Unbalanced free trade deals costing us jobs

London Free Press, Canada

Unbalanced free trade deals costing us jobs

By Ken Lewenza, Special to QMI Agency

31 March 2012

Rebuilding a strong, vibrant and innovative manufacturing sector in Canada by signing more free trade agreements is like saying our society can be healthier if only we ate more chocolate. It’s backwards logic.

The federal Conservative government seems hell-bent on signing as many free trade pacts as possible, with a broad swath of trading partners including small players (Honduras and the Dominican Republic), politically-charged ones Colombia) and ones that could significantly alter our industrial make-up (including Korea, India, Japan and the European Union).

Canada’s direct experience with free trade deals in recent decades suggests workers haven’t been served well, particularly those in the manufacturing sector.

The NAFTA of 1994 helped lower the competitive bar on wages, benefits and working conditions and enabled corporations to relocate capital investments across the continent, often to undercut collective agreements. It also awarded private investors previously unseen rights and privileges (including a legal mechanism to challenge government decisions).

Only a few years later, the World Trade Organization undertook a review of the Canada-U.S. Auto Pact and in 2001 ordered it be dismantled, a move that’s helped kill thousands of Canadian auto assembly and parts jobs.

In the past decade, over half a million manufacturing workers have lost their jobs. Most (like Caterpillar workers in London) have seen these jobs vanish for good. And it’s not just assembly line workers. Jobs losses include workers in the trades, product design engineers, researchers, computer technicians and in-plant management.

Today, manufacturing employs just one in 10 Canadians, a far cry from the 1970s when the rate was nearly double that. Part of this decline is a result of policy decisions under free trade deals that have enabled private corporations to move capital across borders, regardless of the public good and often without consequence.

What’s worse than Canada pursuing more trade deals skewed to benefit private investors is there’s no evidence to show free trade has at all benefited Canada’s trade performance. In fact, Canada’s trade balance has suffered as a result of these unbalanced and unfair free trade deals.

In 1996, Canada had enjoyed a $12-billion trade surplus in manufactured goods with the rest of the world. Today, that has turned into a deficit of $90 billion.

Across the five free trade agreements Canada has signed so far that have been fully implemented (including the U.S., Mexico, Israel, Chile and Costa Rica), we’ve seen an 8.67% average annual increase in imports of goods from those countries, and only a 4.77% increase in exports. It’s ironic Canada trades more favourably with nations when no free trade deal is in place, yet the Harper government has made free trade a cornerstone piece of its economic plan.

In the coming year it’s expected trade talks for a new Comprehensive Economic and Trade Agreement (CETA) with Europe will wrap up, despite growing opposition and criticism toward the deal from civil society groups, labour unions, academics and municipalities — a deal that, if signed, could prove a beachhead for similar deals down the road.

What’s alarming about the dialogue around CETA is that Canadian government officials in the Department of Foreign Affairs and International Trade as well as representatives of the Canadian Manufacturers & Exporters suggest it could be a boon to our fledgling manufacturing base.

How can this be, when Canada currently faces a manufacturing trade deficit with the E.U. of $27 billion? How can it be goods we export to the Europe consist mainly of raw, unprocessed materials and the goods we ship back from Europe consist mainly of finished goods?

Can a free trade deal reverse trade flows so as to benefit Canadian manufacturers? Experience has shown us that it can’t.

A 2010 study by CAW economist Jim Stanford shows the Canada-EU CETA could cost us up to 150,000 manufacturing jobs, ones we can ill afford to lose.

The job losses will only grow if similar trade deals are struck with other nations, like India and Japan, who have a program of industrial development and are reinforcing their manufacturing sectors.

We must commit to fostering a healthy, vibrant manufacturing sector in Canada — one that breaks us from the current downward spiral of jobs and investment. The route to get there consists of active industrial policies (like Canadian-content regulations) for government investments, better managing our dollar, improving on lax foreign investment rules and initiating an industrial jobs strategy, that can focus our research and development in value-added, forward-looking sectors.

More unbalanced free trade will only keep us moving further down the wrong path.

Ken Lewenza is president of the Canadian Auto Workers.