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International Socialist Review Issue 17, April-May 2001
Canada and the FTAA
By Chris Hodge
FROM THE first meetings that floated the idea of the Free Trade Area of the Americas (FTAA) in 1994, Canadian business leaders and politicians have been at the forefront, pushing the idea of a bosses' "free trade" zone in the Americas. Powerful sections of Canadian capital and the Liberal government led by Prime Minister Jean Chrétien also support many FTAA proposals that are most harmful to workers' rights, the environment, and social justice.
Government support of this free-trade agenda contradicts Canada's image as the liberal face of North American capitalism. Canada's trade and travel links with Cuba have long angered right-wingers in the United States. And the Canadian government's willingness periodically to criticize U.S. foreign policy gives the appearance of dissension from the "Washington consensus" of free-market medicine for the developing world.
But this is only an image. In fact, the Canadian ruling class has long been a proponent of "free trade" along the lines of the North American Free Trade Agreement (NAFTA) and now the FTAA. Canadian international trade minister Pierre Pettigrew chaired the 1999 meetings that launched the current drive for the FTAA, which will culminate at the April 2001 summit. Pettigrew's role signified not only the Liberal government's commitment to globalization from above, but also the importance of Canada's participation in the FTAA.
As host to the ministerial meeting in Quebec City in April 2001, the Canadian government is making sure that no expressions of democracy will get in the way of the bosses' summit. Canadian authorities have turned the old walled city of Quebec into a twenty-first-century fortress. They have erected a two-mile long, ten-foot high chain-link fence around the FTAA meeting site. Reportedly, 5,000 police armed with state-of-the-art crowd control technology are preparing to keep protesters miles away from the bosses. Activists attempting to cross the U.S.-Canada border to participate in protests can expect all manner of harassment. And law enforcement agencies are planting rumors in the press warning of groups planning "violence," even "terrorism," at the summit. As Canadian antiglobalization author Naomi Klein wrote:
A month before the summit, post-card perfect Quebec City has been successfully transformed into a menacing place, inhospitable to regular people with concerns about corporate-driven trade and economic deregulation. Protesting, rather than being a healthy part of democracy, seems like an extreme and dangerous sport, suitable only for hard-core activists, with bizarre accessories and doctoral degrees in rock climbing.1
Trade is instrumental
At all levels of power, Canadian politicians and business leaders have played key roles in the shape of the proposed FTAA. With virtually no public debate, corporate bosses and government officials have been negotiating for years to build the FTAA, and Canada has been instrumental to those discussions.
A glance at Minister Pettigrew's remarks on the subject over the past couple of years gives an idea why. Trade is very important to Canadian capital, and the opportunity to open the hemisphere further to Canadian exports has Canadian businesses salivating. Pettigrew put it thus in an address in April 2000 to the Alliance of Manufacturers and Exporters:
In order to facilitate the entry of our goods and services into key markets, the Government of Canada has worked hard, signing free trade agreements with the United States and Mexico, Israel and Chile.
And, we have been on the front lines of opening up trade around the world, both through our involvement in global bodies, such as the World Trade Organization (WTO) and through regional trade initiatives such as the Free Trade Area of the Americas (FTAA).
This emphasis on opening up markets is understandable, because as any businessperson knows, you can't sell if you can't get in.
So our priorities have been clear: obtain access for Canadian companies that is secure; ensure rules that are fair; and create a playing field that is level. 2
Of course, the real agenda of Canadian employers is to ratchet down the living standards of Canadian workers nearer to the abject poverty of others in the hemisphere. Canada's economy is heavily dependent on trade, but the issue with FTAA is not trade per se, but, rather, trade for whose benefit?
Canada's gross national product (GNP) of more than $600 billion (U.S.) placed it as the world's ninth-largest economy. In the proposed FTAA, Canada would be the third-largest economy behind the U.S. and Brazil, which is the world's eighth-largest economy. Eleven Canadian firms made Fortune magazine's Global 500 list of the largest corporations in the world in 2000. Telecommunications giant Nortel Networks, food behemoth George Weston (owner of the Loblaw's supermarket chain in Canada and the President's Choice food product brand), and the liquor and entertainment transnational Seagram are the most well known in the United States. Nortel is the 194th-largest corporation in the world in terms of sales, according to Fortune. Four of the eleven Canadian firms on the list are banks, with combined assets of $355 billion.3
Far from a small or peripheral economy, Canada is one of the big players, and it isn't shy about throwing its weight around. Canada is one of the Quad powers (along with Japan, the EU, and the U.S.) that essentially call the shots in the World Trade Organization (WTO). Earlier this year, Canada temporarily blocked the import of Brazilian beef, ostensibly because of threats of mad cow disease. In reality, it was a cheap pressure tactic on Brazil, which had earlier refused to open its state-run aerospace firm to competition from the likes of Canada's Bombadier Aerospace.
