For Canadians, the American presidential primaries always promise great entertainment value. They’re showy, strewn with flags and red, white and blue balloons flooding the convention floors. They’re full of one-liners and zingers, and full-frontal combat.
And this year, there is a surprising turn in the election. The TPP, the Trans-Pacific Partnership, the mega-agreement with 40 per cent of the world’s economy, is turning many voters sour. It, and NAFTA before it, evoke an allergy to free trade agreements in general.
Many of the frontrunners have come out against the TPP. Ten of the original presidential candidates, both Republican and Democrat, have opposed it. Hillary Clinton has rallied against an undemocratic deal. Bernie Sanders has made it a rallying cry.
But no one has made it their cause as much as Donald Trump.
While many may laugh at him, and many of his ideas are frankly terrifying, Trump has gained substantial momentum railing against NAFTA and TPP.
In the Guardian, Thomas Frank writes, “In each of the speeches I watched, Trump spent a good part of his time talking about an entirely legitimate issue, one that could even be called left-wing. Yes, Donald Trump talked about trade. In fact, to judge by how much time he spent talking about it, trade may be his single biggest concern.”
In the New York Times, Jared Bernstein, a former economic advisor to U.S. Vice President Joe Biden, has argued that it is the end of the free trade era, and that this may be a good thing.
He writes, “It is unquestionable that expanded trade has vastly increased the supply of goods and services and has thus contributed to lower costs for consumers. But basic trade theory connects prices to wages, and in the United States, globalization is widely accepted as a contributor to both wage stagnation and the growth in inequality. For example, the real wage for blue-collar manufacturing workers in the United States is essentially unchanged over the past 35 years, while productivity in the sector is up more than 200 per cent.”
Another day. Another New York Times article. This one points to studies on areas affected by free trade: “Wages remain low and unemployment high in the most affected local job markets. Nationally, there is no sign of offsetting job gains elsewhere in the economy.… These results should cause us to rethink the short- and medium-run gains from trade. Having failed to anticipate how significant the dislocations from trade might be, it is incumbent on the literature to more convincingly estimate the gains from trade, such that the case for free trade is not based on the sway of theory alone, but on a foundation of evidence that illuminates who gains, who loses, by how much, and under what conditions.”
In many countries, there is a debate over how much power we give to corporations. And it is boosting populist right-wing parties and left-wing parties that are against trade. In Europe, many of the right-wing parties such as France’s Front National or Poland’s Law and Justice Party are opposing free trade agreements. At the same time, from the left of the spectrum, voices such as Bernie Sanders and Jeremy Corbyn are also targeting free trade. Often, these messages are mixed with an anti-Wall Street or anti-elite message. In the meantime, the centre and centre-left fail to gain steam.
There is a reason for this. It is important for all political parties to address these issues. Inequality, whether determined by income, gender, race, disability or sexual orientation, is very much alive. And these deals are not making it better.
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The trade pact needs the consent of Canada's provinces and EU member states to become law. So far, it's looking good on the provincial front: Quebec, Manitoba, New Brunswick, Newfoundland and Saskatchewan's leaders have all praised the deal, and Ontario seems open to it assuming it can get compensation for some of its industries that will be harmed by the deal. Pictured: Canadian Prime Minister Stephen Harper and European Commission President Jose Manuel Barroso shake hands following a joint media availability Friday, October 18, 2013 at the European Commission in Brussels, Belgium.
Canada will partially extend patent protection for brand-name drugs, which would delay the introduction of cheaper generics by up to two years. Officials say it will be eight years before any impact of these changes show up as higher costs for provincial drug plans. Earlier reports have suggested the cost to the health care system of extended drug patents could run between $1 billion and $3 billion annually. Jim Keon, president of the Canadian Generic Pharmaceutical Association: The EU trade deal will "delay market entry of cost-saving generic prescription medicines in Canada in the future, increasing health-care costs for provinces, employers that sponsor drug plans for their employees and Canadians who pay for their prescription medicines out-of-pocket." The federal government has suggested it will compensate provinces for higher costs as a result of the agreement.
Domestic car producers will be able to increase sales into Europe to 100,000 units from about 10,000 today under relaxed rules. The EU will phase out its 10-per-cent tariff on imports, and Canada will phase out a 6-per-cent tariff on European car imports. That could be good news for Canadian fans of European luxury cars, as those vehicles will be cheaper. But that, in turn, could be bad news for Canadian auto manufacturers. Dennis DesRosiers of DesRosiers Auto Analysts: "I don’t think anyone can definitively know what the impact of the current EU Agreement will be on the automotive sector. ... The [Canadian] industry peaked in the year 2000 and has been struggling since and, indeed, just finished one of its worse decades in history and continues to deteriorate. Was this the long term result of FTA and NAFTA? We don’t know but it could be."
Canadian beef farmers increase their quota by 50,000 tonnes, in addition to 15,000 tonnes for high-quality beef. Pork farmers will see their quota rise to 80,000 tonnes from the current 6,000. But producers will have to convert to hormone-free product for the European market, which experts say can add about 15 per cent to costs. Martin Unrau, president of the Canadian Cattlemen's Association: "The removal of long-standing barriers in this agreement, such as high tariffs, finally enables Canadian beef producers to benefit from the high value that the European beef market represents." Dairy Farmers of Ontario: "It will take income from Canadian dairy farmers and their communities and give it to the European industry."
Companies will be allowed to bid on major government procurement contracts right down to the municipal level. A joint study showed the new access will give European companies leeway to bid on federal contracts worth between $15 billion and $19 billion an year, and municipal contracts worth $112 billion a year. Critics say that, because of the common practice of "hiring Canadian" in government contracts, EU access to them could mean job losses in Canada. Trade Justice Network: "Canadian governments would lose a powerful tool for spurring job creation and economic development."
Foreign takeovers of Canadian firms now require a formal federal government review if the deal is worth $1 billion or more, but this agreement will raise that to $1.5 billion.
Labour and consumer groups fear CETA could lead to the privatization of Canada's water supply and infrastructure. According to early leaks from the negotiations, Canada did not try to protect water resources as part of the trade deal. The Council of Canadians writes: "This deal will give French companies Suez and Veolia, the two biggest private water operations in the world, access to run our water services for profit. Under a recent edict, the Harper government has tied federal funding of municipal water infrastructure construction or upgrading to privatization of water services. Private water operators charge far higher rates than public operators and cut corners when it comes to source protection."
Follow Sujata Dey on Twitter: www.twitter.com/sujata_dey