Trade strategy for the not-so-powerful

The logic of free trade – why we’re signing CETA

Sometimes the answers are so simple you miss them for fear they couldn’t possibly be correct. Analyzing the rationale for Canada’s participation in a comprehensive economic trade agreement (CETA) with the European Union has reminded me of that.

For unless a magical pot of gold has been promised to us (likely by the Irish … or maybe the Greeks..) and not communicated to the rest of us, a reasoned analysis of the potential costs and benefits of CETA wouldn’t lead one to automatically sign up.

As while the Federal Government continues to bandy about a 3 year old study conducted prior to any of the negotiations that highlighted a potential net benefit of $12billion per year, and upwards of 80,000 new jobs. Two research projects conducted in the wake of the negotiations, and thus using the negotiations as the base of their quantitative assumptions, show much weaker gains. For example, Jim Stanford from the CAW finds that the agreement will actually lead to between 28,000 and 150,000 job losses. Less extreme, research by Kitou and Philippidas show an annual gain of 3 billion Euros, or 5 billion CDN, far less than the Canadian government’s somewhat useless data points.

If the truth lay in Stanford’s figures, we wouldn’t sign up right? And if the figures we’re closer to Kitou and Philipidas’ we’d likely be even more reticent about the procurement and IP related items in the agreement.  

So why in the world are we rushing headlong into this?   Read the rest of this entry »


Have we lost our voice?

For all this talk of Occupy “insert place”, I can’t help but notice that few amongst us are talking about the immediate issues and policies that are being debated as we speak in Ottawa and that hold tremendous economic and social consequences.

For example, the Comprehensive Economic and Trade Agreement currently being negotiated between Canada and the European Union, while an important element of diversifying our trade away from the United States (where we send 75% of our exports), is far from an ironclad winner.

While the government has promised the agreement will potentially add $12 billion and 80,000 jobs to the economy, with notable gains for agricultural exporters, the numbers are based on three year old research conducted on the basis of broad assumptions rather than actual negotiated details. I wouldn’t buy a car, let alone sign the most important trade agreement in our country’s history without an accurate test of the real costs and benefits of participation.

More recent research conducted on the basis of early drafts of the agreement, including that of CAW economist Jim Stanford, highlight that the deal may in fact cause a loss of between 28,000 and 152,000 jobs. Whose numbers are right?  And in which sectors are those supposed job gains or job losses going to occur? Given ongoing weakness in Canada’s labour market, a focus on jobs as opposed to a myopic focus on “growth” is necessary.

Moreover, as a result of intellectual property provisions in the CETA agreement, an estimated $2billion a year will be added to our health care expenditures thanks to the effect of greater patent protection on the availability of generically-branded medications. Given the tremendous burden healthcare currently places on our fiscal budgets (approximately $0.40 of every Provincial dollar), is this tradeoff the right one?  And if the agreement does indeed place an outright ban on “buy local” provisions, and similarly-themed local content requirements, as well as opening up municipal-level procurement to European competition, what will this mean for jobs, wages and prices in Canada?

CETA promises to be the most significant trade deal Canada has signed to-date. It promises access to, in spite of the current economic challenges, a market of nearly 500 million relatively wealthy consumers.  A healthy trade relationship with Europe is essential, as is the diversification of trade away from the United States.   But will Canadian workers, consumers and taxpayers enjoy a net benefit under the terms of this agreement?  Unfortunately we’re heading into this with our eyes closed given the government has shared no research on the specific impacts of the trade deal as currently negotiated.

And there is no shortage of other worthy topics of discussion. Be it Tony Clement’s financial misadventures related to G8/G20 spending, our Canadian position on Palestinian statehood, the future of the long-gun registry or our strategies related to climate change.  The future, let alone the present, isn’t waiting for our input.

To be sure, the current climate of economic uncertainty means we’re all worried about our jobs, about paying the bills, and about taking care of those most dear to us. Moreover, our growing distrust of government and disengagement with policy – dramatically reflected in historically low voter turnouts – leaves many of us feeling helpless to affect change.

But these immediate concerns shouldn’t blind us to the changes that take place under our watch and that future generations will inherit. Our silence on these issues, and our willing disengagement from the electoral process, mean we’re as much to blame as anyone for the outcomes of government policy.

The Occupy movement might suffer from confused and misunderstood economics, but atleast they’re saying something. For most of us have lost our voice, and if that’s true, we risk losing much more as a result.