Free trade with US a boom for elites, a bust for most: report
Canadian Press | 27 December 2007
Free trade with U.S. a boom for elites, a bust for most: report
OTTAWA — Canada’s 20-year-old free trade agreement with the United States has not lived up to its billing and the promises of its proponents, says a new report that seeks to debunk the conventional wisdom that the deal was the best thing since sliced bread for Canada.
The left-wing think tank, the Canadian Centre for Policy Alternatives, argues in a report to be released Friday that while the bilateral trade deal, and its successor the North American Free Trade Agreement, has boosted corporate bottom lines, for most Canadians it has been a bust.
"It’s definitely not the official story is it?" said Bruce Campbell, the group’s executive director. "The essential promise of prosperity and prosperity widely shared has not been met and this is an inconvenient fact for the powers that be."
Campbell, who authored the report, does not dispute that trade between Canada and the U.S. has exploded since the deal was signed on Jan. 2, 1988. Nor does he dispute that Canada’s economy has expanded and that many Canadians are much better off today than they were 20 years ago.
But he says that only the very top income levels - about 10 per cent - have experienced significant growth, whereas for the vast majority salaries have been mostly stagnant.
And while Canada’s top companies have prospered in the past 20 years, they have also mostly shrunk their workforce. This means there are fewer workers in the employ of companies the free trade deal was meant to help.
The report examines what happened to 41 of the top 150 corporations that are members of the Canadian Council of Chief Executives, which under its previous name, the Business Council on National Issues, was the leading private-sector voice in favour the deal.
To arrive at its sample group, the think tank excluded firms that have gone out of existence or were taken over in the intervening years, lapsed members, and banks and insurance companies, since it says the trade agreement dealt mostly with the goods sector of the economy.
The findings were that although almost all saw revenues rise, only 13 increased their workforce, by a combined total of 88,580, led by such corporate giants as Bombardier and Alcan.
The other 28 companies reduced payrolls by a combined total of 205,062 in the 20 years, despite recording revenue increases totalling $98 billion. Even the big-three auto makers saw a revenue hike of 70 per cent in the 20 years, while shedding half the workforce.
Many new jobs were created to absorb losses in manufacturing, the report states, but not in the traded goods sector that the trade deal was meant to boost.
About one third of the new jobs created in the past 20 years came in the services sector at lower average wages than those lost, the report says.
Campbell concedes that not all the job losses and increased wage disparity can be laid at the doorstep of free trade. Rather, he argues that the FTA with the U.S. was a "watershed" agreement that helped lead Canada toward a neo-liberal agenda that decreased government’s ability to intervene in the marketplace and spread wealth more evenly.
"Both directly and indirectly, the FTA enhanced the power of capital relative to that of workers and communities," he said. "It shrank the boundaries of allowable public sector economic activity and constrained the power of governments to regulate markets and empower workers."
Officials with the Council of Chief Executives could not be reached for comment.
The analysis counters most of the arguments put forward by governments, business groups and economists, who have argued that in the main the free trade deal has been a win-win for both Canada and the U.S.
"I haven’t seen the report, but generally, you don’t measure economic well-being at the micro level of specific companies but at the aggregate, such as GDP growth and GDP per capita," said Alexander Moens, a senior fellow at the Fraser Institute, a Vancouver-based right-wing think-tank.
"In the last six or seven years, everyone has realized that the aggregate economic numbers on free trade are indisputable."
In October, former prime minister Brian Mulroney told a Montreal audience that the Canada-U.S. deal his government negotiated "created millions of jobs, raised our standard of living, and helped Canada balance our books and pay down the national debt."
And Trade Minister David Emerson has trumpeted the benefits of free trade while seeking negotiate more deals, particularly in South America and South Korea. Recently, he has complained that security concerns following 9/11 are undermining the benefits of NAFTA.
Campbell said it was impossible to predict what would have happened if Canada had not signed the FTA, stating instead that based on the promises of more jobs and more prosperity for most, the deal has fallen short.
