Canada-Europe Trade Deal ‘Designed To Enhance Power' Of Business, CAW Says

Europe Canada Free Trade Harper Cameron

First Posted: 02/25/2012 11:17 am Updated: 02/25/2012 11:17 am

With free trade negotiations between Canada and the European Union well underway, Canada’s largest private sector union is deepening its opposition to an agreement it says will cost the economy tens of thousands of jobs, raise the costs of prescription drugs and mark the end of “Buy Canadian” policies in the public sector.

The skilled trades division of the Canadian Auto Workers union on Thursday approved a resolution to step up efforts to limit the reach of the Canadian-European Comprehensive Economic Trade Agreement (CETA).

Maintaining that CETA would have “a huge negative impact” on the ability of governments to favour Canadian-made products by granting the EU “full access to procurement,” the skilled trades division of the CAW pledged to work with municipalities across Canada to request “a permanent exemption” from the agreement.

“We will mobilize skilled trades members to protect the powers of the municipalities, hospitals, school boards, utilities and other sub-federal agencies to use public procurement, services and investment as tools to create jobs, protect the environment, and support local development,” the resolution asserts.

CAW economist Jim Stanford told delegates at the union’s skilled trades and collective bargaining conference in Toronto that the agreement would cost the Canadian economy between 28,000 and 150,000 jobs, and exacerbate a trade imbalance that already favours the EU.

The estimates run counter to the position of the federal government, which has said the deal will boost Canada’s economy by an amount that is “equivalent” to 80,000 new jobs.

In addition to removing tariffs on European imports, Stanford said the agreement would make it easier for European companies operating in Canada to import skilled workers from the EU, and tighten drug patent laws, which he predicts will hike costs.

“This isn’t free trade,” he said. “This is much, much bigger. This is a whole arrangement designed to enhance the power and freedom and profit of the private business sector in both Canada and Europe.”

The effect on procurement of big ticket items such as subway cars and buses is a particular sticking point for the CAW. The agreement would require provincial and municipal governments to consider bids from European companies when contracting with the private sector.

“This would be the utter end of any ‘Buy Canadian’ strategy we could have in our public sector,” Stanford said.

Media reports have indicated that there would likely be a threshold for opening up bidding to European firms under CETA: Contracts on goods and services that run more than $346,000, and construction contracts above $8.5 million.

The CAW is among several labour groups and environmental organizations that have mounted a campaign against the deal in recent months, with the Council of Canadians warning that the deal could lead to the privatization of Canada’s public waterways by big European water utilities.

In a press release earlier this month, however, Foreign Affairs and International Trade Canada reiterated the government’s commitment to pursuing “an ambitious free trade agreement that will benefit workers and their families both in Canada and the EU alike.”

“The benefits to these Canadian workers and their families are clear: a 20 percent boost in bilateral trade and a $12 billion annual increase to Canada’s economy,” the department maintained.

Former Canadian trade negotiator Peter Clark concedes the EU may be the bigger winner under CETA, but says it is crucial to giving Canada a “competitive position” in the global market that is becoming increasingly interconnected.

“It’s going to cost the Canadian economy more than it is going to cost the Europeans and that’s because we need the deal. We can’t be left behind,” said Clark, who heads an Ottawa-based international trade and public affairs consulting firm. “What we might lose by getting it is a drop in the bucket compared to what we might lose by not having it.”

According to Clark, it’s still too early to estimate how many jobs may be at stake, but says that “a little bit of dislocation” is common in the first few years of any trade agreement.

“What [opponents of CETA] are looking at is the negative side, they’re not looking at the positive side,” he said.

But the prospect of job loss struck a chord with many of those in attendance at the CAW conference, for whom the passage of the North American Free Trade Agreement in 1993 remains inextricably linked to the gutting of the manufacturing industry that followed.

“This kind of a hit, we can’t take,” said Ed Gould, a trustee of CAW Local 199 in Niagara, Ont., citing the dearth of new factory jobs and the absence of young faces at the meeting, which brought together about 150 members from across the country, as ominous signs for the union.

Gould says he has been trying to mobilize members in his local because “ten years from now, you won’t have a pension, you’ll be paying for your health care, and you’ll probably be paying $6 a litre for water.”

As Clark explains, because municipalities don’t have constitutional powers, they can’t autonomously “back out” of CETA.

But that hasn’t stopped the CAW, along with other opponents of the European deal, from lobbying municipalities to pass resolutions seeking immunity from the deal -- a position that has so far been embraced by more than 35 jurisdictions, including Windsor, Ont., Montreal and North Vancouver.

Not every municipality, however, is on board.

Earlier this month, Saskatoon city council voted down the resolution, believing it would contradict the city’s “open for business” reputation.

“Right now we’re seen as the darling of the international investment community,” Keith Moen, executive director of the North Saskatoon Business Association, told The Star Phoenix at the time. “If the message from council is such that we are not welcome to international trade that interest will surely go elsewhere.”

