CIIT Committee Report

Report on the Committee’s travel to Brazil
Supplementary Opinion of the NDP
Peter Julian MP
(September 23, 2009)

“A nation cannot prosper long when it only favours the prosperous”
-Barack Obama

THE NDP’s VISION OF FAIR TRADE

The NDP reaffirms its commitment to fair trade policy. By fair trade, we mean new trade rules and agreements that promote sustainable practices, domestic job creation, and healthy working conditions while allowing us to manage the supply of goods, promote democratic rights abroad, and maintain democratic sovereignty at home. Fair trade incorporates social justice into its business practices, focuses on businesses and cooperatives that invest in their communities and help to build local sustainability.  Workers’ rights and environmental rights are integrated into the foundation of business and empower both workers and consumers to make more sustainable choices.

In negotiating trade agreements and expanding Canada’s trade relationships with the rest of the world, it is impossible to separate human rights, labour rights and the environment from trade issues.

• How we can promote fair trade:
• New trade agreements must actively encourage improvements in social, environmental, and labour conditions and not simply minimize the damage of unrestricted trade;
• Federal and provincial procurement policies must stimulate Canadian industries by allowing governments to favour suppliers here at home over foreign multinationals;
• We must recognize that supply management boards and single-desk marketers like the Canadian Wheat Board can play an important role in helping to replace imports with domestic products; and
• Local, community, and individual initiatives to buy fair trade imports and locally produced goods must be preserved and fostered.

• Why fair trade and not free trade?
• Fair trade policies protect the environment by encouraging the use of domestically and locally produced goods (less freight begets less fuel consumption which means less carbon greenhouse gas in the atmosphere) and by promoting environmentally conscious methods for producers who ship to Canada.  By contrast, free trade policies, even those created with the environment in mind, do little to impede multinational corporations from polluting with reckless abandon.  The environmental side agreement of NAFTA, for example, has proven largely unenforceable, particularly when compared with other protections for industry and investors.
• A system of fair trade can encourage the growth of Canadian jobs, both in quality and quantity.  Fair competition rules and tougher labour standards will put Canadian industries on a level playing field with our trading partners and slow the international “race to the bottom” that has resulted in the loss of Canadian manufacturing jobs.  Free trade rules, on the other hand, have hurt Canadian job quality.  Since 1989 most Canadian families have actually seen a decline in inflation-adjusted real incomes.
• Fair trade can also protect labour rights by fostering the growth of workers’ cooperatives and labour unions.  Like the environmental side accord, NAFTA`s labour agreement is unenforceable, giving industries which are willing to violate workers’ rights incentives to relocate Canadian jobs.  Fair trade policies which favour co-ops, unions, and equitable pricing will protect workers in the developing world who might otherwise be exploited and take away reasons for Canadian producers to export jobs.
• Fair trade rules will also protect societies and human rights around the globe.  Although some predicted a human rights benefit from unrestricted free trade, this has yet to be seen.  In contrast, conflicts between locals and multinational corporations in such places as Peru (with whom Canada is implementing a free-trade agreement) have become violent.  A fair trade policy that aims for benefits for all parties can protect the most vulnerable from human rights abuses.

CANADA & BRAZIL: THE FAIR WAY FORWARD

New Democrats recognizes the importance of expanding economic and cooperative relations with Brazil. However, these relationships must develop in a manner that fosters sustainable growth, the creation of good jobs and development. Canada’s commercial relations with Brazil should seek to balance bilateral, pragmatic trade and specific niche areas in natural resources, agriculture, sciences and technology with a longer term strategy of developing fair trade with MERCOSUR (“The Common Market of the South”).  This longer term strategy would also have the ancillary benefit of involving Uruguay, Paraguay Argentina and Venezuela in addition to Brazil.

US trade policy under former President George W. Bush saw MERCOSUR as a threat.  In contrast to this approach, Canada should be more supportive of MERCOSUR’s priorities of developing a regional common market in the southern cone that would provide trading security to its members and delivering fair levels of support to all. MERCOSUR has elements of fair trade in its model and goals that are worth emulating, notably, the recognition of a social dimension to trade, including the reduction in poverty, and the necessity of promoting a gradual and sustainable integration of key economic sectors to build up higher added value economies.

As Brazil’s deputy UN envoy Piragibe dos Santos Tarragô stated on the occasion of the launching of the International Human Solidarity Day:

“Within MERCOSUR, poverty reduction has been remarkable. In Argentina, poverty declined from 54 percent in late 2002 to 31 percent in the first half of 2006. In Uruguay, poverty decreased from 32 percent in 2003 to 30 percent in 2005. In Brazil, it fell from 28 percent in 2003 to 23 percent in 2005. Moreover, the income of the poorest 50 percent Brazilians grew twice as fast as that of the top 10 percent.” http://www.un.org/esa/socdev/social/documents/BRAZIL.pdf

Unlike MERCOSUR, all three of the countries participating in NAFTA have experienced increases in trade and investment with an increase in poverty. Since the implementation of the Canada–US Free Trade Agreement in 1989, two-thirds of Canadian households have seen a decrease in their real incomes.  The income share of the richest 20% of the population now exceeds 50% of all income, leaving less for the remaining 80% of Canadians.  Clearly, NAFTA-style free trade is beneficial to the wealthy.  The poorest of Canadians have seen their income drop so severely that they have lost the equivalent of one and a half month’s income since the Canada–US Free Trade Agreement was signed. The situation is even worse in Mexico and in the US. Moreover 97% of the new investment in Canada under NAFTA has not been directed toward real economic activity but rather toward the acquisition of Canadian firms by foreign multinationals. While NAFTA has facilitated the movement of foreign capital, working families have not reaped the benefits. Instead of the wealth and new full-time jobs we were promised, Canadians have seen the erosion of permanent jobs and a marked shift toward temporary and part-time positions. Benefits and pensions are disappearing and working conditions are eroding. Working families are experiencing crushing household debt, more stress and greater instability.

The so-called free trade model ultimately rejects fair & sustainable trade. Through deregulation and the empowerment of corporations over democratically elected governments, the model allows a handful of dominant corporations to capture and control bilateral trade flows, which in turn distorts the market. The free trade model is therefore a misnomer because it actually betrays the very essence of free trade since trade under this model is neither fair nor free. The NAFTA model has shown unparalleled efficiency in driving and entrenching the political and economic domination of large multinational corporations and is currently at the heart of the ongoing drive for bilateral FTAs.

Forging a new trade policy based on multilateral fair trade would permit Canada to become a leader on the international stage rather than serving as a blind follower to a tired, outdated and ineffective 20^th Century trade model.  It would be a chance to undertake, one again, the kind of project that is uniquely Canadian: recognizing that important link between social economic justice and all spheres of government policy.

It is such a new fair, democratic and progressive trade policy that Canada should promote with Brazil, MERCOSUR and our Latin American partners.