Hugh Holland is a retired engineering and manufacturing executive now living in Huntsville, Ontario.
By Hugh Holland
Since the days of Marco Polo, trade has been enriching people lives. Instead of everyone trying to be good at everything, trade enables people to do what they do best and exchange it for what someone else does best. Cabinet makers exchanged with dress-makers. Silk-makers exchanged with silver-makers. Today, we live in a global village where we exchange everything from art and apples to zithers and xylophones. No country has everything they need, and no person can be good at everything.
Modern trade agreements replace the haggling, corruption and conflict of the ancient bazaar with a set of pre-agreed rules for fair trade such as tariffs, labour standards, environmental standards, and standardized customs paperwork to minimize red-tape, time, and cost.
The 1965 Canada-US auto trade agreement enabled companies to rationalize production across the border so that each plant could specialize on a few similar products. That simplified everything, improved quality and reduced cost, all to the benefit of consumers.
The 1994 North American Free trade Agreement (NAFTA) built on the experience of the auto pact to provide those benefits to most products and services. The Trans-Pacific Partnership or TPP builds on the experience of NAFTA to include nine more Pacific Rim countries with the most up-to-date and complete set of rules to date.
In 1963, Canada had four auto assembly plants. The 1965 Auto Pact required Canada to add capacity and by 1994, there were ten assembly plants in Canada that employed around 25,000 people.
In 2015 we have ten even more-productive assembly plants in Canada that in 2014 assembled 2,393,000 cars, trucks and vans. Eighty-five per cent (2,034,050) of them were shipped to the USA and Mexico and a few overseas.
Total sales in Canada were 1,890,387 units; 358,950 were assembled here and 1,531,437 were imported, mostly from the USA and Mexico. So Canada exported more than we imported. In addition, we have 81,000 people employed by auto-parts manufacturers. When engineering and sales staffs are added, our Canadian auto industry employs well over 100,000 people in well-paying jobs.
What if we closed our borders to auto trade? Canadians would have to choose from about 20 different types of cars, trucks and vans instead of the 120 types we have today, and all would cost more.
Canada has nothing to fear and much to gain from the TPP. It reduces barriers and streamlines the process for trading everything from agricultural and forest products, to manufactured products, to resources and services in a market block of 800 million people, with another 500 million indicating interest in joining. Every member of the TPP has something unique to offer and something they need.
The TPP will lift the standard of living for all countries involved, especially those with a much lower income per capita than Canada. A hand up is better for all concerned than a hand out.
Dave, read “The Money Mafia” by Paul Hellyer for a complete discussion of Banking in the world.Gary Null played a partial speech by Elizabeth Warren on the TPP on Oct.15,2015: (This transcription is not in it’s entirety) (change anything American here to Canadian) The U.S. is in the final negotiations of the TPP. I come to the floor to ask who will benefit: American workers, consumers, small businesses, taxpayers; or the biggest multi-national corporations in the world. Buried in the closely-guarded draft is the investor-dispute settlement, or ISDS. The name may sound minor, but this provision fundamentally tilts the playing field further in favour of big multi-national corporations; worse yet, it undermines U.S. sovereignty. ISDS allows foreign companies to challenge American laws and potentially pickup huge payouts from taxpayers without ever stepping foot in an American court. Here’s how it works: imagine that the U.S bans a toxic chemical that is often added to gasoline. We ban it because we believe it is dangerous for people’s health or harmful to the environment. If a foreign company that makes this toxic chemical want to sell it in the U.S., it would normally have to challenge that in a U.S. court. But with ISDS, the company can skip the U.S. court and go before an international panel of arbitrators. If the company wins, the ruling cannot be challenged in U.S. courts, and the arbitration panel could require the American taxpayer to cough up millions, even billions of dollars in damages. ISDS has the power to impose gigantic fines, but it doesn’t have independent judges. Instead highly-paid corporate lawyers go back and forth between representing corporations one day, and sitting in judgement of corporations the next. We should have real doubts about how likely it is that a lawyer looking to attract high-paying corporate clients will rule against those corporations when it’s his or her turn to sit in the judge’s seat. It’s also a real problem when only international investors get to use these courts. Investors that are, by and large, large corporations. If a vietnamese company wants to challenge the U.S. increase in minimum wage, it can use ISDS. But if an american labour union believes theVietnamese company are paying slave labour wages in violation of tread commitments, the union has to try to wind itself through the Vietnamese courts. Good luck with that. These rigged pseudo-courts were created after WW2 because investors worried about putting money into developing countries, where the legal systems were just not as dependable. They were concerned that a corporation might build a plant today, only to watch a dictator confiscate it tomorrow. ISDS was born to encourage investors to invest in countries with weak legal systems. I don’t know if these justifications made sense back then, but they sure don’t now. Countries in the TPP are hardly emerging economies with weak legal systems Australia and Japan have well developed, well respected legal systems, and multi-national corporations navigate those legal systems every day. A french company sued Egypt because Egypt raised it’s minimum wage. A Swedish company sued germany because germany decided to phase out nuclear power. A Dutch company sued czechoslovakia because Czechoslovakia didn’t bail out a bank that the Dutch company partly owned. Phillip-Morris is trig to use ISDS to stop Uruguay from implementing new tobacco regulations. Sun Belt Water is suing Canada over preventing it from exporting water from B.C. The entire speech is here: https://www.youtube.com/watch?v=xzfxv2XQoPg
Does this make you think our Government is looking out for the best interests of Canadians?
