April 2001
This piece was a response to an article written in The Globe and Mail by Canada’s former prime minister Brian Mulroney, the man who negotiated both the Free Trade Agreement between Canada and the U.S. and the North American Free Trade Agreement, which brought Mexico into the deal. In the article, he argued in favour of a further expansion of NAFTA, to include the entire hemisphere (the proposed Free Trade Area of the Americas). Mulroney’s position hinges on his belief that NAFTA has been an unqualified success for all three countries. At the time the debate was published, Quebec City was preparing to host the Summit of the Americas, the meeting of thirty-four heads of state to launch the FTAA. Activists from across the Americas were planning huge counter-demonstrations.
Brian Mulroney thinks the numbers are his friends. He proudly points to the percentage of Canada’s gross domestic product now made up by exports to the United States—40 percent! The number of jobs created by trade— four in five! And Mexico’s status as an important U.S. trading partner—second only to Canada! These numbers are a vindication, our former prime minister believes, for the free trade deals he negotiated first with the United States, then with Mexico.
He still doesn’t get it: those numbers aren’t his friends; they’re his worst enemy. Opposition to free trade has grown, and grown more vocal, precisely because private wealth has soared without translating into anything that can be clearly identified as the public good. It’s not that critics don’t know how much money is being made under free trade—it’s that we know all too well.
While there’s no shortage of numbers pointing to increases in exports and investment, the trickle-down effects promised as the political incentive for deregulation— a cleaner environment, higher wages, better working conditions, less poverty—have either been pitifully incremental or non-existent.
The labour and environmental side agreements tacked on the North American Free Trade Agreement have a spectacularly poor track record. Today, 75 percent of Mexico’s population lives in poverty, up from 49 percent in 1981.
Trade may be creating jobs in Canada but not enough of them to keep up with the number of jobs that have been eliminated—by 1997, there had been a net loss of 276,000 jobs, according to the Canadian Centre for Policy Alternatives.
Total pollution from manufacturing has doubled in Mexico since NAFTA was introduced, according to a Tufts University study. And the United States has become a climate-change renegade, chucking out its Kyoto commitments wholesale. It turns out that defiant unilateralism is the ultimate luxury item in the free trade era, reserved for the ultra rich.
There is always a ready excuse for why the wealth liberated by free trade is stuck at the top: a recession, the deficit, the peso crisis, political corruption and now another looming recession. There is always a reason why it should be spent on another tax break instead of social or environmental programs.
What Mulroney doesn’t understand is that only economists worship wealth creation as an abstraction, only the very rich fetishize it as an end in itself. The rest of us are interested in those rising numbers on the trade ledger for what they can buy: does increased trade and investment mean we can afford to rebuild our health care system? Can we keep our promises to end child poverty? Can we fund better schools? Build affordable housing? Can we afford to invest in cleaner energy sources? Do we work less, have more leisure time? In short, do we have a better, more just, sustainable society?
The opposite is the case.
As Mulroney was kind enough to admit, “Free trade is part of a whole that includes the GST [Canada’s Goods and Services Tax], deregulation, privatization, and a concerted effort to reduce deficits, inflation, and interest rates.” These are the domestic preconditions of playing the global trade game—a package that, taken together, guarantees that the numbers Mulroney touts so proudly do little to address stagnant wages, economic disparities and a deepening environmental crisis.
And when economic growth is severed from meaningful measures of social progress, thinking people begin to lose faith in the system. They start to ask difficult questions not only about trade but also about how economists measure progress and value. Why can’t we measure ecological deficits, as well as economic growth? What is the real social cost—in cuts to education, in increased homelessness—of the whole package of policies referred to by Mulroney?
These are the types of questions that will be heard in Quebec City this week. They will come from people such as José Bové, the French dairy farmer whose campaign is not against McDonald’s but against an agricultural model that sees food purely as an industrial commodity rather than the centrepiece of national culture and family life. They will come from health care workers questioning a trade system that defends patents for AIDS drugs more vigorously than millions of human lives. They will come from university students, paying more for their “public” education every year, while their schools have been invaded by ads and their research departments are being privatized one commercially sponsored study at a time.
The slogan People before Profits is dismissed as unfocused by free trade defenders, but it neatly encapsulates the sentiment running through the campaigns that are converging in Quebec City. The argument for barrelling ahead with the Free Trade Area of the Americas is based on an unshakable ideological belief that what’s good for business will be good for everyone—eventually. Even if that dubious argument is true, the timeline is unacceptable. According to the governor of the Bank of Mexico, at the current rate of economic growth, it will be sixty years before Mexico doubles its per capita income and ends its extreme poverty.
