around the world, whether in terms of working conditions, a clean environment or safe and healthy products. Above all, a renewed framework should ensure respect for a diversity of national approaches. One of the greatest conceits of this past century has been the presumption that we have found a single model that will spawn economic success wherever applied. But in fact, each country needs tools at their disposal to address the problems particular to their circumstances.
As Marjorie Cohen has pointed out, it is through different approaches that we derive sources of comparative advantage. A more flexible framework creates the conditions for gains from trade. For Canada, this might mean provisions to enable countries to maintain key sectors such as health and education in the public sphere. For poor countries, it may mean an enhanced capacity to develop an industrial base. At any rate, it suggests a healthy alternative to the â€œone size fits allâ€ approach that has dominated our thinking on trade and investment, and that has led to a growth industry of trade deal-making.
Oh yeah, here’s where my rant began:
With WTO stalled, Pacific pact beckons
With files from the Associated Press
OTTAWA — Canada is accelerating a drive for international trade deals in the wake of collapsed global commerce liberalization talks, signing an agreement with Peru yesterday and signalling it’s keen on an Asia-Pacific free-trade zone if worldwide negotiations can’t be revived.
“For us, Plan B could well be an Asia-Pacific free-trade area,” International Trade Minister David Emerson told reporters during a telephone call from an Asia-Pacific Economic Co-operation meeting in Hanoi.
“The centre of economic gravity is shifting inexorably toward Asia.”
He said the United States and Australia are enthusiastic backers of an APEC free-trade zone, adding that Canberra plans to lobby for the idea when it takes the helm of the 21-country body this year.
APEC membership represents close to 50 per cent of world trade and the forum could serve as an alternative to World Trade Organization’s Doha round of talks that fell apart in July if those negotiations cannot be restarted, Mr. Emerson said.
“In Canada, we simply have to have a Plan B. We cannot sit back and assume that there will be a successful Doha round, although we are putting tremendous effort into making sure that there is a successful round,” Mr. Emerson said.
Yesterday, Ottawa signed a foreign investor protection agreement with Peru, a measure that safeguards the rights of business in both countries. It’s Canada’s first FIPA in eight years and the first significant deal clinched since Ottawa signed a free-trade agreement with Costa Rica in 2001.
Mr. Emerson said the Peruvian deal reflects the fact that Canadian investors have poured $2.3-billion into the South American country, adding that securing the legal rights of business should pave the way for more investment there.
He said Ottawa is also talking with Peru, Colombia and Ecuador about launching full-fledged free-trade negotiations and hopes to resume stalled talks on a bilateral deal with Singapore next year.
Mr. Emerson’s push to secure access in markets around the globe is a change of pace for Ottawa, which previously focused on WTO talks — negotiations that collapsed after five years in July.
While Canada only signed one trade deal in the past half decade, the U.S. has been busy sewing up special two-way deals. Congress has approved at least seven of them with 12 countries since 2001.
Canada’s new tack mirrors many other countries’ as WTO talks lost momentum. Those negotiations show few serious signs of reviving before next summer, when U.S. President George W. Bush’s fast-track authority expires.
Marc Busch, a professor at Georgetown University’s School of Foreign Service, said APEC members may find negotiating among 21 countries as difficult as WTO talks.
“The bigger question is if Canada is able to negotiate something of substance with all these [APEC] countries — and all these other countries are willing to as well — why can’t we all go back to the WTO talks in Geneva?” Prof. Busch said.
APEC’s business advisory council has urged member countries to consider a Pacific free-trade area during next week’s summit.
An APEC free-trade area, stretching from the U.S. to China and from Australia to Chile, would include 40 per cent of the world’s population and 56 per cent of its gross domestic product.