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.”

More driver surveillance, less customer satisfaction

Why didn’t the delivery guy just hand me my parcel instead of leaving a note on my door saying it couldn’t be delivered and I would have to pick it up? I was home; it would have been so easy. It was so annoying to think that the carrier (who I won’t name but wasn’t Canada Post) was right there, at my door, and took my package away.

Man having a parcel delivered

Ester Kaplan had the same problem and decided to get to the bottom of it. “I began to notice something frustrating about my UPS deliveries,” she explains is Harper’s magazine, “They never arrived. When I wasn’t home, I’d leave a note asking for packages to be left at the laundromat on the corner. I’d get an attempted-delivery note instead. The same thing sometimes happened even when I was home—I’d find an attempted-delivery note, but no one had rung my doorbell.”

UPS uses a monitoring system called telematics which transmits data from the truck and handheld devices. More than 200 sensors track everything from backup speeds to stop times to seat-belt use. When a driver scans a package for delivery, the system records the time and location; it records when a customer signs for the package. Most of this information flows back to a supervisor in real time.

I didn’t realize there was so much driver surveillance. One good thing about parcel delivery, I thought, is that at least someone isn’t always looking over your shoulder. But with this level of monitoring, someone is. Worse, they only see part of the picture, not whether a bridge under repair or if the roads are icy.

At first, telematics was only used to monitor safe driving practices such a seat belt use. Now it’s all about fuel-savings, reductions in maintenance, and efficiencies in labour.

With more shoppers buying online, suppliers like Amazon are competing with each other to get their merchandise to the door as soon as possible. That puts pressure on carriers to deliver more stuff with the same staff.

Kaplan followed one driver around. He told her that supervisors would announce, “Hey, your stop count is going up by ten.” Daily UPS package deliveries grew by 1.4 million between 2009 and 2013 in the U.S., while employees shrank by 22,000.

Sure, telematics is working but at what human cost? Drivers are putting in long days and getting injured. They know how to pick packages safely but, in a rush, they end up with back and shoulder injuries.

Drivers leave stickers on doors without delivering parcels because it cuts time. Telematics, clever as it might be, can’t determine whether a customer is actually home or not.

Until drones start delivering parcels (I’m not holding my breath), it’s only going to get worse. I’m going to find online retailers that use parcel companies that don’t run their drivers ragged even if I have to pay a bit more.

Meanwhile, you beleaguered carriers, don’t deliver my parcel. I’ll understand. Slap the sticker on door and run if it makes your life easier. Eventually, online marketers will figure out that customer service is worth treating you right.

Dreams for B.C.’s LNG projects dim

Even when times were relatively good, Premier Clark’s dreams of making B.C. a global energy exporter were slim. Before the collapse of oil prices, when the Asian market for liquefied natural gas was strong, B.C. was a latecomer. Others, such as Australia, were years ahead in securing markets.

lng

Now the promise of nineteen LNG projects is fading faster than last New Year’s resolutions. Of the nineteen projects, ten have been approved by the National Energy Board for export licenses. Of the ten approved, the B.C. government is hopeful that three will be operating by 2020.

Of the three, some could be in jeopardy. The Globe and Mail recently reported the takeover of BG Group by Shell. ‘That move added to the uncertainty over B.C.’s fledgling LNG industry (April 8, 2015).”

Even before the takeover, BG’s Prince Rupert project was slowing. BG said an investment decision not in the cards until 2017 at the earliest.

And Shell’s attention is straying elsewhere. “Shell said on Wednesday the BG deal would give it enhanced prospects for new projects, particularly in Australia and Brazil,” warned the Globe and Mail.

Hopes were high that another LNG project, Pacific NorthWest LNG, would proceed but Moody’s Investors Service Inc. is throwing cold water on that too. “Moody’s said Pacific NorthWest LNG is the best bet to forge ahead, but cautioned that ‘Petronas appears to be leaning toward deferring this project, as lower oil prices have reduced its cash flow and it directs more investments domestically to Malaysia.’”

Moody’s issued a stark outlook for all of the fledgling North American LNG industry, not just B.C., arguing it doesn’t make economic sense to invest billions when Asian buyers are slowing down their LNG orders.

The B.C. government tried to woo it’s LNG dance partners even as they were getting cold feet. At first the government was going to tax the projects at 7 per cent, but as partners shied away the government cut it to 3 1/2 per cent. Even at seven per cent, Clark’s promise of lower taxes, better public services, and a $100 billion Prosperity Fund was in doubt says the Canadian Centre for Policy Alternatives.

