A snapshot review of 'free' trade, fifteen years later:
How free trade agreements have really affected Canadians
By Pat Doig

Positive results
(at least from the viewpoints of the top income earners)

  • The top 20 per cent of rich Canadians got richer.
  • Corporations can now pay less taxes, are now less hindered by national laws, are freer to move production out of Canada to less regulated, lower-wage-paying countries.
  • They have succeeded in getting the government out of the way of business.
  • CEOs were able to get even richer, with extraordinary access to government.
  • American friends have been able to buy up Canadian companies at unprecedented rates with no interference from annoying Canadian watchdogs.
  • Industry has been successful in attaining their goals of re-structuring, deregulating, privatizing, unimpeded investment and free flow of capital.
  • Our American friends and Canadian companies no longer have to worry about actually producing goods in Canada. They are now able to serve Canada from cheaper-producing countries without the necessity of using Canadian resources.
  • Canadian subsidiaries can now more easily outsource. This actually increases export and import numbers. Their profits have soared.

Endorsements

Listen to these ringing endorsements from right-winged politicians, big business interests and politicians that swing from corporate positions to political power and back to corporate positions:

Peter Mackay says free trade "has been a big winner for our country" and refers to it as the "crown-jewel."

Brian Mulroney: "By and large, it has been good for us and good for our sovereignty."

Financial Post: "The Free Trade Agreement with the U.S. has led to nearly a decade of prosperity and a much more competitive economy."

The Liberal government: "The Government of Canada firmly believes that the FTA and its successor, the NAFTA, has served Canada well."

John Crosbie calls free trade "a brilliant success and which everybody else thinks is a brilliant success, because they are now all in favour of it."

Canadian Federation of Independent Business executive VP Garth Whyte: "Most sectors have done well."

Big business that was behind the push, i.e. Canadian Council of Chief Executives (formerly BCNI), the U.S. Business Roundtable & the Mexican Business Council have declared NAFTA an extraordinary success for all three countries.

Negative results
(from the viewpoint of the bottom 80 per cent of Canadians)

  • The more integrated with the United States Canada has become as a result of the free trade agreements, the less choice we have seen in determining our own fate, national policies, and foreign policy. Canada is less sovereign than pre-FTA.
  • Things, i.e. corporations, now trump the common good for people. For example, Howard Mann, environmental lawyer who participated on the Canadian negotiating team on the NAFTA side agreement, says: "Some measures are deemed by bureaucrats potentially to be in breach of trade law -- the NAFTA and the WTO -- and never go forward."
  • Canada's social programs and safety standards have deteriorated to an extent that lives are more at risk. (One example, the NAFTA environmental side accord watchdog, The Commission for Environmental Cooperation, has pointed out a 400 per cent increase in U.S. hazardous waste coming into Canada, not to mention unprecedented border-crossing pollution.)

    From the start, corporations have lobbied against the social safety net (includes health care) in order to make corporations/multinationals more "competitive" in the free-market economy.

    Immediately after the 1988 election, the then president of the Canadian Manufacturer's Association, in a letter to government, wrote: "The [Free Trade Agreement] makes it more urgent that we tackle the outstanding issues that affect our competitiveness. Because 60 per cent of program spending is tied up in statutory programs, with most of this in social programs, this is the spending area that must be reduced." That is exactly what has happened.
  • Unlike what is portrayed to the Canadian public by the free trade enthusiasts, Canada has actually experienced a net job loss, despite increased exports, because of the nature of those exports and the increase in imports. Companies are also relocating production to lower-wage, lower-standard countries such as China, India, and the Philippines. Full-time jobs in the 1990s accounted for only 18 per cent of the total job growth. The majority of any growth was in self-employment, accompanied by weak growth in self-employed net income. For the 13 pre-FTA years, the unemployment rate averaged 8.99 per cent. For the 14 years post FTA, the unemployment rate average was 9.43 per cent.
  • Canada's standard of living dropped, exactly opposite to what was expected. Canada's real economic performance fell far behind our main trade partner, the U.S., despite the "level playing-field" promise. The Dept. of Foreign Affairs and International Trade recently trumpeted the fact that the Canadian economy has grown 3.8 per cent since NAFTA. What they didn't mention was that it used to average 4.7 per cent in the years before free trade and significantly more than that in earlier decades.

    In the decade before the FTA, in terms of GDP growth, Canada performed better than most, including the G-7 countries, the European Union and the OECD. From 1984-1988 leading up to the FTA we out-performed all the OECD economies. After the FTA decade, we fell behind all of them and had the slowest growth since the 1930s, falling to 80th compared to other countries. In 2001, Canada ranked only 65th.

    Toronto Dominion CEO Charles Baille said in 2001: "Canada had the fourth worst economic growth rate over the past 15 years among the IMF's group of 'advanced' countries."