Loading Slideshow...
  • 5 Signs Canada's Workers Are In For A Rough 2012

    Photo: CP/Andrew Vaughan

  • Good Jobs Few And Far Between

    When it comes to evaluating Canadian job growth, the employment numbers are just part of what worries Benjamin Tal, deputy chief economist at CIBC World Markets. "It's not only the quantity, but also the quality of employment that's falling in Canada," says Tal. "A lot of the jobs that are being created are low-quality, especially part-time jobs and low-paying jobs." Though -- unlike the U.S. -- Canada has regained all the jobs lost in the recession, he says that an absence of good-paying jobs is the "main reason" why wages have stagnated. Adjusted for inflation, personal after-tax income is now rising at the slowest rate since 1995. Meanwhile, the skills mismatch in many jurisdictions has left employers short on skilled labour despite still-high unemployment levels in other regions. "If you lose a job, you don't have the skill set to go an find a job elsewhere that companies want and need," says Tal. (Alamy photo)

  • Globalization

    When Caterpillar decided to stop assembling locomotives in its Electro-Motive facility in London, Ont., it was a poignant reminder of how globalization is giving deep-pocketed, transnational corporations the ultimate trump card in bargaining with workers: a cheaper alternative. According to Mike Moffatt, a labour expert at the University of Western Ontario's Ivey School of Business, because of automation and an increase in imports from lower wage jurisdictions like China and Mexico, Canadian workers are competing for fewer manufacturing jobs. "That's given firms real power to negotiate down wages," says Moffatt, who points to the <a href="http://www.reuters.com/article/2012/02/06/riotintoalcan-alma-idUSL2E8D699U20120206" target="_hplink">Rio Tinto lockout in Quebec</a> as another illustration of the might afforded to companies with global reach. Since locking out workers at its aluminum smelter in Saguenay-Lac-Saint-Jean on December 31, the Anglo-Australian mining giant has used non-union workers to operate the facility at one-third capacity. With no plans to return to the bargaining table, the company recently announced it is restarting two suspended lines, and is expecting to return to full capacity in May. As Tal maintains, "In this environment, the bargaining power of labour is diminishing."

  • Austerity Agenda

    Just as the power has shifted toward private-sector employers, Michael Lynk, a labour law expert at the University of Western Ontario, says there is a sense that governments are becoming emboldened amid the post-recession climate of austerity that has swept from Toronto's City Hall to Parliament Hill. "There's increasingly an attitude of take-it-or-or leave-it by [private sector] employers, but we may begin to see that with public sector bargaining as well, where they basically say, 'You have to meet our bargaining objectives this round, and we're going to be prepared to endure a short or lengthy lockout to prove our point," he says. Though global economic instability recently prompted federal Finance Minister Jim Flaherty to pull back on his earlier commitment to deep cost-cutting in the upcoming budget, government departments are expecting spending to be slashed by between five and 10 per cent, a goal that will be met at least in part at the expense of public service jobs and benefits. The Canadian Centre for Policy Alternatives recently estimated that the <a href="http://www.behindthenumbers.ca/2012/02/02/federal-cuts-could-push-unemployment-to-8/" target="_hplink">federal government's budget cuts could push unemployment up half a percentage point, to 8 per cent</a>. (CP photo)

  • Pension Problems

    From <a href="http://dalgazette.com/featured/faculty-strike-rumours-explained/" target="_hplink">Dalhousie University</a> to <a href="http://www.thestar.com/article/1120516--labour-strife-ahead-in-air-canada-pilot-talks" target="_hplink">Air Canada</a>, employers no longer able -- or willing -- to fund costly pension plans are mounting attempts to roll back retirement benefits, stoking labour unrest and a growing sense of financial insecurity among workers. As Dalhouse University labour economist Lars Osberg explains, the financial crisis took a huge bite out of the value of corporate pension portfolios and the interest rate required to generate the stream of returns to make these programs sustainable. All of which explains why experts anticipate a deepening of the trend away from inflation-protected, gold-plated defined-benefit pension plans, shifting responsibility for retirement savings from employers to workers.

  • Decline Of Unions

    The power in numbers that enabled Big Labour to negotiate better wages and benefits in the aftermath of the Second World War is a distant memory today, as the <a href="http://www.huffingtonpost.ca/2011/12/12/canada-income-inequality-decline-unions-middle-class-jobs_n_1139136.html" target="_hplink">erosion of unions continues to whittle away the strength of collective bargaining</a>. This is particularly true in the private sector, where unionization sits at 16 per cent of employees, less than a quarter of public sector unionization. "I think you will see more disputes with unions having to compromise more than in the past," says Tal. "I really don't see that they have the upper hand at this point." Given the yawning gap between private and public sector unionization, Lynk warns that pressure on public sector unions could mount as it has in the U.S. in recent months. "The argument they've been floating is, 'Why should public sector workers have jobs for life, good pensions, and decent wages? They're eating up your taxes,'" he says. "I wouldn't be surprised if we're not [starting] to see the beginnings of that kind of argument here in Canada."

FOLLOW HUFFPOST CANADA BUSINESS