“These claims were unrealistic at the proposed 7 per cent rate from February’s budget. At the lower rate they will be a pittance. First off, companies are able to deduct the full capital costs of their LNG plant investment before they pay the full (now 3.5 per cent) tax.”

That means they would be tax-free for six to twelve years depending on the market price of LNG. Even after paying off capital costs, the returns would be miniscule says CCPA economist Marc Lee. Sure, taxes and royalties together would amount to something. “But compare that combined $300–900 million to BC’s 2014 budget of $44 billion. Drop, meet bucket.”

And that calculation was made on the assumption of five LNG plants. Yes, B.C. has a balanced budget this year but at the cost of reduced services such as the cuts of 8,500 hours to bus service in Kamloops and $29 million dollars collectively to school districts who have already cut to the bone.

Where are the jobs in technology?

Where are the jobs? Not in technology. Not in manufacturing despite hopes that the declining Canadian dollar would stimulate growth. While the economy continues to grow, unemployment remains stubbornly high. And the jobs available are of the lowest quality in 25 years according to a recent report by CIBC.

whatsapp

The bloom went off technology decades ago. In the 1980s and 1990s, investment in computer and information-processing equipment surged, stimulating a wide range of entirely new computer-related occupations.

Canada was the beneficiary of technology in the field of communications. However, since 2000, Canada’s tech giants Nortel and Blackberry have shed thousands of jobs and digital jobs have not taken their place.

Carl Benedikt Frey, researcher at the University of Oxford, describes how the glow has gone from the surge that pulled economies through the doldrums of the 1980s and 1990s. “The problem is that most industries formed since 2000—electronic auctions, internet news publishers, social-networking sites, and video- and audio-streaming services, all of which appeared in official industry classifications for the first time in 2010 —employ far fewer people than earlier computer-based industries. Facebook employed only 8,348 as of last September.”

The reason is simple. Digital businesses require little capital to get started. The average cost of developing an app is only $6,453. The popular Instant-messaging software firm WhatsApp started with only $250,000, and employed just 55 workers when Facebook announced it was buying the company for $19 billion.

Not long ago a new billion-dollar company would have created thousands of jobs. In 2010 only about 0.5 percent of the U.S. workforce was employed in industries that did not exist a decade earlier.

The low-job digital economy is growing; replacing jobs that employed many more. When the Kamloops Daily News closed, it employed about 34 full-time staff and 12 contracted delivery drivers. Now those unemployed workers are struggling to find jobs in digital media.

The loss of jobs is predictable in the absence of new technology. Eighty years ago, economist Alvin Hansen forecast the causes of job loss. During the Great Depression, Hansen suggested that as population growth slows and the rate of new technologies declines, investment will fall and lead to slower economic growth and fewer new jobs.

Hansen wrote that “when a revolutionary new industry … reaches maturity and ceases to grow, as all industries finally must, the whole economy must experience a profound stagnation …. And when giant new industries have spent their force, it may take a long time before something else of equal magnitude emerges.”

On the bright side, digital businesses are easy to start because of the low-cost entry costs. But affordable technical education is a key. Progressive governments can help, not only by keeping tuition low, but by supporting jobs in emerging technologies: solar photovoltaic installers, wind energy engineers, biofuels production managers and transportation planners.

Closing the gap between rich and poor is vital. “The challenge for economic policy is to create an environment that rewards and encourages more entrepreneurial risk taking. A basic guaranteed income, for instance, would help by capping the downside to entrepreneurial failure while boosting spending and combating inequality.” says Frey.

 

B.C.’s resource development will not generate jobs

Resource development develops new jobs but not more jobs says Professor Marvin Shaffer. New pipelines and LNG processing will not reduce unemployment despite the claims of politicians. “The economic impact analysis is the one that politicians and media latch onto –the ones with the big, though fundamentally misleading numbers.”

No-Jobs-300x300

Those misleading numbers are impressive: labour income of $69.9 billion for Northern Gateway alone. But that assumes that the new jobs are filled by the unemployed. In reality, most of the jobs would be filled from people already employed in B.C., Canada, and globally. Considering that, the net labour income rise is only 0.06 per cent of the amount trumpeted.

These are not Professor Shaffer’s opinions. Rather, the figures come from a report commissioned by the builders of the proposed Northern Gateway pipeline, Enbridge, as presented to the National Energy Board for review.

