If free trade is so good, why are things so bad?

NUPGE's National Secretary-Treasurer, Larry Brown, examines the links between free trade deals, the current state of the Ontario economy and the recently released report by economist Don Drummond.

By Larry Brown
National Secretary-Treasurer
National Union of Public and General Employees (NUPGE)

So it’s now official: Ontario is in a state of decline. The Ontario government hired a professional pessimist, Don Drummond, to tell them how bad things are, and he delivered for them.

It should be noted that Mr. Drummond fits the classic definition of an economist, as the profession that has predicted twenty of the last four recessions. We should be glad he’s not a doctor; we’d ask him about our cold sore, and be told we only had two days to live.

But his report, although admittedly gloomy, has been received as a "wake up call," a "reality check," an overdue but necessary "dose of sanity." We’re told it’s so true that it should be taken to heart in every province!

Sanity? If you had voluntarily taken a huge pay cut, and someone told you the only way you could balance your household books was by not feeding your kids, with no reference to going back up to full pay, you might wonder how good the advice was, don’t you think?

Mr. Drummond was told he couldn’t look at government income, that is, he couldn’t even look at tax fairness. He accepted the job, even though it was a flawed assignment. Although he did break that rule in a few spots; for example, he wants to make people pay for parking at Go Transit stations. Deficit, beware!

Ontario is an incredibly wealthy province with hugely profitable companies who aren’t paying their fair share of taxes because their taxes have been cut time and time again. There are also a lot of very wealthy people who have been given tax break after tax break. Of course Ontario is in a deficit – succeeding governments have given away, and continue to give away even during this recession, the wealth of the province to corporations and those in the top income levels.

But never mind that; Mr. Drummond has officially declared that Ontario is in a state of decline. All of the great minds - of the right wing persuasion - have nodded their heads at this wise finding.

There is one way in which that gloomy assessment is true. Ontario’s manufacturing sector has been in decline for some time now. For how long? Let’s see, when did we sign on to the North American Free Trade Agreement (NAFTA)?

Since Canada signed on to NAFTA, Ontario has lost hundreds of thousands of good manufacturing jobs. Those jobs went to States in the U.S. where unions are made weak by legislation, and to Mexico where unions are made weak by free trade zones where union rights are virtually nonexistent.

Formerly Canadian products can now be made in low wage states, where unions are virtually banned, and there are no inconvenient social protections like occupational health and safety rules, or public health care, quality education, or decent social assistance rates; and then these products can be sold back into Canada without tariffs or any kind of barriers.

We used to have a healthier automotive sector, but the Auto Pact which protected Canadian jobs was ruled invalid under the World Trade Organization (WTO), another free trade deal.

If the right wing pundits are pressed, they will say that Ontario has lost its manufacturing base because of "international competition," or some such euphemism.

But jurisdictions with low wage, anti-union, low living standards have always been there; what’s new is that we have given away our right to protect Canadian workers against the effects of these low wage jurisdictions, so corporations now can, and do, move to low wage areas at will, because they cannot be prevented from selling their products here anyway.

It’s actually amazing; right wing pundits will loudly and constantly proclaim the magical effects of free trade, and in the next breath they will solemnly agree that jobs are being lost to low wage regions where workers have no rights – and they will absolutely refuse to connect those two thoughts.

In fact, the Harper government is now negotiating away, secretly, of course, on a new master free trade deal with the European Union. There goes the rest of Ontario’s automotive manufacturing sector, when that deal is done. There goes a lot more of Canada’s industrial base. It’s another job killing free trade agreement.

And one more time, we are being told two completely contradictory things, as if they can both be true at the same time. On the one hand, the free trade deal with Europe will create a zillion new jobs, and on the other hand, unfortunately, Canada’s manufacturing sector will continue to decline because of global competition.

If anything we were told about the benefits of NAFTA were true, we should all be rolling in the green by now. If anything we were told about the advantages of international trade under the WTO were true, we would all be doing extremely well.

Canada is doing OK for only one reason, our resources like oil and gas, which have nothing to do with free trade, and meanwhile our economy is being hollowed out by free trade agreements.

But if it is true that the manufacturing sector in Canada, in Ontario, is dying, well, then the claims about the advantages of free trade can’t be true, can they.

Cheer up, Mr. Drummond. Spring is on the way. Unfortunately, though, your report is fundamentally flawed. So long as we ignore the need for tax fairness, and so long as we ignore the effects of free trade deals in killing our economy, we can cut and slash public services until the cows come home and nobody will benefit - except the same wealthy elite that have already gotten richer while the rest of us have paid far too heavy a price.

Larry Brown is the National Secretary-Treasurer of the 340,000-member National Union of Public and General Employees.

NUPGE

The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE