TPP rises from the ashes

Rumours of the death of the TPP are greatly exaggerated. After President Trump announced U.S. withdrawal from the Trans-Pacific Partnership, I congratulated him: “Thank you, Mr. Trump, for killing the TPP.”

 image: WMAL radio

I now realize that Trump’s withdrawal from the TPP was not an indicator of leadership, but a sign of retreat from the international community. It’s just another indication of the degree of U.S. marginalization. Trump’s withdrawal from the Paris Agreement is yet another indicator that we must carry on without him.

Where the original TPP had a number of flaws, the new TPP can be negotiated to Canada’s advantage. Canada was disadvantaged in the first round because we were latecomers: we had to accept what had already been negotiated.

Canada is a trading nation and as such, we depend on fair trade agreements. As politicians like to do, I’ll list my five conditions for acceptance of the new TPP -dubbed TPP11 after the number of countries left to pick up the pieces.

Investor-state dispute settlement provisions (ISDS) should not be part of TPP11. This allows companies to seek damages from governments when local regulations interfere with profit-making.

When disputes arise, as they are bound to do, they should be settled in a transparent manner by judges, similar to the International Court, not in private between arbitrators as is now done with NAFTA.

Environmental standards should not be part of TPP11. Environmental damage is seen by industry as a cost of doing business -a price which indigenous peoples and future generations will pay. Environmental standards need to be negotiated by separate accords like the Paris Agreement.

Intellectual property and should be excluded as well. Artists and small software companies need protection, but too often concern for intellectual property masks large corporate interests such as Disney.

Exclude health regulations as well. They are an excuse for Big Pharma to extend the patent life of drugs that could be made cheaper with generics.

TPP11 will be a meeting of middle powers now that the U.S. is out, and China and Europe were never in. Canada can then negotiate from a position of strength when it comes to superpowers. Trump favours individual bilateral deals because he imagines an advantage over smaller countries. But if those smaller countries can form a block where there is an alternative to the bully-tactics of Trump.

The TTP11 would give Canada access to markets not previously available, says Hugh Stephens of the Canadian Global Affairs Institute. It will jump-start bilateral talks that were going nowhere, like those between Japan and Canada. With Japan in the TTP11, negotiations can proceed. And trade agreements under the umbrella of TPP11 can take place with other countries where Canada has no bilateral agreements such as Australia, New Zealand, Malaysia and Vietnam and Malaysia.

And in countries where Canada does have bilateral agreements, such as Mexico, Chile and Peru, the TTP11 can tie up loose ends.

Whereas Canada was a follower in the original TTP, we can be a leader in fair trade under TTP11. With the U.S. retreating into a fog of befuddlement, Canada needs to step up on the world stage.

 

 

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Thank you, Mr. Trump, for killing the TPP

It’s a rare thing when the views of president-elect Trump and Canadian activists align as in their opposition to the Trans-Pacific Partnership. Trump has vowed to kill the deal the day he is sworn in.

However, the source of loathing couldn’t be more different. Canada is a trading nation and we depend on the flow of goods for jobs. Trump wants to set up barriers to trade and regards such deals as “job-killing.”

Unlike the deal between Canada and Europe, the Comprehensive Economic and Trade Agreement (CETA), we were on the sidelines when the TPP was negotiated. The TPP had little to do with reducing trade barriers. Law professor Michael Geist of the University of Ottawa outlines the other provisions:

“Much of the TPP focused on economic regulation, such as intellectual property enforcement, health regulation and environmental standards. Trade agreements are a poor place to negotiate these issues, which have traditionally fallen within the purview of international organizations that develop consensus-based treaties with broad stakeholder participation (Globe and Mail, November 16, 2019).”

Trump has NAFTA within his sights, too. With the North American Free Trade Agreement threatened by the belligerent president-elect, it’s vital that Canada look elsewhere. Canada already reached a deal with South Korea in 2014 and has engaged in talks with Japan, India and China regarding similar agreements.

Ongoing irritants plague all of these trade deals because corporations insist on corrupting them with their own interests under the label of “free trade.” One of those irritants is the investor-state dispute settlement provisions (ISDS) which allow companies to seek damages from governments when local regulations interfere with profit making.