What the protesters are saying is that human dignity and environmental sustainability are too important to be patiently prayed for like rain during a drought. They should not be belated side effects but the very foundations of our economic policies.
Thankfully, the protesters are resisting the pressure to come up with a one-size-fits-all alternative to free trade and are, instead, defending the right to genuine global diversity and self-determination. Rather than one solution, there are thousands, slowly coalescing into an alternative economic model. In Cochabamba, Bolivia, that means insisting that water is not a commodity but a human right, even if it means throwing out the international water conglomerate Bechtel. In British Columbia, it means First Nations and non-native rural communities demanding the right to manage “community forests,” which combine selective logging, tourism and local industry, as opposed to granting industrial tree-farm licences to logging multinationals. In Mexico and Guatemala, it means coffee farm co-operatives that guarantee a living wage and ecological diversity.
Some defenders of free trade say that if the protesters in Quebec City were serious, they would be on the other side of the chain-link fence that has been built to protect the delegates and that now physically divides the city. They say that protesters should be politely negotiating side agreements on labour, democracy and environmental standards.
But thirteen years after the first free trade agreement with the United States, it’s not the details of the FTAA agreement (we still don’t know them) but the economic model itself that is under fire—the numbers just don’t add up.
Displaying his usual diplomacy, Prime Minister Jean Chrétien last week told the newspaper Le Devoir that thousands are coming to Quebec City to “protest and blah blah blah.” Quite the opposite. They’re coming to Quebec to protest because they’ve had it with the “blah blah blah.”
The following article was written eight months after the Quebec summit. It is included here because after the attacks in New York and Washington, D.C., the trade-offs for increased trade became even more stark.
In the name of fighting terrorism, the United States is demanding that Canada dramatically toughen security at its borders, as well as give up a great deal of control over them to U.S. security officers. Canada could scarcely be in a worse bargaining position: thanks to free trade, 87 percent of our exports go to the U.S. and almost half of our economy is now directly dependent on an open border.
Many Canadians see some border integration as the unavoidable price of protecting the $700 billion annual trade relationship with the United States. But Canadians are being asked to give up more than border control. We are also being asked to hand over a chunk of the economic dividends of years of economic austerity. Finance Minister Paul Martin’s “security budget,” delivered on December 10, throws $1.2 billion directly at the border. Some of it is designed to protect Canadians from terrorists, but much of it must be seen for what it is: a new public subsidy for multinational corporations.
When Canadians accepted cutbacks to health care, unemployment insurance and other social programs, we were told that this austerity was necessary to attract foreign investors. We weren’t trading our social programs for free trade, the boosters said—on the contrary, only free trade would generate the kind of prosperity needed to rebuild our social programs.
But there’s a hitch. Just as Canadians were starting to imagine spending some of our recent national prosperity on new programs, it turns out that the budget surplus will not be used to make people more secure. It will be used to make trade more secure, to “keep our borders open,” as Martin said.
The proceeds of cross-border trade are going back into the border itself: to make it a terrorist-fighting and free-trade-flowing superborder. We are going to have “the most modern border in the world,” Martin enthused. This, it turns out, is the legacy of all the years of belt tightening: not a better society but a really great border.
The plan is to create multi-tier border crossings that are at once open for business but closed to “unwanted” people. This is no easy task, since migration of people and trade in goods tend to be interrelated.
That’s why Martin’s plan to open and close the border at once is so costly: $395 million to screen refugees and immigrants, $58 million to make border crossing smoother for frequent business travellers, $500 million to crack down on illegal immigrants, $600 million over six years to improve the traffic flow.
Let’s pause for the irony. Free trade was supposed to lower the costs of moving goods across borders, thereby encouraging new investment. Now we have become so dependent on trade (and the U.S. has become so mistrustful of our ability to police ourselves) that we are spending hundreds of millions of new dollars just to keep the trade flowing.
Put another way, costs that used to be absorbed by the private sector in the form of export and import duties and tariffs have been transferred to taxpayers in the form of security costs. The border, the promise of so much prosperity, is turning into an economic sinkhole.
Annette Verschuren, president of Home Depot Canada, applauded Monday’s budget, saying, “We depend on the border to ensure that our goods get to our stores, and anything that speeds it up reduces our costs.”
Are the new security costs an unavoidable price to pay for our economic stability? Perhaps. But they should at least send a cautionary message to our politicians who are pushing to expand the North American Free Trade Agreement into the entire hemisphere.
Free trade has already taken a severe toll on our social programs and our ability to make sovereign immigration and refugee policy. It is now costing us billions in security dollars. Can we at least stop calling it “free”?