EDMONTON, AB, Jul 8, 2014/ Troy Media/ – Canadians can be excused for not being able to name the 10 or so countries that we have free trade agreements with. Other than the U.S. most are with niche trading partners such as Panama or Honduras and free trade has had no significant impact on inward or outward trade volumes.
However, not all trade agreements are created equally. The new generation of proposed agreements, the Canada EU free-trade agreement (CETA) and the Trans-Pacific Partnership (TPP) are a complex maze of political and economic issues which are being negotiated in secret and have the potential to change the rights of Canadians at home and abroad.
Free trade is as old as trade itself. David Ricardo in the 19th century explained it in terms of comparative advantage – a country should specialize in products in which it has a lower opportunity cost to produce compared to its trading partners. A country could then increase its output and trade the surplus to other nations that have a comparative advantage in other products. Ricardo’s model assumed trade without tariffs and his philosophy gave birth to the world’s first modern bilateral free-trade agreements.
Comprehensive agreements such as CETA and TPP focus not only on tariff reduction but also on future value creation within global supply chains. This includes protection of intellectual property rights, investment, labour mobility, worker safety, and environmental regulations. It is the economic and regulatory aspects of these agreements that bring them into conflict with domestic legislation and why there is so much controversy around them globally.
CETA, despite Prime Minister Stephen Harper’s announcement, is still an agreement-in-principle. Several EU countries, including Germany, have concerns over the investor-state clause that would allowprivate firms to sue governments if their business is harmed by government actions. This clause would allow Canadian subsidiaries of multi-national oil companies to sue EU governments over environmental and emissions standards, which would potentially giving corporations power over the EU’s and Canada’s domestic environmental regulations.
The TPP is similar to CETA but on a much larger scale. The TPP is attempting to integrate the economies and regulatory regimes of 12 countries which have diverse laws, beliefs, and cultures. After 20 negotiating rounds, a draft agreement has yet to be published and public support is waning in many of the countries, including the United States.
Brunei, a founding TPP participant, has caused outrage around the world for recent changes to its penal code that will allow for the stoning of suspected homosexuals and adulterers. One hundred and nineteen members of the U.S. congress have signed a letter demanding that Brunei be expelled from the agreement, but Canadian politicians have been silent on these issues and continue with their mission of expanding trade.
Singapore and Vietnam, two other participants in the TPP talks, have also been criticized for their anti-democratic approach to free speech, especially online, where they routinely block social media networks and sue bloggers.
Comprehensive trade agreement will inevitably happen in the future, but they are not something that Canadians should be kept in the dark about. Our politicians need to talk about policy and fact, not just make grandiose statements about “keeping our economy strong.”
Our economy is strong and will continue to grow in the short term if we create “winning conditions”, such as maintaining a low dollar, building a new bridge to Detroit, regulating rail routes for our grain and forestry products, and developing ‘farm to fork” regulations that will allow cattle producers to take advantage of existing trade opportunities in Europe, and around the world.
In the long-term, Canadians and Europeans, not politicians, must decide if they want the positive aspects of CETA along with the possibility of multinational companies determining environmental laws.
As for the TPP, it is too early to tell if it will bear fruit or die on the bureaucratic vine alongside Keystone XL. Economic integration with countries that are not “like-minded” is difficult and politicians must not compromise Canadian values for trade. When we refuse to stand up against the stoning of suspected homosexuals and adulterers because we want to sell more oil, we lose what it means to be Canadian.
Ryan Lijdsman is a Canadian-based international business consultant. Follow Ryan on twitter @ryanlijdsman
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