Canada was stung by an ISDS under NAFTA in which a Delaware-based company proposed expansion of a quarry in the Bay of Fundy. Nova Scotia rejected it on environmental grounds. The federal government rejected it. Then a secret NAFTA tribunal approved it and we are stuck with a bill of hundreds of millions in compensation.

Tribunals aren’t a necessary part of trade agreements when you consider we have a court system. It’s not like we’re dealing with developing countries whose court systems are unknown or viewed as dodgy. CETA is a slight improvement over NAFTA. Members of the tribunal will be appointed by countries instead of corporations giving it the aspect of an international court.

One way to bypass trade deals is for unions to negotiate international agreements that are not susceptible to tribunals. Canadian auto unions have recently bargained deals with the big 3 auto manufacturers worth $1.6 billion. Jim Stanford, former economist for the Canadian Auto Workers and Unifor, and now professor McMaster University is thrilled with the deal which acknowledges superior productivity in Canada:

“Most Canadian auto plants operate at or near full capacity. Combined with advanced technology and work organization, that gives the Canadian industry an important productivity advantage. Output per worker is 10 per cent to 15 per cent higher than it is in the United States (November 21, 2016).”

Trade deals have been muddied by the addition of non-trade provisions, although I doubt that’s what motivates Trump.

Be prepared to walk away from NAFTA

Canada is a trading nation. As such, we need well-crafted trade agreements. NAFTA is not one of those.

Photo courtesy Council of Canadians

Photo courtesy Council of Canadians

Both candidates for president of the United States have indicated that they would renegotiate or tear up the North American Free Trade Agreement with Canada and Mexico. Both are reflecting the discontent of the American people from the rust belt. They have seen well-paying jobs evaporate, only to materialize in low-wage countries.

There have been few winners of NAFTA, says Gordon Laxer, founding director and former head of the Parkland Institute at the University of Alberta.

“The big winners since 1988 (the year the FTA was signed) have been the global 1 per cent. The big losers have been the lower-income and middle classes in the rich countries. That underlies the populist revolts of Brexit and the presidential candidacies of Donald Trump and Bernie Sanders (Globe and Mail, August 31, 2016).”

Canadians aren’t happy with NAFTA either. An Angus Reid poll revealed that one-third want it renegotiated, one-third are unsure or want it done away, and only one-third want it left as is or expanded.

Canadians have reason to be unhappy. As taxpayers, we have paid $190 million to foreign corporations to settle lawsuits. Under NAFTA, Canada has been sued 39 times mainly over our environmental protection laws. The U.S. has never lost a case.

Disputes are settled, not by judges but by secret tribunals run by exorbitantly paid corporate lawyers who decide what Canadian laws have hurt U.S. corporate interests here.

Then there is the “Mexican exemption.” Mexico wisely refused to agree to the NAFTA clause that required countries to supply the U.S. with the same proportion of energy as in the previous three years –even if it hurts the exporting country.

Unlike Mexico, Canada is not exempt from this so-called proportionality rule. In the event of a sudden loss in our energy production, Canada would have to supply the U.S. even if it meant that we did without. What makes this clause worse is that the U.S. keeps 700 million barrels in the Strategic Petroleum Reserve in case of an emergency, while Canada has none.

What Canada supposed to get in exchange was unlimited access to U.S. markets. In other words, we would have free access in times of plenty in exchange for compulsory supply in times of dearth.

Except we don’t even have that now. The agreement to unlimited access was broken when President Obama stopped TransCanada’s Keystone XL pipeline.

It never crossed the minds of the Canadian negotiators of NAFTA that easy oil would run out and that the difficult tar-sands oil would be priced out of global markets. It never occurred to them that Canada would be burdened with CO2 emissions that would be produced from exported oil.

Canada is a trading nation and the world wants what we produce. We don’t have to settle for a second-class trade agreement. Laxer concludes:

“NAFTA is flawed and outdated. Two of its rules hurt Canada. We must be ready to negotiate hard and to walk away if necessary, using the six-month exit clause.”

Don’t call the TPP a free trade agreement

Canada is a trading nation. Trade agreements are good for Canada. The Trans-Pacific Partnership is not one of those.

