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Van Loan fights facts with philosophy on CETA

Last week, Maude Barlow, national chairperson of the Council of Canadians, had an op-ed in the Globe and Mail on the hidden environmental costs of the Canada-EU free trade pact. It was based on briefings that Canada’s lead negotiator has given to civil society groups, leaked drafts of the CETA negotiating text, and a sustainability impact assessment of the deal from a private EU firm. In other words, it was backed up to the hilt with facts. How did Canada’s trade minister respond in his letter to the editor on Monday? First by again dismissing and refusing to engage any and all fact-based opposition to CETA. But then by producing garbage about both NAFTA and CETA.

Jim Stanford, economist with the Canadian Autoworkers union (CAW) and author “Out of Equilibrium: The Impact of EU-Canada Free Trade on the Real Economy,” has picked through that garbage in a blog for the Progressive Economic Forum. It’s a must read for anyone interested in confronting Harper government propaganda about CETA.

For example, on the alleged $12-billion boost to the Canadian economy Van Loan predicts from an EU deal, Stanford responds:

Its prediction of a 20% increase in bilateral trade, actually consists of a predicted 17.1 billion euro increase (24%) in Canada’s goods and services imports from the EU, but only an 8.6 billion euro increase (21%) in Canada’s exports to the EU. This study itself therefore predicts a widening of Canada’s already large trade deficit with Europe, by 8.5 billion euros. The generic “expansion of trade” [in CETA as predicted by government numbers] delivers more stimulus (in both absolute and proportional terms) to EU sales in Canada, than the other way around. How does that create “jobs and growth” in Canada? Answer: it doesn’t. In a demand-constrained world, a bigger trade deficit means lower employment.

On Van Loan’s promise of more jobs:

Since the [Canada-EU joint economic] model assumes constant full employment throughout, no jobs are created by an FTA; this is explicitly stated in the report. All the “gains” from trade are generated solely by an improved allocation of resources. In claiming both $12 billion in GDP and new jobs, van Loan is nonsensically double-dipping at the well of wishful thinking.

Stanford quotes one of the European authors of that joint study, who has written of the economic model that, “Given the necessarily speculative nature of the scenarios we evaluate, and the simplifications that are obviously necessary in modeling the entire world economy, our results should not be taken as precise predictions.”

So why, asks Stanford, does Van Loan repeatedly claim as fact, “A Canada-EU agreement will … grow Canada’s economy by at least $12 billion”?

My guess is he has little else to say about the deal. He’s been told to stay on message and hope for the best. He’s even admitted to Diplomat magazine that it’s a philosophical matter for him:

Philosophically, we believe that as a country, as an economy, (Canada) is based on trade. The more free-trade arrangements we can have in place, the better off we are. Philosophically, economically, our consumers are better off, our economy is better off. We get access to more markets. We don’t necessarily look at (only) what we want to get in a marketplace but rather at the notion that freer trade is better on all fronts.

Stanford confronts this philosophical, or more accurately ideological position in his new CCPA report and finds it doesn’t match the facts. With the environmental price of CETA looming large, as Barlow explains in her op-ed, Canadians should be asking themselves whether free trade truly is “better on all fronts” for Canada.