    Canada's productivity fell far behind the U.S. as the gap widened. During the 90s, Canada was 20th out of 26 OECD countries in productivity growth.
  • Canada's real income level gap with the U.S. widened and slipped relative to several other countries. As corporate taxes were cut, to be "competitive," ordinary Canadians have had to pick up the slack, paying more individually for necessary services such as property taxes, power and utilities, education and health costs, gasoline, retail sales tax -- combined in an era of stagnant and declining income.
  • More than 10,000 Canadian companies fell out of Canadian hands, without a whimper, since getting rid of the Foreign Investment Review Agency, an American demand for free trade talks, resulting in less jobs, less corporate taxes remaining in Canada, less being spent on research and development in Canada.
  • The "export boom" happened mainly in response to a previously strong U.S. economy and, perhaps mostly, to the low Canadian dollar. When we see the dollar rise, we see exports drop.

    To quote one of Canada's biggest exporters (not to mention major receiver of government aid), Bombardier's L. Beaudoin, in 2000: "Our exports did not increase during the first few years." He had earlier also stated: "The more the Canadian dollar dropped, the better things got for Canada. Only then did the benefits of the FTA begin to materialize."

    And from the June 2003 Senate Report of the Standing Senate Committee on Foreign Affairs re trade: " Certainly, almost every witness we heard from said that the value of the dollar was crucial to our exports and that the value of the dollar was responsible for our increase in exports to the U.S."

    This seems to put into question the Mulroney, MacKay and free trade opponents' oft-repeated claim that the FTA and NAFTA are extraordinarily successful, accompanied by the resultant "export boom" offered up as the reason why. Clearly this is misleading.
  • The successful Auto Pact, which was to be protected under the free trade agreements, and was to be "more secure as part of a broader accord," according to Brian Mulroney, was struck down as being in violation of the World Trade Organization. The result? Plant closures in Canada and, according to the CAW, a loss of 7,000 good-paying Canadian autoworker jobs to Mexico.
  • Canada has given up significant control over energy and national environmental regulation. Our precious resources are falling out of Canadian hands, being diverted south with apparent abandon and lack of concern for possible future shortages.
  • U.S. protectionism has increased, as opposed to being halted as was promised. U.S. trade laws trump any trade agreement obligations. From the U.S. trade website: "At the same time, our government was careful to structure the WTO dispute settlement rules to preserve our rights. The findings of a WTO dispute settlement panel cannot force us to change our laws. Only the United States determines exactly how it will respond to the recommendations of a WTO panel, if at all."
  • Twenty per cent of Canadians have gotten richer while 80 per cent are in worse shape than pre-FTA.
  • Canada is near the bottom of the heap in terms of global competitiveness among the G-7 countries.
  • Few foreign investors any longer consider Canada as a prime place to invest. By 2003, Canada was down to 14th globally on the list of countries in which corporations were likely to invest.
  • Most Canadians are now employed in the lower-paying service industry rather than the traditionally better-paying production industry. Between 1992 and 2002, service exports to the U.S. were $34.4 billion, compared to $40.5 billion in imports.
  • The savings of Canadians have plummeted. Never have Canadian citizens been so in debt. The majority of Canadians are living paycheque to paycheque. By 2003, the average Canadian owed 0.1 per cent more than they were earning. The number of people going broke has doubled. Ninety thousand Canadians now go broke yearly. The debt to income ratio has passed 100 per cent. At the same time as being no further ahead financially, living costs have soared and the unemployment safety net has deteriorated to the U.S. levels -- exactly the opposite of what was promised.
  • Canada's share of world trade has fallen. Canada's share of the U.S. market has also fallen, despite the trade promise of privileged access.
  • Dispute panels have not been successful in ending disputes. Harassment has increased, clobbering Canadians and putting citizens out of work as a result. It apparently means nothing even if you win.
  • As a result of the trade agreements, Canada has given the U.S. rights to our water that they didn't have previously, which will, no doubt, come back to haunt us.
  • The assets of the corporations that were behind the push for free trade, have more than doubled while their work force has been significantly cut. CEO salaries have skyrocketed.
  • Tariff cuts have not led to any increase in firm size in manufacturing in Canada as was expected. The "specialization" theory of the free-market economy is a non-starter as firms change countries at ever-increasing rates.

To summarize

Virtually every promise made to Canadians about the expected benefits of free trade has proven to be untrue.

The same small minority of people that have benefited from the free trade agreements and promoted them, despite their promises having proven to be false, are incredibly still telling the public free trade is great for us and we need more of the same.

The Canadian border is slowly being wiped out. Canada is slowly being wiped out.

This is perhaps the biggest con job ever perpetrated on Canadians by a small number of powerful people who seem willing to put individual gratification above the fair treatment of the majority of Canadians and the sovereign protection of their country. With easy access to statistics from even government sources that clearly show "free trade agreements" have not delivered to the majority of Canadians, what other explanation can there be?