After a year of black and white views, is there space for nuanced debate on trade?
In the fight between
‘America First’ and ‘progressive trade,’ real change may be the first casualty,
write Stuart Trew and Scott Sinclair as they reflect on a year of heated trade
Senior fellow, Canadian Centre for Policy Alternatives
Editor, the Monitor
Almost a year into his presidency, Donald Trump has been nothing if not disruptive. On some issues, such as trade and the future of globalization, the US tweeter-in-chief has dug a veritable chasm between America and its traditional allies. Whether intentionally or not, that chasm may have swallowed up any chance of having an honest debate about what kind of trade agenda is appropriate in an era of climate change and widening inequality.
Where Trump sees only “disasters” in agreements like the Trans-Pacific Partnership (TPP), and is pursuing an “America First” agenda in the North American Free Trade Agreement (NAFTA) renegotiation (in an attempt to bring manufacturing jobs back to the United States), Canada and most Western countries have tripped over themselves highlighting efforts to keep the free trade project rolling, as a sign of their “openness” to the world.
The Trudeau government proudly displays its “progressive” deal with the European Union (the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA) and played a lead role with Japan in salvaging a renamed “Comprehensive and Progressive” TPP. It insists it can sign a deal with China that includes strong labour and environmental rules, and possibly a chapter on promoting gender equality. The European Union has just signed a CETA-like agreement with Japan and is pressing ahead with Mercosur in South America, Australia and New Zealand.
But are these really the only two paths available to would-be reformers: Trumpian mercantilism (in combination with environmental deregulation and tax cuts) or Trudeau’s brand of conventional free trade with progressive trappings? This Manichean view creates a paradox for those of us who have for some time critiqued neoliberal globalization from a progressive standpoint.
First, the narrative of Trump versus Trudeau has the potential to stunt an adult conversation about how status quo globalization is failing workers, women and the environment — something the prime minister frequently acknowledges in his international speaking engagements. As Oxfam Canada points out in an excellent recent report on gender and trade: “Trade liberalization has created a race to the bottom on wages and labour conditions, with women concentrated in the lowest paid and most precarious jobs.”
The elimination of capital controls and restrictions on the ability of governments to leverage foreign investment for development purposes have contributed to growing inequality in most countries. The remarkable multiplication of global trade flows over the past 30 years has been accompanied by accelerated global warming and ecological strains, and enthusiasts ignore the inconvenient fact that more trade-dependent countries like Canada produce higher greenhouse gas emissions per person. Meanwhile, multinational corporations repeatedly invoke investor rights in deals like NAFTA (and now the “progressive” TPP) to attack government regulations, such as the Ontario Green Energy Act or Quebec’s ban on fracking, that at least try to address these issues.
Second, the current either/or debate about globalization is masking the ways Trudeau’s “progressive trade” agenda — in CETA, the NAFTA renegotiation and elsewhere — is championing proposals as radical and unsustainable as anything the Trump team has put forward in the interests of “America First.”
Modern (post-NAFTA and post-WTO) trade deals serve a much more important but less talked about role of constraining government policy space in areas unrelated to tariffs. The original TPP, for example, included extensive new intellectual property rights and e-commerce rules primarily benefiting major US pharmaceutical, biotech and big data firms. It forced US legal norms onto other countries, limiting their ability to lower the price of medications, regulate for public health (in the case of novel or genetically-modified foods), protect personal data and limit the monopoly power of the Amazons, Googles and Facebooks of the world. While the most contentious of the US-backed intellectual property provisions have been suspended pending an improbable American re-entry to the deal, the rebranded TPP is essentially the same corporate-biased agreement pilloried by Trump and Hillary Clinton alike.
CETA — the template “progressive” deal for the Trudeau government — includes a domestic regulation chapter that puts limits on the qualification and licensing measures of provincial and municipal governments, requiring approvals processes — including for energy and other mega projects — to be “as simple as possible,” a vague concept that will be up to trade tribunals (not government regulators) to define. The residents of Burnaby, B.C., will be able to guess how such a clause might set back municipal fights against environmentally reckless oil and gas infrastructure.
If the main point of modern trade deals is not simply to reduce tariffs but to lower or get rid of non-tariff barriers (aka public interest regulations) that corporations feel interfere with their profitability, then a truly progressive fix defeats the purpose of the agreements, and will alienate the corporate constituency that is driving this agenda forward. If it’s actually meaningful reform the Trudeau government is after, then our corporate community could abandon the project. And if it isn’t, it ends up as a fig-leaf for business as usual. Thus, the Trump trade paradox is our government’s problem as well.
Where does this leave us? Rather than pursue more and more deals in a panicked response to “America First,” maybe we should just take a breather. Trade tariffs are as low as they have ever been worldwide. To the extent that there can be any significant gains for Canadian exporters (e.g., by getting a free trade deal with China or Japan before the Americans or Europeans), they will be limited and short-lived.
Pausing the rush to sign deals would also let us stand back and assess the social and environmental consequences, and ask whether there are parts of our existing deals that are getting in the way of creating good, green jobs, or expanding public services, or improving opportunities for women and Indigenous communities. A real progressive trade agenda will take time and effort, not just cosmetic changes. Those who think it will be easy or a matter of branding are fooling themselves. Those who dismiss the idea outright are undermining our chance to get it right.