WASHINGTON, DC - JUNE 23:  Demonstrators protest against the Trans Pacific Partnership trade agreement outside the Senate office buildings on Capitol Hill June 23, 2015 in Washington, DC. The Senate passed an important proceedural vote on the trade bill, which would grant President Barack Obama enhanced negotiating powers to complete a major Pacific trade accord, clearing the way for final passage as early as Wednesday.  (Photo by Chip Somodevilla/Getty Images)

With a few exceptions, Canada’s trade barriers are already low and the TPP will have little effect on trade. Professor Blayne Haggart from Brock University in St. Catharines, Ontario, says it’s all about increasing corporate power. Sections that are supposed to be incidental riders are the real essence:

“Instead, agreements such as the TPP are about implementing policies that have nothing to do with comparative advantage, policies that are often designed to lead to higher consumer costs and concentrated corporate power. Treated as marginal issues, these policies are ‘free-trade free-riders,’ coasting along on an unearned legitimacy.”

By “comparative advantage” he means trade between partners that benefits both. “Costs are lowered, production is maximized and people can buy imports at prices lower than would have prevailed had they produced everything themselves,” explains Haggart in the Globe and Mail.

The TPP is not a free trade agreement; it’s a consolidation of U.S. interests globally. The details have to be carefully dissected but here are a few things that we know.

One of the “free-trade free-riders” is intellectual property. The U.S. wants to extend the patent protection for drugs to prevent generic manufacturers from providing cheaper medicines. Groups such as Doctors Without Borders warn that greater drug-patent protection would “limit competition from generic drug manufacturers that reduce drug prices and improve access to treatment, and would accelerate already soaring medicine and vaccine prices.”

Another is extended copyright length. The TPP would extend the life of copyrights from 50 years to 70 years beyond the life of the author. This would benefit U.S. media companies and provide little benefit for artists or the public. Copyright holders are often corporate media giants like Disney.

If the negotiators of the TPP were honest, they would admit that this is not a “partnership,” it’s an imposition of U.S. interests on trading partners. One of the biggest U.S. exports is American culture, what they like to call the entertainment industry. Another is health care. These are the money-makers that the U.S. wants to protect.

One more free-trade free-rider is the infamous “investor-state dispute settlement.” It places corporations on the same level of states, allowing foreign firms to sue countries, not only for breach of contract but for public policies such as environmental protection and access to drinking water.

As I explained in my column of October 15, Canada is already on the receiving end of the most dispute claims under NAFTA. We can expect more under the TPP as corporations try to bring our public policies in line with their private interests.

Yet another provision would allow car manufacturers to hide operating codes that allow them to cheat on emission regulations the way Volkswagen did under the guise of intellectual property. These codes should be examined by regulators the way that slot machines are.

Just how bad the TPP is for Canada has yet to be determined. The 6,000 pages of the secretly negotiated agreement have only been recently released. One thing that should make us suspicious is when supporters call it a free trade agreement.

Even without the details, one thing about the TPP remains constant

We don’t know much about the Trans-Pacific Partnership that the Conservatives recently signed except that it will replace North American Free Trade Agreement.

TPP

As a trading nation, Canadians generally favour trade agreements. Last year, an Angus Reid poll showed 68 per cent in favour of a trade deal with Europe.

We favour of trade deals while being woefully ignorant of the details; sometimes in the dark about their very existence. In the case of the TPP, Environics showed that 75 per cent didn’t even know what the TPP was; let alone that the Conservatives were negotiating it on our behalf.

This blind faith in the concept of trade agreements often leads us into a blissful unawareness. One principle about the TPP will likely remain constant: private tribunals will replace our courts when it comes to disagreements.

That’s what the Investor–State Dispute Settlement provision does under NAFTA. I would hazard a guess that few Canadians are even aware of the ISDS provision under Chapter 11.

ISDS allows foreign investors to settle disputes with governments through binding private arbitration instead of Canadian courts. Yes, governments can be dictated to by arbitrators. Why would governments give up such a mandate of their power? The Monitor magazine explains:

“The dubious rationale for granting this extraordinarily sweeping right to foreign investors was that the Mexican courts of the day were prone to corruption and political interference.”

