By Gerard Di Trolio
Take the following recent exchange in the pages of The Toronto Star. Noted political economist Gordon Laxer published a very clear and sharp explanation of why Canada should give up on NAFTA.
The main points in Laxer’s article are:
- By the signing of the free trade deal between Canada and the United States in 1988, tariffs were already low or non-existent on many items. Successive World Trade Organization agreements have managed to lower or abolish tariffs further between many countries without free trade agreements.
- The major problem with NAFTA is Chapter 11 which allows corporations to challenge government policies that are seen as disruptive to profits.
- Another major problem is Chapter 6 which includes the “energy proportionality” clause which requires Canada to export three-quarters of its oil and half of its national gas to the U.S. Not only does this hinder Canada’s ability to be energy independent, it could block any attempt to wind down productions from the oil sands as well as fracking.
- Canada can build new hi-tech industries if freed from NAFTA because such industries require industrial policy and strategic intervention in the economy from governments to make them happen.
The next day, The Star published a pro-NAFTA article from Sean Speer from the Macdonald-Laurier Institute. Instead of addressing Laxer’s main points, Speer mostly relies on the argument that there will be significant disruption to the economy if NAFTA ceases to exist. Speer mentions the bogeyman of economic nationalism even notes that Unifor’s opposition to Trump’s tariffs shows that there is now a free trade consensus in Canada.
Speer’s piece is par for the course of pro-NAFTA commentary in the Canadian media. He does not engage substantively with Laxer’s arguements or any that the left has made over the past 30 years of free trade in Canada and misrepresents Unifor’s position on free trade.
That Unifor and other unions now totally accept free trade is an absurd argument on its surface. The opposition to Trump’s tariffs by Canadian unions is very much about the unilateral and ad hoc basis that the tariffs have been implemented in. There is no mention of Unifor’s opposition to the Canada-Korea Free Trade Agreement which was based on the negative effects of the deal on the Canadian automotive industry.
But Speer’s analysis is par for the course from the mainstream commentariat in Canada. Alarmism is the preferred way of arguing why keeping NAFTA is essential.
In the Maclean’s editorial Canada must step up to defend a globalized world,” the accompanying pictures comes from the National Day of Action against Islamophobia and White Supremacy protest in Toronto from February 2017.
The intention is clear. If Canada does not stand up for the current global economic order, then the far right will be empowered. At this point it’s almost amazing that given the rise of the far right globally, that there are those that think maintaining the status quo is a bulwark against a further right wing drift.
Labour and the left cannot go into this naively of course. An immediate and unexpected abrogation of NAFTA will harm the Canadian economy on some level, but the severity is still being debated. Canada is very trade dependent on the U.S. and supply chains are integrated. Any sort of rebalancing of trade will take time and not be painless.
And if NAFTA suddenly ceases to exist, there will be those voices arguing that Canada must slash taxes and regulation in order to attract new foreign investment. Since Trump’s corporate tax cuts, there have been renewed concerns about Canada’s competitiveness from the usual suspects in the business world and the IMF.
That’s why alternative voices to the NAFTA status quo are so important. We’re facing an ecological, social and economic crisis. Hanging on to NAFTA as it currently exists will to nothing to stop catastrophic climate change or prevent more far right governments from coming to power despite what the establishment media wants to believe. Building a new common sense around the future of Canada’s trade relationship and the entire international economic order is something that needs to be high on the agenda for labour and the left otherwise the far right will step into the void caused by the contradictions of global neoliberalism.