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From NAFTA to TPP, Canada Hasn’t Learned From Free Trade Mistakes

Closed John Deere plant in Welland, Ontario. (Photo: Terry Nicholls)

Barbed wire still protects the cracked pavement where an abandoned John Deere plant used to operate in Welland, Ontario. The building, still standing, is testimony to the Niagara region’s former status as a manufacturing powerhouse.

(You can see the ruins of that once-prosperous period for yourself in the pictures of Fiona McMurran and Terry Nicholls.)

Recently, Council of Canadians member Fiona McMurran organized a tour for Anne-Marie Mineur, a Dutch Member of the European parliament, showing abandoned manufacturing plants that are relics of the pre-NAFTA days. The ghosts of Welland are abundant: Union Carbide, Welland Industries, Energex Tubesite, Lakeside Steel, John Deere, Powerblades Industries, Welded Tube of Canada, Universal Resource Recovery, Atlas Steel, ASW Steel, Henniges and Automotive Sealing Systems Canada.

“Once known as the bustling industrial heartland of Niagara, ‘where rails and water meet,’ Welland has now become the city that free trade left behind,” McMurran noted.

Photos of the abandoned plants are eerie, a testimony to an economy that was slowly crushed. While NAFTA is not solely to blame, Canada’s manufacturing sector hollowed out since NAFTA’s inception. Statistics Canada data show that 540,000 manufacturing jobs (as calculated by Unifor from Statcan’s CANSIM site) have been lost since 2000, a fact that not even NAFTA proponents can deny. As well, many of the promises — increased productivity, more jobs, more money in our pockets — have simply not come true.

Although Canada has signed an unprecedented number of trade agreements, this doesn’t guarantee more trade.



This is ironic because, as free trade agreements become toxic all over the world — with hundreds of thousands of Germans protesting against trans-Atlantic trade deals, with trade agreements playing a highly visible role in the U.S. presidential election, and with India and Eastern Europe trying to exit bilateral investment agreements — Canada, a country bound by a long-standing trade deal, has not had a comprehensive debate on the proposed CETA (trans-Atlantic) or TPP (trans-Pacific) agreements.

And yet, we have faced the brunt of free trade. While our economy has grown, equality has not. Statistics Canada data show that workers’ inflation-adjusted average wages have stagnated while CEOs’ incomes have risen. The Canadian Centre for Policy alternatives publishes an annual survey showing how long it takes the average CEO to make what the median worker makes in a year. This year, it took just 12 hours.

Although Canada has signed an unprecedented number of trade agreements, this doesn’t guarantee more trade. In fact, export growth has been higher with countriesnot covered by such agreements. Jim Stanford, an economist and special adviser at Unifor, a large trade union, demonstrates that Canada’s export growth has been faster with countries not covered by trade agreements. Canada’s exports to South Korea actually declined after a bilateral trade agreement came into force.

Whereas five per cent of Canada’s exports are with countries outside NAFTA covered by free trade agreements (FTAs), close to 30 per cent per cent of bilateral trade occurs with non-FTA partners. Added to this, Canada’s exports to non-FTA countries have grown faster than imports. In fact, we’ve done so well in “free trade” agreements, that, in May, Statistics Canada showed that we had record trade deficits.

Under NAFTA, food sovereignty has been challenged and local production threatened, with many small farmers in all three NAFTA countries losing their livelihoods. While Canadian agriculture exports tripled from $11 billion to $33 billion between 1988 and 2007, net farm income fell by more than half during that period and Canadian farm debt doubled. Canada has lost many family farms — the number fell from 366,128 in 1970 to 204,730 in 2011. Now, most cattle, hogs and poultry are concentrated in large factory farms. Some feedlots contain more than 20,000 head of cattle, or between 5,000 and 20,000 hogs. For poultry, as many as 100,000 birds are squeezed into small areas.

And while, the promises didn’t add up, we got something that wasn’t on our radar: investor attacks on our policies through ISDS, the infamous Investor State Dispute Settlement provisions, in Chapter 11 of NAFTA. This was designed to protect investors from uneven application of the rule of law in Mexico.

But rather than protect Canadians, it attacked Canada. Seventy per cent of all suits under these provisions were against Canada. Could this be due to Canada’s stronger social and environmental regulations?

Because of NAFTA, in 2014, Canada became the world’s most heavily sued developed country, with 37 suits against it. In Europe, this has been a major concern. While Dutch, German and other film crews have been here horrified at the legacy of ISDS, Canadian media have hardly touched the subject.

In September, the Lone Pine ISDS case will be heard by arbitrators. Lone Pine is the Canadian company that is using its U.S. identity to sue Canada for $300 million because Québec insisted on maintaining a moratorium on fracking on the historic St. Lawrence River. Again, instead of requiring companies to pay for environment damage they may cause, as Nobel economics laureate Joseph Stiglitz has noted, governments are being asked to pay potential polluters for the right to maintain environmental regulations, whether through an arbitrator’s order to pay, through having to pay to defend a regulation (remember, legal fees amount to an average of $8 million per suit) or through avoiding a case by simply abandoning policies or legislation that could be used to invoke Chapter 11. Two-thirds of ISDS cases under NAFTA involve conflicts of mining or resource industry interests with environmental policies.

Anne Marie Mineur, the European parliament member, also went to Digby, Nova Scotia, where the Sierra Club is currently helping Canada appeal a NAFTA Chapter 11ruling that ordered Canada to pay Bilcon of Delaware Inc. for rejecting a proposed quarry. The project, located in an environmentally sensitive area near the Bay of Fundy, was turned down by the local community, in part due to its threats to endangered species.

It took plenty of effort for the local community, through backyard meetings, and local people power, to fight the quarry application. Now, under NAFTA, they are forced to fight one more time so that Canada doesn’t settle out of court with the company.

With an intense autumn looming — the deadline for submissions to the Commons Committee on International Trade examining the TPP, a debate on whether the TPP will go to U.S. congress in November, the final stage of the U.S. election campaign with trade a hot topic and CETA going before the European Parliament soon afterwards — it’s important to remember our past lessons.

Watch for Maude Barlow’s cross-country tour on the TPP, a campaign to have our submissions heard by the Commons committee and tours to Europe to talk about Canada’s experience under NAFTA and what Europeans can expect under CETA. There will also be international days against trade agreements on November 4 and 5, coinciding with the anniversary of the defeat of the Free Trade of the Americas Area agreement.

In other parts of the world, many are looking critically at Canada’s NAFTA experience and are learning the lessons to which Canada has not yet paid full attention.

To read more about Canada’s experience of NAFTA told by Council of Canadians chair Maude Barlow, click here.

This article was originally posted in the Huffington Post.