Canada’s free trade sales pitch


So refreshingly frank was Prime Minister Stephen Harper with his cynical opinion going into the Fifth Summit of the Americas in Trinidad last weekend. Yet, it was disappointing to hear him speak of his negative expectations.

Going in, it was to have been his first such outing, so on what was he basing his negative expectations? At the very least, does it offer some insight into the character of the man?

To be fair, others also expressed relief that co-operation was evident, thanks to Obama, ‘the Charmer’. In fact, many leaders in the region lauded the conviviality of the Summit, despite the failure to produce a statement of consensus at its close.

That aside, Harper’s main talking point at the conclusion of the Summit was about the renewed commitment to free trade between Canada and interested states at the Summit.

It has been said that free trade, like communism, sounds good in theory, and to listen to its proponents there is every reason to believe that it is to be desired – especially over protectionism. Free trade agreements have been described as taking the same step as vaccinating one’s children. It’s what good parents do to protect their children. And, in a similar vein, it’s what good governments do to protect their nation’s commerce.

But what is it that gets in the way of making free trade a success for all entities that participate in these agreements? Why, for instance, do so many small farmers protest against them?

For one, it would appear that countries with more economic advantage and resources – the larger economies – automatically have more advantage when it comes to getting their broad range of products into the smaller target countries.

Another quandary is resistance to change by leaders who belong to the elite circle of ruling families in their country when it comes to putting in place forward looking revenue-generating mechanisms that are built into free trade agreements. Some of those rich ruling families never had to pay such taxes, hence the dissonance when actually having to become the agent of change. It amounts to them turning their backs on their elite social class. Moreover, in some cases, corruption is a factor.

In some countries, the members of the ruling elite expect to receive foreign goods duty free, in exchange for favours or bribes. And so, customs duties are only for ordinary folks to pay. Hence, the transition to free trade would mean that certain leaders would withdraw non tax paying privileges for the wealthy, including themselves.

Ideally, a good government generates tax revenue through a fine-tuned balance of income, corporate, property and value-added taxes that give incentives to people to work hard and take risks in investing in the creation of businesses that, in turn, employ people. Those who support free trade argue that other revenue, for example, from customs duties and other import charges, artificially support non-competitive sectors of an economy and only delay the demise of these sectors, while wasting human resources that would be better off creating wealth doing something at which that country is competitive.

But here is one problem: When free trade is rushed into place, as has been the case in some countries where farming is a mainstay in the economy, the quality of life for small and subsistence farmers in particular becomes greatly altered by the availability of cheaper produce in the market brought in through free trade. Those farmers end up having to shift to factory work or similar kinds of employment to make ends meet, but their quality of life bears no equivalence to their pervious agrarian existence.

Moreover, once the dependency on food shifts to imports and, as greed inevitably comes into play, when those prices move upwards even by as little as two or three per cent, those who are barely surviving on already meager incomes are pushed into starvation.

It was barely a year ago that many lesser-developed countries were in the throes of distress over increased prices for staples as well as inadequate supplies. Only now is India lifting its ban on the export of rice and other staple grains. So is free trade fair trade? As the saying goes, what’s good for business is bad for people and vise versa.

On a cynical note…

Just as one wonders about the oh-so-neat airplay of the heartwarming, inspiring story of the unemployed, un-glamourous Scottish woman wowing the world with her vocal talents, one may wonder about the neat timing of the Canadian-trained Jamaican security forces’ bloodless takedown of a hijacker onboard a flight full of Canadian vacationers in Montego Bay, at the same time that Canada’s PM was there visiting. Talk about conflux.

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