Government and business in Canada have, over the past 20 years, colluded in a vicious attack on workers' living standards and the gains made by ordinary people over a century of struggle. The Chrétien government supports the FTAA because its passage will further aid the aim of Canadian business to pillage the rest of the world and lessen workers' living standards and rights at home, a process that has been underway already for some time, as Maude Barlow explains:.
Canada has experienced the highest rise in child poverty in the industrialized world in the last decade--the same years in which the number of millionaires has tripled and corporate salaries have grown at an average of about 15 percent a year. In the very free trade years that corporate salaries skyrocketed, workers' wages rose just 2 percent, less than the rate of inflation.
The cuts to social programs and Employment Insurance (only one third of unemployed workers now receive EI benefits they have paid for, compared to almost 80 percent in 1989) have been so deep that Standard and Poor says that the myth of a "kinder Canada" must be put to rest. For the first time in 1999, says the New York-based ratings institute, Canada spent less on its elderly and unemployed than did the United States.4
In many ways, the FTAA attempts to extend the terms of NAFTA to most of the hemisphere. NAFTA has been in force in Canada, the U.S., and Mexico for more than seven years, and its consequences have driven many Canadians to oppose the FTAA. NAFTA contains provisions, in the infamous Chapter 11, that allow corporations to sue foreign governments if a regulation or law in the foreign country is an impediment to the corporation's profits. Examples abound of the dire consequences of this provision for workers' rights, environmental safeguards, and human rights.
One well-known case involves a 1998 lawsuit by the U.S.-based Ethyl Corporation, which sued Canada for $250 million after Canada banned the gasoline additive methylcyclopentadienyl manganese tricarbonyl (MMT) because the additive posed health risks and clogged vehicles' catalytic converters. Ethyl claimed the ban violated NAFTA because it "expropriated" future profits and damaged Ethyl's reputation.
After learning that the NAFTA tribunal was likely to rule against its position, the Canadian government revoked the ban, paid Ethyl $13 million, and issued a public statement declaring there was no evidence that MMT posed health or environmental risks! This even though MMT is banned in the United States!
U.S. corporations haven't been the only beneficiaries of NAFTA. In July 1999, the Canadian corporation Methanex sued the U.S. government after California governor Gray Davis mandated the removal by December 31, 2002, of methyl tertiary-butyl ether from gasoline sold in the state.
So, Canadian corporations, like their U.S. counterparts, embrace these trade agreements because free trade has been a bonanza. Since NAFTA went into effect, Canadian exports have nearly doubled, from $141 billion in 1993 to $277 billion (U.S. current dollars). Canadian firms today earn more than $37 billion more on exports than they spend on imports. Canadian business estimates that one in five Canadian jobs depends on trade.
It should come as no surprise, then, that Canadian business pushes the free-trade religion every bit as hard as U.S. business. On the eve of the ill-fated 1999 WTO meeting in Seattle, Perrin Beatty, president of Canadian Manufacturers and Exporters (CME), made clear that he had no truck with critics of NAFTA, the WTO, and free trade:
Without the dramatic increase in exports since the Free Trade agreement was signed a decade ago, we would be talking today about how to make deeper cuts in our social programs instead of debating how to distribute the surplus. That's what makes the talk about liberalized trade as a threat to our social safety network so ironic.5
Meanwhile, CME's ideas on "distributing the surplus" include tax cuts for the rich, corporate welfare, and U.S.-style "reform" of government-run health care and education systems.
Of course, another side to the debate about the FTAA exists within Canada. Ranged against the slavishly pro-business Liberal government and the corporations is a large and growing movement of unions, environmental groups, social justice groups, and tens of thousands of activists.
Widespread opposition to the deal in Canada is apparent. A recent poll found that 84 percent of respondents who were aware of genetically engineered (GE) foods "strongly" agreed and an additional 10 percent "somewhat" agreed that the Canadian government should be allowed to prevent the import of GE foods.6 The FTAA's passage would prevent any national government from exercising such power.
The Canadian nongovernmental organizations Common Frontiers and Reseau Quebecois sur l'Integration Continentale (RQIC), which includes several large union backers both in English-speaking Canada and in Quebec, have called an alternative People's Summit and a demonstration on April 21. Also, groups such as the Council of Canadians, which has a membership of 100,000, are building for the demonstration and publishing excellent information about the impact of FTAA.