Hi Jim “TPP is a sellout ,Just like our borrowing from private banks”
I think you are talking about how the Federal Government finances it’s deficits , by issuing government bonds ( borrowing) to investors. My understanding is that the major holders of long term government bonds are the pension funds ( including CPP ) and insurance companies in this country that are matching long term investment assets with their long term liabilities. Not our Cdn. banks ( which I do not regard as “private” as there are millions of Canadian shareholders ) . The major Cdn. banks may well facilitate the distribution (issuance ) of our Government bonds via their investment arms ,, but are not the major long term investors . Regardless of who holds our Government bonds , they will not finance ( invest ) in them without getting a return ( interest ) on their investment. There is no free lunch.
TPP–There is no free lunch. To gain market access to 800,000,000 consumers by having them reduce their tariffs and quotas , we need to give up some of our protection. IMHO , we gained far more than we lost.
The differences between our”Big Three” are moot. none speak of maintaining our sovereignty by returning to the use of the Bank of Canada. The media is silent. Iceland jailed it’s bankers and reinstituted it’s central bank. They increased reserve ratios to 100%; in Canada it is currently 2%. TPP is a sellout, just like our borrowing from private banks. Mckenzie King spoke of losing our sovereignty, and having the population enslaved tot he bankers. And no-one seems to care…
Hi Hugh
Great article on the benefits of free trade.
When Canada signed the Auto pact in 1965 our trade to GDP was 20%.
By 1994 when we signed NAFTA our trade to GDP was 35%
By 2000 our trade to GDP had grown to 43% of GDP.
Our international trade has grown the economy , increased employment ( and we do not export big macs ), tax revenue and lowered costs for all Canadians.
A few tariff reductions that will benefit Canadian exporters ( read more jobs).
Beef : 39% to 9% . Seafood: 15%/ 34% to 0. Apples: 17% to 0. Wood and Forestry products: 40%/31%/20% ( depends on the country ) to 0.
Iron and steel: 40%/25% to 0. Aluminum: 30% / 27% to 0. These are not Tim Horton’s jobs.
Assuming the Americans and Aussies sign on , Canada can not afford to be on the outside , looking in on the growing east Asian markets.
To Mary : The patent protection agreed to for Biotech drugs is the same 8 years that currently exists in Canada , so no increased drug costs.
To Ruby: The ISDS excludes environmental , health and Tobacco legislation.
Canada gave up very little (3.25% of Dairy and 6% tariffs on cars/parts over 6 years.)
Congratulations to our trade team.
I find Hugh’s article silly.
Corporatism is the economic face of political fascism. Top down hierarchical structure with little to no democratic substance.
Canada: The Trans-Pacific Agreement Will Sap Whatever Is Left of Our Sovereignty
If you really think we live in a free and independent society, think again. What sovereignty are we left with, when we have already forfeited our birthright to multinationals?
What freedom are we talking about when a private company can challenge our laws in court, according to the various so-called free-trade agreements, negotiated by our governments in secret: NAFTA, the Comprehensive Economic Trade Agreement between Canada and the European Union (CETA) and now the Trans-Pacific Partnership (TPP)?