If that were a valid justification, Mexico should be on the receiving end of corporate claims. In fact, Mexico has only had a few while Canada has had the most.

“Canada has faced 36 ISDS claims, more than any other developed country in the world, and since 2005 we’ve been hit by 70% of all NAFTA investor lawsuits.”

One of those claims against Canada came in March this year after ExxonMobil’s Canadian subsidiary won $17.3 million in damages after challenging requirements that they dedicate a tiny percentage (0.33%) of their revenues to research and development, education and training in Newfoundland and Labrador.

“But what is especially galling about this case is that Exxon, along with every other company active in the offshore oil sector, had explicitly agreed to abide by provincial R&D commitments.”

In 2010, the federal government had to pay AbitibiBowater $130-million to settle an ISDS complaint after former premier Danny Williams’ expropriation of the company’s mill. Williams said that the owners had broken the lease agreement by walking away from mill, leaving 800 unemployed.

The Harper government tried to weasel out of paying the settlement claiming that the province had caused the problem. More likely, it was an attempt to punish William’s for his lack of Tory support. The last time I looked, Newfoundland is still part of Canada and since NAFTA applies to Canada, it applies to Newfoundland. If the offending province were Alberta, Harper probably would not have complained.

Most of the talk around the TPP has been whether car parts will hurt and beef parts will prosper. Don’t hold your breath waiting to hear how Canada will be dictated to by corporations through private tribunals held in secret.

Becoming friendly with U.S. President an oily question  

I notice, President George W. Bush, that you have canceled  your visit to Canada next month. That’s OK, we know how  busy you are.  We got preview of what your message might be  from your ambassador to Canada, Paul Cellucci.

leaflets

“There would be no debate. There would be no hesitation. We would be there for Canada as part of our family. And that is why so many in the United States are disappointed and upset that Canada is not fully supporting us now,” said Cellucci  on March 25, 2003.

I notice that your ambassador delivered your passionate appeal directly to Canadians,  via Economic Club of Toronto.  Diplomats usually give their dry, carefully worded, messages to host governments.

But what, Mr. President, do we owe this earnest attention?  In the past, you have scarcely noticed that we exist.

Excuse me if I seem petty, but it seems like you like Mexico best.  Mexico was the first country that you visited as president.  Mexico’s President Vincente Fox was the first leader invited to the U.S.  On Fox’s visit, you gushed “This is a recognition that the United States has no more important relationship in the world than the one we have with Mexico.”

Did you forget, Mr. President, that our two countries share the world’s greatest trade ($1.4 billion a day) and the longest undefended boarder in the world (although I understand you have a problem with that.)

What do you want from Canada?   You know that all of our military resources are fighting the war on terrorism in Afghanistan and in the Persian Gulf.  It’s a commitment greater than most in your coalition.

If you are seeking our approval, I’m truly touched since your always seem to do things your own way.

I notice that you didn’t visit Iraq either.  Your message to Iraqis came in the form of 17 million leaflets dropped in advance of your invasion, and from a pop radio station aboard a converted C-130 cargo plane that flew over Iraq.

One of your leaflets read “The oil industry is your livelihood.  Your family depends on your livelihood.  If the oil industry is destroyed, your livelihood will be ruined.”

The American pop music from the flying radio station over Iraq was a nice touch.  We get a lot of that music here, too.  When the radio announcer flying over Iraq said that Saddam Hussein was corrupt and you wanted him out, you obviously meant what you said.

Three days after ambassador Cellucci’s impassioned speech in Toronto, he was the heart of B.C.’s oil patch in Fort St. John.  His message was that Canada is the biggest source of energy for the U.S. and without Canadian energy, the American way of life would die.

Wow, the survival of the American way of life is at stake.  But I’m beginning to get the feeling that you like us, not just because we are family, but for our oil.  The ambassador also says that you have a problem with our government.

He told the Economic Club of Toronto that you were “disappointed” with recent comments from members of the government of Canada.  Disappointed?  As you would be with a wayward brother, Mr. President?

I notice that you have also been disappointed with Venezuela’s President Hugo Chavez Frias ever since he was elected in 1999.  Is that why you tried to get him out office and privatize Venezuela’s publicly owned refineries?   I can understand why you are concerned – – it’s the second largest output of oil in the world, and the fifth largest in terms of exports.

