Canada: From energy superpower to world colony?

Canada is embarking on a series of free trade deals with China, the EU and with Pacific countries, but the silence on the subject of these agreements is deafening.

There is a stark contrast between the level — and volume — of debate about Canada’s free trade deals today and the original  Canada-US Free Trade Agreement in 1988.

An election was fought on that free trade deal, but today Canada has signed FIPA — a free trade deal with China — with not much more than a whimper, and other deals are in the offing. 

Politicians across the political spectrum are jumping on the bandwagon: the Conservatives, NDP and Liberals all support the Canada EU Free Trade deal. This political group-think means these deals aren’t getting the public scrutiny they desperately need.

Free trade? Really?

Free trade cheerleaders love to portray critics as economic naifs who just don’t understand the wonders of free trade.

But ever since the original US-Canada FTA, these deals have often been so lopsided they can’t be called “free trade” at all. 

In both the US-FTA deal and the China-FIPA agreement, Canada surrendered full access to its markets without getting access to US and Chinese markets in return.

This leaves Canada with nothing left to bargain away to actually achieve free trade with China or the US. With China, it’s not as if there will be a chance to renegotiate: while NAFTA has a six-month cancellation clause, FIPA’s 31-year term means it doesn’t expire until 2045.

Consumers are often warned about sales pitches that sound just too good to be true, but that is just the way the Canada-EU Free Trade deal is being sold to Canadians: as a huge economic opportunity.

Is this even the same EU we’ve been reading about for nearly a decade? The economic basket case wracked by non-stop currency and debt crises, grinding austerity and pockets of youth unemployment over 50 per cent?

Net loser

Number crunchers suggest Canada will be a net loser in the EU deal.

One single concession by Canada — caving in to the demands of European pharmaceutical companies for longer patent protections — will cost us more in higher drug prices than the benefits for every other Canadian business sector combined.

In exchange, Canada will allow European companies to bid on municipal and provincial services currently delivered by public employees and scrap agricultural “supply management” in dairy — even though, as Stephen Harper himself said in 2006, it is just about the only sector of Canadian agriculture where farmers are making money.

One supposed benefit of allowing China, the US and the EU so much access is that they can bring foreign investment to Canada, creating growth and jobs.

But plenty of “foreign investment” isn’t new at all: new owners are buying an existing, profitable company. Alcan and Tim Hortons were snapped up by Brazilian companies, and Nexen, an oil company, was purchased by a Chinese state-owned oil company.

Money for nothing

Many economists and politicians don’t seem to care about where ownership and management live: but it should be obvious, especially in an era of incredible CEO pay, that it makes a difference as to whether or not Canadians do the gruntwork while the profits and performance bonuses all leave the country.

One of the most controversial aspects of these free trade agreements is the “Investor-State Dispute Settlement” (ISDS), which was first included in NAFTA. The ISDS is something quite extraordinary. It essentially creates a new right for foreign corporations: the right to have their profits guaranteed by government.

There are two ways it works. One is that it tends to create a “ratcheting effect,” making it easy for governments to degrade labour and environmental regulations but hard to improve them, if it reduces corporate profits.

But the other is that the “dispute settlement” is a tiny international tribunal that can, by decree, order governments and Canadian taxpayers to compensate corporations for lost profits.

This is not free trade, or free enterprise: it is a business model of permanent government bailout, with taxpayers ensuring a steady stream of dividends for shareholders and bonuses for executives. Economists call this kind of deal “rent-seeking” — a polite way of saying “getting money for nothing.”

In The Globe and Mail, Gus Van Harten, a Law Professor at Osgoode Hall wrote that, “several countries have faced catastrophic awards under these treaties, the arbitrators have steadily grown their role, investors increasingly sue developed states and the amounts at stake have escalated to tens or even hundreds of billions of dollars.”

When he was first elected, Stephen Harper boasted Canada would become an “energy superpower.” With no pipelines being built and the price of oil dipping below $50, that goal is in doubt.

Instead, we are pursuing free trade deals that strip citizens and governments of political power while guaranteeing returns for the benefit of idle absentee owners. A country like that is usually called “a colony.”

Canadians deserve a debate about just what kind of country we intend to be, and whether we want the world as our customer — or as our landlord. 

Dougald Lamont is a Winnipeg writer and former Manitoba Liberal leadership candidate.