Trade is the new euphemism for a Bill of Rights for Corporations.
http://www.globalresearch.ca/canada-the-trans-pacific-agreement-will-sap-whatever-is-left-of-our-sovereignty/5481461
Hi Paul
I bought my first new car (a 1965 Chevrolet Impala) for $3,500. Inflation alone would bring that price to $23,000 in today’s dollars. But since then, fuel economy has more than doubled, emissions per vehicle have been cut by 90%, and a long list of safety features are now mandatory such as anti-lock brakes, electronic crash avoidance, and 8 air-bags. The emissions control package alone on a big truck or tractor is worth $20,000. And yet there are still plenty of cars available in the $13,000 to $18,000 price range. The efficiencies provided by cross-border trade have helped to keep the prices down to affordable levels. But most people choose to buy cars with more features or SUVs with all-wheel drive or fully loaded light-duty trucks.
Those who like to attack bigger companies should not forget that the bigger companies do almost all of the research and development that leads to the annual advancements in fuel economy, emissions control, safety etc. And the big companies buy as much as possible from smaller parts suppliers. That is true of most big companies in any industry.
People like to complain about losing jobs to trade, but when it comes to buying a TV, a washer and dryer, clothes or a car, how many people make any effort to check its origin? Most go for the best value. That is why companies must source at low cost to survive.
International trade is never easy and never without its disputes, but my 40 years of working in that environment tells me that trade is much better than no trade. Ten years from now, we will be very glad we are part of the TPP, and we will be very sorry if chose not to be not part of it.
Mary
When that happens, we will all go back to being hewers of wood and drawers of water.
Regards, Hugh
In my opinion, these agreements are much more about corporate (“investors” in the jargon of the agreements) protection than about trade. For example, I bet that the TPP will contain patent protection for drug producers, meaning higher drug prices for us all (and increasing the government cost of any expansion of our health coverage to cover medications).
Investor-state Dispute Settlement (ISDS) provisions are included in almost all of these and I expect will be in the TPP. These allow corporations to sue governments, in special secret tribunals, whenever the corporations feel that government laws, regulations, or administrative processes (at any level) prevent them from making profits. I can’t place it now but I read somewhere that Canada is far ahead in the $ millions we have had to pay the U.S. over the course of NAFTA on the basis of ISDS. Moreover, these provisions tie the hands of legislators for decades.
Apparently the data show that, despite Harper’s aggressive implementation of many of these “free” trade agreements, our exports have shrunk in recent years.
The only good thing if this agreement is ratified is that it can only exist or be enforced while cheap, easy transportation exists. As our oil-based industrial economy inevitably declines and disappears, so will the the TPP and its ilk.
if you want an example of better jobs than Walmart or Tim Hortons take a look right here in Huntsville. We have an auto parts factory employing more than 100 people and 95% of the products made there ship on down the road to the USA every day. The TPP agreement is going to help this company grow to be 200 + employees, just watch the next couple of years. These are good paying, skilled jobs.
I disagree. The T.P.P. is more about corporate power than free trade. It gives foreign corporations the power to challenge any laws or regulations that stand in the way of their profits. This could adversely impact our environment and worker safety, while benefiting only those corporations and the very rich.
This is perhaps the silliest and most superficial “opinion” that I have seen published, yet
If one measures trade success by the variety of goods available to a consumer (regardless of where they are made and how much they cost), then these trade deals are wonderful. But surely the bigger question is: has the a trade deal benefited the average Canadian. The answer in my opinion is a resounding “no”.
Today the price of the average car sold in Canada is roughly $33,000. In 1994 (on the eve of NAFTA) the average cost was $14,280.
In 1976, the median “real” household income was $56,000. In 1998, the real median household income was $54,000, And today it is about $60,000 But that doesn’t tell the whole story. Between 1976 and 1993, the wage gap between the bottom 20% of wage earners and the top 20% was stable at between $87,000 (1976) and $83,000 (1993 pre NAFTA) but today that gap is $209,000.
I am not against trade….. but I also realize that Canadian values are not for sale for a few shiny baubles. Trickle down economics has never worked. Making corporations and paltry few individuals rich through these trade deals has only given us more jobs at Walmart and Tim’s.
Someone needs to tell the emperor that he has no clothes. This after all is not the Canada that I believe in
Paul Whillans
However