Saturday April 02, 2016

Nobel Prize-winning economist Joseph Stiglitz warns Canada against TPP

Joseph E. Stiglitz, winner of the Nobel Prize in Economics, speaks during the Swiss International Finance Forum, in Bern, Switzerland, Tuesday, May 20, 2014. Politicians, supervisory authorities and scientists engage in an active dialogue on the future of the Swiss financial market during the forum.

Joseph E. Stiglitz, winner of the Nobel Prize in Economics, speaks during the Swiss International Finance Forum, in Bern, Switzerland, Tuesday, May 20, 2014. Politicians, supervisory authorities and scientists engage in an active dialogue on the future of the Swiss financial market during the forum. (Peter Klaunzer/Keystone/Associated Press)

The warning from Nobel Prize-winning economist Joseph Stiglitz leaves no doubt about his assessment of the Trans Pacific Partnership.

"TPP is a very bad agreement and will worsen inequality. I'm actually shocked that they're actually seriously considering ratifying it," Stiglitz told host Chris Hall on CBC Radio's The House.

The former chief economist for the World Bank was in Ottawa this week to participate in a forum on the TPP.

"This is not a free trade agreement. This is a managed trade agreement, and it's managed mostly for corporate interests in the United States without giving a little bit to the other TPP partners," he said.

TPP concerns

Stinglitz outlined several issues with the Trans Pacific Partnership, which — if ratified — will form a trading block representing roughly 40 per cent of the world's gross domestic product.

The economist and Columbia University professor said his biggest issue with the treaty revolves around the investment chapter and the right it would give corporations to sue governments if they think rules and regulations contravene the terms of the TPP.

For example, Stiglitz said that if the federal government passed legislation to "help alleviate, say, exclusion of First Nations or other groups in your society, you could be sued. If you passed a minimum wage law, you could be sued."

He added the deal would do little to help boost growth and would hurt Canada's job landscape.

"The trade agreement surely will lead to job reduction. They talk about exports creating jobs, but they keep forgetting that imports destroy jobs," he warned. "Canada is a country which, on average, will be importing labour-intensive goods and exporting capital-intensive goods so that on net, there will almost surely be job losses."

Warning to Canada

The Nobel Prize winner told The House he has shared his concerns with Canada's International Trade Minister Chrystia Freeland, and that Freeland appeared to understand his arguments against the deal.

"I think the most likely outcome [in the United States] is a re-negotiation," he said, pointing out that both Democrat presidential candidate nominees, Bernie Sanders and Hillary Clinton, oppose the deal, as does Republican frontrunner Donald Trump. 

"And I think it would be terribly helpful if Canada came out with the same position — we're in favour of good trade agreements, it's not that we are protectionists," Stiglitz said.

"But this is not about free trade. This is about changing the rules of the game for the market economy in ways that disadvantage ordinary people and advantage a few large corporations."

New Zealand Trade Deal Signing

Ministers from 12 Pacific Rim countries signing on to the Trans-Pacific Partnership Agreement in Auckland, New Zealand, Thursday pose for a family photo, including Canada's international trade minister Chrystia Freeland (third from left.) (David Rowland/SNPA via Associated Press)

The TPP signing ceremony in February kicked off a two-year ratification period, during which the United States, Japan and at least four of the remaining 10 countries must approve the final legal text in order for the deal to take effect.

Freeland has said that Canada's approval process will begin with broad consultations on the agreement, and that signing on to the deal doesn't mean it will automatically get ratified.

Prime Minister Justin Trudeau has repeatedly demurred when asked outright if he supports the agreement. He staked out the middle ground during the last election campaign promising the aforementioned consultations while trumpeting the promise of expanded trade agreements.

He sent a similar message to the Americans Thursday during a panel discussion in Washington.

"We're very much a pro-trade country," Trudeau said when asked about the TPP. "We're always looking at trade deals as a way of growing our economy.

Trudeau says Canada is 'pro-trade' but won't commit on TPP1:00

"Obviously, on any big deal it's no surprise to anyone there are areas, sectors, industries who have more concerns than others and in our conversations with Canadians ... there are a lot of people in favour and there are a few who have real concerns. We're looking at understanding and allaying certain fears," he said.

Defenders of the deal, most notably B.C. Premier Christy Clark, have warned that if Canada sits out of the deal it could shut the country out of the rapidly growing Asian market and compromise the terms of NAFTA.

"In every trade deal there are downsides, but you think about what NAFTA has done for Canada in terms of growing jobs" and the country cannot pass up similar net benefits with the TPP, Clark told The House in February.

The twelve signatories to the TPP are: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam.