Special to Globe and Mail Update
March 5, 2008 at 7:10 PM EST
In the aftermath of Barack Obama's and Hillary Clinton's threats to "renegotiate" NAFTA — or pull out — the usual suspects have been activated to tell the world how wonderful the deal has been for Canada and the United States.
There is no doubt that the sector that devised the scheme in the first place and sold it to politicians have benefited greatly from this investors' rights agreement and its predecessor. The continent's largest corporations have greatly reduced regulatory impediments to their profits, radically lowered labour costs, gutted Canada's sovereign capacity to pass new environmental legislation and, in terms of investment restrictions, virtually erased the borders.
All of those corporate benefits, however, have been extremely bad for other aspects of Canada and for ordinary Canadians.
But first, let's dispose of a myth about free trade — the notion that it was responsible for massive increases in trade between the U.S. and Canada. According to an Industry Canada study, 91 per cent of the increase in trade in the 1990s was due to the cheap Canadian dollar and the sustained economic boom in the U.S. Now that our dollar is at par or higher, our manufacturing exports are plummeting.
But even if NAFTA were responsible for increased trade, Canadian workers have paid a huge price. Throughout the 1990s, federal governments trumpeted the need to be "competitive" under NAFTA as an excuse to implement some of the most Draconian rollbacks of Canadian social programs ever undertaken. In the name of "labour flexibility," Paul Martin implemented drastic changes to EI eligibility, and repealed the Canada Assistance Plan, freeing the provinces to gut their welfare programs. His extreme low-inflation policy deliberately kept unemployment at high levels (8 per cent to 9 per cent) for most of the 1990s.
That meant that, throughout the decade, workers' real wages actually declined. They still have not caught up to 1981 levels. And the highly paid 220,000 industrial jobs lost as a result of NAFTA are gone forever, replaced by lower-paid jobs.
NAFTA was supposed to unleash a flood of foreign investment — boosting our industrial capacity and productivity. Instead, since the first trade agreement was signed, more than 95 per cent of direct foreign investment has been used to buy up Canadian companies. Head offices and research and development money has headed south, and Canada has seen a steady decline in manufactured goods as a percentage of its GDP for the past 10 years.
Our productivity has fallen behind that of the U.S. in virtually every year since the FTA came into effect in 1989.
The environment has also suffered almost continuously since the deals were signed — and this is according to the Commission for Environmental Co-operation, the NAFTA agency responsible for monitoring the impact of the new regime. The North American Mosaic: The State of the Environment Report, released in 2001, declared that "North Americans are faced with the paradox that many activities on which the North American economy is based impoverish the environment on which our well-being ultimately depends."
It might also have mentioned that Canada has not passed a major new environmental protection law since NAFTA came into effect — at least not successfully. In two instances where it did try, NAFTA's investment chapter forced it to back off. In the Ethyl Corp. case, Canada tried to ban a gasoline additive, MMT, that damaged cars' catalytic converters (not to mention our health). The company sued under NAFTA and Canada withdrew the law. The resulting chill effect means we have no idea how many proposed new laws have been killed in their cribs.
Prime Minister Stephen Harper says Canada is an energy "superpower." But NAFTA virtually guaranteed that the U.S. would be the beneficiary of our energy, and it unleashed a massive increase in energy exports to the U.S.
Canada now exports 63 per cent of the oil it produces and 56 per cent of its natural gas to the U.S. And because of NAFTA's proportionality clause, Canada is legally obliged to continue exporting the same proportion of our oil and gas forever even if we face a shortage.
Next up is our water. The U.S. is already officially into its supply problems and it will, over the next 20 years, become a catastrophic crisis, outpacing even their predicted energy crisis.
NAFTA defines water as a good — meaning that, as soon as any provincial government signs a contract to export bulk water to the U.S. (by river diversion or tanker), nothing can stop further exports.
All of this, and for what? Allegedly, it was for guaranteed, predictable access to the U.S. market. But, of course, as the softwood lumber saga proved, there is no such thing. When its history is written, NAFTA could rightly be described as the worst agreement ever signed by a Canadian government.
Murray Dobbin, a Vancouver writer, is a columnist for the online magazine The Tyee.