(Photo: Backbone Campaign, Flickr Media Commons)
This week, there were two competing narratives on free trade. While (astonishingly!) both the IMF and The Economist said there are problems with free trade, others asserted that free trade is under attack by "populists." Some have determined that the electorate is under the influence of scaremongers and must be re-educated to rid them of their fearful, misinformed views.
If you are reading this blog, you may be a "populist." The economic press and world leaders have caught on to the obvious fact that there is resistance to free trade agreements. In response to 320,000 Germans rallying against against CETA (the Canada-European Union Comprehensive Economic and Trade Agreement) and strong sentiment in Austria and Slovakia, Canada's International Trade Minister, Chrystia Freeland, said there is a very tough mood in Europe on trade deals, "the rise of sometimes quite ugly, protectionist anti-globalization sentiment in Europe - we're seeing a lot of those feelings being expressed in the U.S. election campaign."
The Economist this week said the TPP is "faltering," CETA is "fragile" and the TTIP is "flailing." It continued: "A nasty brew of opportunistic politicking and sceptical (and often misinformed) electorates is largely to blame for this halting progress."
Many have linked openness to immigration with openness to trade deals, arguing that those who oppose trade are closed-minded and obviously on the side of bigots. I admit that having a potential U.S. President Donald Trump as the loudest voice against free trade hasn't helped: his collection of misogynist, racist and incoherent views is not something that progressive populists should strive towards.
But there is another word for populism: democracy. The Oxford Canadian dictionary defines a populist as "a person who holds, or who is concerned with, the views of the populace."
Chrystia Freeland, the Minister of International Trade from Canada, looks on as ministerial representatives from 12 countries sign the Trans-Pacific Partnership (TPP) agreement in Auckland on Feb. 4, 2016. (Photo: Michael Bradley/AFP/Getty Images)
Freeland herself, before she was trade minister, knew this well. In a New York Times article, she pitted populists against plutocrats, arguing, "People might not mind that if the political economy were delivering for society as a whole. But it is not: wages for 70 per cent of the work force have stagnated, unemployment is high and many people with jobs feel insecure about them and about their retirement. Meanwhile, the plutocrats continue to prosper. And for more and more people, the plutocrats' technocratic paternalism seems at best weak broth and at worst an effort to preserve the rules of a game that is rigged in their favour."
So, what are the "populists" so "unreasonably" afraid of?
Our jobs, for one thing. A new study from Tufts University on the effects of CETA shows a loss of 23,000 jobs in Canada and 230,000 jobs in the EU. Similar studies of the Trans-Pacific Partnership have shown losses of 58,000 jobs.
Rising inequality, for another thing. The CETA study also shows a rise in inequality, which is already growing. While productivity gains create higher profits, job creation and workers' incomes will stagnate. One out of every two additional dollars that would normally have gone to workers will now go instead to owners and investors. This amounts to losses of $2,656 per person over seven years, a far cry from government projections of a $1,000 cheque per person every year.
We are afraid of the sorts of rules contained within trade agreements that establish more rights for corporations.
Our public services, on top of that. Tax income will decrease by 0.12 per cent of GDP. Public spending will fall by 0.20 per cent of GDP. This is due to the increased competition for investors under CETA, with countries competing for investment by reducing corporate taxes.
Maude Barlow, National Chairperson of the Council of Canadians, speculated on what, if anything, Canadians would be getting out of the deal.
"Here's an independent study that suggests that there aren't economic gains -- only job losses, inequality and the erosion of the public sector," she said. "But that's only the economic part. We haven't begun to quantify the damage to our laws, policies, and democracies through regulatory harmonization and corporate lawsuits challenging our environmental and social standards. Not to mention attacks on farmers and municipalities."
Trade is not something we are not afraid of. It is not something we oppose. But we are afraid of the sorts of rules contained within trade agreements that establish more rights for corporations.
This week, the "populists" got an unusual champion, the International Monetary Fund. A report issued by the IMF regards free trade as benefiting only the wealthy few and says more needs to be done for workers displaced by globalization. Their solutions are different from ours, but, when the IMF says there are problems, perhaps it is because things have come to an extreme point.
Agreements like CETA and the TPP are pushing the world in the wrong direction.
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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."
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