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.”

Trump explained

Seen through the lens of politics, the rise of Donald Trump as candidate for president of the United States doesn’t make sense. It’s more comprehensible when seen as a class struggle.

U.S. Republican presidential candidate Donald Trump speaks at the Family Leadership Summit in Ames, Iowa, United States, July 18, 2015. REUTERS/Jim Young   - RTX1KTWT

Contrary to popular opinion, Trump support is strong among liberal voters. A poll by a ABC/Washington Post poll found that 17 per cent of the most conservative voters supported Trump; for somewhat conservative voters it was 24 per cent; and among moderate-to-liberal voters, 27 per cent supported him reports Doug Saunders in the Globe and Mail.

The collateral damage of this class struggle is the Republican Party which faces an existential problem. Republicans lost the last election because of lack of support from visible minorities. Trump’s bombast is driving even more of them away. It’s a losing strategy for Republicans which threatens to hollow out the party.

Trump supporters represent an inarticulate howl from a particular underclass called, for lack of a better term, the Disaffected.

The Pew Research Center defines the Disaffected as mostly male, overwhelmingly white, and especially lacking in education. Bewilderingly, they are lukewarm to the very welfare that they depend on.

“Disaffecteds are only moderate supporters of government welfare and assistance to the poor. They strongly oppose immigration as well as regulatory and environmental policies on the grounds that government is ineffective and such measures cost jobs.” Eighty per cent of them said immigrants “are a burden on our country” nearly double the rate of the general American public.

The Disaffected class go with the political flow. In 2004 they tended to vote for George Bush.  By 2005 they were mostly independent. In 2008 and 2012 they voted for Barack Obama. Now they mostly belong to Donald Trump.

With many liberals among the Disaffected, you would think that the Democratic Party would be in trouble as well. But many support the overtly socialist candidate Bernie Sanders. At the heart of this class uprising seeks retribution for perceived injustice.

More than ideology, what they recognize is an outraged voice. The pack recognizes the baying of kin.

The Disaffected are against integration because it failed them. From the rust belts of America, they peer out at better educated, more entrepreneurial, often Muslim immigrants getting what they feel is rightfully theirs. Saunders elaborates:

“It is perhaps easiest to understand the Disaffecteds as a case of failed integration. As the children and grandchildren of the old postwar U.S. white industrial working class, they have followed a trajectory, and fallen into ways of thinking, that are strikingly similar to those of some unsuccessful low-income immigrant groups in Europe: a low educational-attainment rate, lack of entrepreneurial success, reverse social mobility across generations, a tendency to self-segregate into ethnic enclaves and self-policed neighbourhoods, and, now, an increasing tendency to vote for extremist politics.”

When America was great, in the minds of the Disaffected, they could leave high school and get a well-paying factory job for life. It was no accident that destroyed their life style: it was by design.

American politicians since President Reagan have purposely abandoned U.S. factory jobs. Under the sway of libertarians (Stephen Harper was a disciple), the jobs of the Disaffected were sent overseas.

America is now experiencing the blowback from the betrayal of an underclass.