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.

From http://stopbadtradedeals.org/

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.

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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.

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.

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.

Zombie Canadian mining company stalks Costa Rica

The vital statistics of Infinito Gold, based in Calgary, don’t look good. It has no functioning mines and a negative working capital of $154 million. Monitor magazine assesses their condition bluntly: “Infinito should be six feet under.”

Yet, it staggers on. The only thing keeping the zombie mining company going in Costa Rica is cash infusions from Calgary billionaire Ronald Mannix. He refuses to let it die.

If you’ve been to Costa Rica, you know how important eco-friendly tourism is to the small Central American country. Infinito seems to have been blind to that culture when they bought land on the border of Nicaragua to build an open-pit mine fifteen years ago.

When I visited the area near the border of Nicaragua in 2012, Costa Rican pride in their pristine rivers and forests was evident.  Back in June 2002, on the occasion of World Environment Day, the Costa Rican president of the time, Abel Pacheco, banned open-pit mining completely.

But not even banishment could stop the mining company from lurching forward. In an apparent bribe, Mannix flew to Costa Rica in 2008 to offer $200,000 to a Foundation named after the new president Oscar Arias Sánchez. Suspiciously, shortly after the trip, the president decreed that the open-pit mining ban was lifted.

Costa Ricans were incensed and through a citizen court secured a moratorium on Infinito’s activities; regrettably, not before the company had done $10 million in damage to the proposed mining site.

Costa Rica’s attorney general wanted to get to the bottom of Sánchez’s motives for lifting the ban. While that move would be virtually impossible in Canada under the iron fist of the PM, Costa Rica’s attorney general boldly investigated possible wrongdoing of his own government.

The key was whether the $200,000 offered by Mannix had actually been transferred to the president’s foundation. A request was made of Canada’s Department of Justice to provide a definitive answer. At first, Canada ignored the request, and then stonewalled by demanding additional information from Costa Rica; disclosure of which would have breached the country’s privacy laws.

In the absence of cooperation from Canada, Costa Rica’s attorney general recently stated the case against Sánchez would have to be closed for lack of corroborating evidence.

When apparent bribery doesn’t work, Mannix has yet another scheme to jolt the lifeless body of Infinito. It’s called investor rights. The concept was first embedded in NAFTA, soon to be entrenched in the TPP.  Rick Arnold explains the twisted strategy.

“Time to call it quits? Nope. Infinito Gold’s main backer, the unremitting Mannix, decided to up the ante by gambling on an investor–state lawsuit against Costa Rica, to be heard outside the courts by a private, investor-friendly World Bank tribunal. The legal costs would be expensive, but a win could earn the empty shell of a company megabucks in compensation for not building its mine.”

Even if Mannix wins, the shattered hulk of Infinito will crumple. It’s a lose-lose situation. Costa Rica will lose $94 million for rejecting a mine that was never wanted, promoted by a vindictive Canadian, conducted by a tribunal in secret.