And Venezuela’s membership in the Organization of the Petroleum Exporting Countries is certainly irritating.  Don’t you hate the way OPEC controls world oil prices by limiting oil production?

I thought President Chavez’s reaction to your concern was uncalled for when he said that “Venezuela is a sovereign nation … we are nobody’s colony.”

Come to think of it, that’s almost exactly what our Canadian prime minister said in response to the remarks from your ambassador.  Or was he responding to your senior adviser Richard Perle who called Prime Minister Chrétien a “lame duck”?

Anyway, I’m sure that you’ll make it clear to us.  You can just put your message on American TV channels.  We all watch them.

 Good environmental record best card to play in Canada’s deck

No wonder the Americans aren’t worried about the “tough talk” of Prime Minister Chretien when he was in Alberta.  I guess he thought a little macho talk was appropriate in the land of swagger and oil. There must be a better way.

polite-canadian

Chretien told an Alberta audience that he gave US president Bush “hell” for putting barriers up to Canada’s lumber while wanting our oil and gas.  Chretien’s bravado was lost on Americans.

Most Americans aren’t even aware that they get energy from Canada. They think that all their fossil fuels come from the Middle East.  And the idea of a threat of Canadians cutting off energy flow to the US is unthinkable to Americans.  Part of the problem is that we are seen nice people — incapable of doing rotten things like retaliating.

The idea of cutting off oil and gas exports is unthinkable to Albertans, too.  They are in no mood to sacrifice the windfall profits they are making on gas and oil.  After all, it’s those profits that are fuelling the political agenda of the Alberta government.  Without oil and gas, the right-wing gospel of the marketplace and low taxes would be hot air.

The unfair American tactics couldn’t come at worse time for the new B.C. Liberal government.  Not only are they faced with a slowing continental economy, but now this and the layoff of thousands of B.C. workers.

British Columbia suffers more than any other province from the 19.3 per cent tariff on softwood imposed by the US.  Almost half of all Canada’s export lumber comes from here.  To add insult to injury, the Americans are handing the tariff money over to sawmills in the States.

The federal Liberals have chosen a path that will inflict maximum damage on B.C.  The feds stubbornly support the North American Free Trade Agreement and its dispute resolving committees.  Sure, eventually the Americans will loose this dispute.   But in the meantime, B.C. suffers.

The federal Liberals could have chosen to keep the money in Canada as the last federal government did. In the last dispute with the US over softwood, the then-Conservative  federal government implemented an export tax that kept billions of dollars in Canada.

The effect of both taxes is the same.  Both an export tax by Canada or import tax by the US drives the price of lumber up.  The difference is that Canada could collect billions that would go to help unemployed saw mill workers in B.C.

Former Minister of Trade Pat Carney knows what its like to deal Texas presidents — she had to deal with Bush Sr.  Carney was bluntly told by Bush toadies that “You are going to loose regardless of how fair or legal your case is.”  The current Minister of Trade, Pierre Pettigrew,  blindly believes in NAFTA and due process.

You can’t beat bullies by playing fairly.  The only way to win is to play smarter.  We need to take advantage of our nice image.  Canada should market its goods through Canada’s good brand name, says professor David Wheeler of the Business and Sustainability department of York University.

Canada is universally known as promoting fair play, social and environmental concern, says Wheeler.  Although our reputation has been tarnished by foot-dragging on the part of the feds in signing the Kyoto agreement to reduce greenhouse gases, the Canada brand still has some marketable value.

We should forget about the mass export of our natural resources at discount prices.  Canada needs to tap into the valuable environmental market. For example, the giant retailer Home Depot will only take lumber with environmental credentials.  Also, Europeans are prepared to pay more for paper that has been produced without environmentally harmful chemicals.

Even after years of wrangling with the US and the softwood dispute is finally won by Canada, there is still the perception that our stumpage rates for logs too low.  Americans have to pay more than Canadian sawmills because our logs are taken from publically owned Crown land.

Environmentalists on both sides of the border claim that we are giving our resources away a bargain basement rates.   And maybe they are right.  We need to regain the high road so that “made in Canada” means that we care about our environment.