Declines in the flow of imports and exports punctuated the COVID-19 economic crisis for many trade-dependent countries, including Canada. Lingering trade disputes, including in softwood lumber, made matters worse.
Eighteen months into the pandemic product shortages are still all around us - from cars and consumer goods, to jet fuel and vaccines. As a result, factories remain closed, prices are rising, and life-saving medicines are inaccessible to millions around the world. Part of this is an over-reliance on global supply chains based on “free trade” that are designed to lower costs and wages while boosting profits.
Unfortunately, government is now contemplating a new slate of potentially harmful trade agreements. How Canada approaches these talks will have far-reaching consequences.
Trade is a vital economic activity for Canada. However, trade rules can and must be fairer, more inclusive and designed to meet the economic needs of all people and the environment. Canada can take steps to lessen its dependence on trade, encouraging economic self-sufficiency and resilience in key areas. Building a new fair trade model starts by breaking down elements of the old, in the spirit of mutual benefit and international solidarity between trade partners. Where past conservative-minded governments tried to stymy reform and reject workers’ concerns, recent events (including within the recently negotiated Canada-U.S.-Mexico Agreement) show that change is possible.
Canada needs a coherent trade policy that aligns with the goals of rebuilding industrial capacity and re-situating the nation as a leader in international development and global solidarity.
Canada’s next federal government must:
- Establish a permanent, civil society trade advisory committee to assess the outcomes of trade policy and inform future trade priorities;
- Drop demands for special Investor-State Dispute Settlement mechanisms in ongoing trade talks, and remove such provisions in existing treaties;
- Increase annual official development assistance (ODA) funding to the global target of 0.7% of Gross National Income, to help meet the 2030 U.N. Social Development Goals;
- Develop a trade adjustment assistance program that enhances labour market supports for trade-impacted workers;
- Make strict and enforceable labour and environmental provisions a precondition of trade treaties;
- Resolve the long-standing U.S. softwood lumber dispute, and protect workers;
- Undertake a comprehensive equity-based assessment of trade policy and its effect on women, racialized workers, people with disabilities and Indigenous people.
- Canada’s goods exports (resources and manufactured goods) fell by 12% between 2019 and 2020 – higher than the global average.
- Globally, three firms dominate the computer chip industry (80% of industry revenue) – all of based in the Asia-Pacific – leading Europe and U.S. to push for greater domestic capacity.
- Canada’s latest softwood lumber trade dispute with the U.S. has lasted more than four years, and counting.
- Canada spent nearly $400 million in penalties and legal fees resulting from NAFTA Chapter 11 investor lawsuits.
- In 2019, Canada spent just 0.27% of Gross National Income on international development assistance, far below the 0.7% target, a shortfall of about $7.5 billion.
The COVID-19 pandemic shone a light on Canada’s economic vulnerabilities during a crisis.
Shortages of personal protection equipment (PPE), especially for vulnerable workers, demonstrated Canada’s foolhardy over-reliance on foreign sourcing of strategic goods. Car factories, lacking sufficient supplies of needed computer chips (manufactured mainly in Asia), shut down assembly operations, issuing extended layoff notices and stalling the auto sector’s anticipated rebound. Persistent shortages in inputs like fuel, plastics, food ingredients and building materials continue to stifle economic recovery.
Despite decades of union-led campaigns on the dangers of unrestricted trade, excessive offshoring, declines in production capacity and risky Just-in-Time inventory strategies, governments failed to listen. Corporations proceeded to leverage trade rules to consolidate their operations and globalize supply chains to cut costs and grow profits. This unrestricted approach to trade left workers and local economies vulnerable and worse off.
Trade rules actually prevent Canada from using some effective recovery tools, even as calls for government to “buy local” and rebalance trade are increasing. The Canada-European Union comprehensive trade pact is one of example where trade rules limit government’s ability to buy local products and services, and create jobs.
Corporate interests are so deeply woven in international trade law that they have become a contributing barrier to COVID vaccine access. The World Trade Organization has so far failed to meet demands to waive intellectual property rights held by patent holders, to bolster production of vaccines and medical equipment in least development regions of the world. Slow-moving negotiations continue to delay progress to bring vaccines to those most vulnerable and further reduce the spread of variants. Sadly, vaccines have been delivered to just 1% of people in low-income countries. Canada, which notoriously failed to support the calls to waive intellectual property rights, also continues to under-contribute official development assistance funds to meeting the U.N.s 2030 Social Development Goals (SDGs), and must do more to help.
Despite these barriers, with political will and worker’s actions, trade rules can change for the better. NAFTA’s re-negotiation resulted in the removal of controversial investor protections that made it easy for corporations to sue governments over laws and regulations that hurt their profits (often referred to as Chapter 11 rights, or Investor-State Dispute Settlement provisions). The new NAFTA, or Canada-U.S.-Mexico Agreement (CUSMA), also includes groundbreaking provisions to improve workers’ rights, and advance free collective bargaining in Mexico. Canada has helped normalize dialogue around an inclusive and progressive global trade policy.
Unfortunately, Canada also falls back into old habits. Government is advancing discussions with Mercosur nations (Brazil, Argentina, Paraguay and Uruguay) toward a new free trade treaty, and old-NAFTA-style investor rights, which cost workers in Canada and globally, are on the table. Canada also announced its pursuit of trade talks with Indonesia, despite recent and egregious government efforts to repress labour rights. A new bilateral agreement with the United Kingdom also appears on the horizon that may contain all the same pitfalls in the Canada-EU deal, including unenforceable labour and environment provisions.