Many organizations in Canada have taken up the fight against the FTAA. Importantly, Canadian unions are at the forefront of this battle. The large Canadian Auto Workers union (CAW) is encouraging its locals to attend the Quebec demonstration and organizing transportation for people who want to go. The Communications, Energy and Paperworkers union is also building for the demonstration. The Canadian Labour Congress, similar to the AFL-CIO in the U.S., has endorsed the April 21 demonstration.
Internationalism and class politics must be at the heart of effective opposition to bosses' agreements like the FTAA. The movement against corporate globalization has created the possibility of building working-class internationalism that fights for elevating workers' living standards to the highest level instead of the race to the bottom that the bosses and politicians are trying to impose via the FTAA.
In Canada, the opposition to FTAA is better organized than in the U.S., primarily because the labor movement is larger and more active. Many Canadian unions have fought against free-trade agreements since the 1989 Canada-U.S. pact. In past free-trade fights, nationalism that talks about defending "Canadian sovereignty" or "Canada" against U.S.-led corporate domination has weakened solidarity across borders.
But a decade of Canadian business expansion led by free trade has made the need for international solidarity much clearer. In 1989, the Liberals fought the national election as opponents of the FTAA. Now, they are among free trade's biggest backers. Until its recent announcement of opposition to the FTAA, the New Democratic Party, Canada's labor party, had even seemed to make its peace with NAFTA. With Canadian business so obviously thriving, and with many Canadian politicians becoming converts to free trade, it was difficult to argue that the U.S. was foisting free trade on Canada anymore.
Elements of Nationalism
Canadian workers enjoy benefits that American workers lack, such as socialized health care and better union rights. Sections of the Canadian labor movement have at times argued that the problem with free trade is foreign corporations, essentially letting the Canadian bosses off the hook. But as the Canadian employers and right-wing politicians have attacked workers' rights with a vengeance over the last 20 years, the arguments have shifted.
There are still elements of Canadian nationalism. For instance, it is not uncommon in anti-FTAA materials produced by Canadian organizations, such as the Council of Canadians, to avoid mentioning suits brought by Canadian corporations against U.S. or Mexican governments under NAFTA Chapter 11. This is a common feature of much anti-FTAA material published by Canadian groups. However, the overall theme of the progressive opposition to the FTAA is international solidarity and the importance of a coordinated fight throughout the Americas against the "exploitation of Latin America's natural resources by Canadian and U.S. corporations."7 Building international solidarity has superceded narrow Canadian nationalism as the driving politics in the fight against the FTAA. The reality of NAFTA, which has been used to attack the living standards and working conditions of workers in Canada and the U.S., has helped to drive home the point that it isn't Canadians vs. Americans (or Mexicans), but rather workers in all countries vs. bosses in all countries.
A CAW discussion paper on the FTAA makes the case very well:
What is ultimately holding back Canadian governments from collecting fair taxes, and implementing good social security, and implementing good labor laws, and protecting the environment, and eliminating poverty, and ensuring the safety of our drinking water, is not globalization. It is, rather, the vested interest that the rich and powerful--including rich and powerful Canadians--have in the continuation of a social and economic order marked by vast inequality, permanent insecurity for workers, and largely unchecked power for corporations and private investors.8
This is clearly the direction that the movement needs to go. The FTAA represents the bosses' attempt to build a hemispheric zone of low wages, privatization, and rampant corporate power. It must be challenged not only in the streets of Quebec, but by ongoing movements of workers in every country in the hemisphere to demand a zone of social justice and workers' rights.
1 Naomi Klein, "Keeping us out before we get there," Toronto Globe and Mail, March 21, 2001.
2 Pierre Pettigrew, "Notes for an Address by the Honorable Pierre S. Pettigrew, Minister for International Trade, to the Alliance of Manufacturers and Exporters, Quebec Chapter," April 14, 2000.
3 Data on Canadian corporations taken from Fortune magazine's "Global 500: The world's largest corporations," July 24, 2000 (available on-line at www.fortune.com).
4 Maude Barlow, "The Free Trade Area of the Americas and the threat to social programs, environmental sustainability and social justice in Canada and the Americas," The Council of Canadians, January 18, 2001 (available on-line at www.canadians.org).
5 Perrin Beatty, president of Canadian Manufacturers and Exporters, "International trade essential to Canada's survival" (speech made to the Hamilton and Burlington Chambers of Commerce, Hamilton, Canada, November 23, 1999).
6 Environics Research Group poll, commissioned by the Council of Canadians, conducted between December 22, 1999, and January 16, 2000 (available on-line at www.canadians.org).
7 Maude Barlow, "The Free Trade Area of the Americas."
8 Canadian Auto Workers, "What's at stake for Canada, and what we can do about it" (discussion paper on Globalization and the WTO presented at the Joint CAW/Quebec Council meeting, Toronto, Canada, December 2000; available on-line at www.caw.ca).