The authors of the report, Wright Mansell, throw cold water on other so-called benefits. Politicians loudly proclaim increases of government revenues of $98 billion and GDP $311.5 billion. “Those are gross impacts,” warns Shaffer in a Canadian Centre for Policy Alternatives newsletter.

To get true picture, the benefits have to be weighed against the costs, including losses to businesses as a consequence of the pipeline or resource development; businesses such as railways which now carry a lot of oil.

The Wright Mansell report calculates the true net gains, namely gross benefits minus costs. The net benefits of Northern Gateway end up going to oil producers. The biggest winners are the producers themselves with $17.8 billion; and the governments of Alberta and the feds with $9.4 billion.

And even those net benefits depend on the vagaries of world markets for fossil fuels, exchange rates on the Canadian dollar, and interest rates on money borrowed to build the projects.

Other factors are not included in the report, says Professor Shaffer. “One suspects that the federal government would have to redirect a large share of its gain to Green House Gas offsets, marine safety and other measures for that case.”

Then, there is the matter of alternatives to the oil bottleneck out of Alberta; other ways to potentially increase the value of the resource such as refining the bitumen in Canada, and competing projects and strategies such as the existing Kinder Morgan pipeline and the Canada East project.

The massive windfall from LNG claimed by the B.C. government – a $100 billion Prosperity Fund – looks more like wind than windfall. No such fund can develop when Premier Clark promises tax cuts and increases to public services. None of this consistent with a Norway-styled “prosperity fund.”

To add insult to injury, not only does resource development fail to create jobs for the unemployed, fail to increase B.C.’s tax revenue, fail to produce a rainy-day fund, it is an environmental disaster waiting to happen.

I have to agree with Premier Clark’s ambitious plans to train unskilled workers but instead of training them for the black hole of resource extraction, prepare them for technologies of green renewable energy — not a dying fossil fuel industry.

A Tale of Two Unions

These times should be ripe for the expansion of unions. Low-paid workers are angry. The middle class sees their way of life slipping away. Yet union growth is elusive, in part, because of traditional structure says Anil Verma, labour relations expert at the University of Toronto. “Part of the inability of unions to reach out to new members relates to their own structure,” he says. “If the union movement was starting out today, it would look totally different.”

union

Unions lift all wages, even non-union workers, according to urbanist Richard Florida. His research shows that low wages are greater in regions where unions are weak.

Canadians regard unions as bad medicine: good but hard to swallow. An Environics poll conducted in 2011 found that a majority of Canadians believe that unions have too much power. But then, even more believe they are necessary. “An even stronger majority also believe that unions are important and effective institutions, in terms of protecting employees’ rights in the workplace and improving working conditions for all Canadians,” reports John Lorinc in his article for The Walrus, State of the Unions.

Regardless of conflicting opinions, millions of Canadian workers –one-third of those surveyed– would love to join a union. Unions have been unable to tap into this longing.

The other face of that love/hate relationship sees unions as self-serving. Four out of five Canadians believe that unions are only concerned about their member’s welfare and care little about the poor and disadvantaged.

This is hardly news to unions but it became painfully obvious when two unions recently merged. The Canadian Auto Workers, and the Communications, Energy, and Paperworkers Union of Canada combined to form Unifor last year. In preparation for this union of unions, they hired consultants to take the pulse of the nation.

The consultants found that not just the general public, but many union members thought about their unions only when money came up during contract talks. Contrary to hard-boiled union rhetoric they spent little time dwelling on the larger question of working conditions. Unifor faced “a branding problem par excellence,” which could threaten its ability to organize and influence public policy said the consultants.

While Unifor struggles to connect with its membership and community, another union putting is returning to roots. In contrast to the established blue-collar and civil service unions across Canada, a relatively small union, UNITE HERE, is mobilizing its workforce reminiscent of union street activists of a century ago.

The union is a merger of the Union of Needletrades, Industrial, and Textile Employees (UNITE) and the Hotel Employees and Restaurant Employees International Union (HERE). They are targeting workers in the service and tourism sectors. UNITE HERE aims to improve the working conditions of immigrants, women, and visible minorities who toil in hotels and casinos.

And they’re taking it to the streets. Members organize, stage demonstrations, and confront unpleasant managers. They keep things stirred up and in the face of exploitive employers. Compared to the conventional grievance process, which attempts to resolve things in civil manner, UNITE HERE keeps workers engaged daily in workplace injustices.