Special to PV
Council of Canadians trade campaigner Stuart Trew has published an analysis of the potential impact of the Canada-European Union Trade Agreement on Hamilton. Trew argues that CETA would be sharply negative, despite promises by governments, economists and the media that freer trade is automatically good for a “trading nation” such as Canada.
Trew points out that “those who’ve witnessed first hand the decline of Hamilton’s manufacturing base know that free trade doesn’t produce jobs. It moves them around. More precisely, it helps employers move jobs other places they can produce things cheaply and on their terms.”
CETA will strip cities like Hamilton of any tools to create new jobs, promote sustainable development and enhance public services: “For the first time, CETA will make apply trade and investment‑related disciplines to municipal governments, Crown corporations, universities, hospitals and school boards ‑ the so‑called MUSH sector.”
In a nutshell, he argues, CETA would forbid municipalities from applying offsets, or conditions designed to extract local development benefits, on tenders for goods, services and construction over certain thresholds.
CETA would ban “Buy Canadian” policies, depriving cities of an effective job‑creating tool: “Toronto, for example, buys subway cars from a plant in Sudbury because it creates enormous spinoff economic activity and jobs across the GTA. Our city may one day like to make a similar policy for its light rail vehicles. It wouldn’t be able to if the city were bound by CETA.”
The potential to use procurement policies to achieve social goals would vanish. These include employment or training goals, but also sustainable or green development strategies, buy local food programs, and so on.
Supporters of CETA claim that cities like Hamilton would instead benefit from a greater choice of contractors at a lower price. But European firms already bid on and win Canadian contracts, and vice versa. What the EU is seeking in CETA is a legal guarantee that if one of its firms puts in the lowest bid, that firm will win the contract. Municipal decisions to the contrary could be challenged before trade tribunals with the authority to halt projects, hand out fines and potentially overturn contracts.
But “taxpayer value” is more than the bottom line cost. In the United States, Trew notes, “many states and municipalities go with an in‑state option on contracts even if it costs 10 percent more than the lowest bidder, as long as the local company meets all the other technical requirements.” Such a situation could arise in Hamilton, where the city might want the steel in a local construction project to be sourced from Ontario mills.
“It’s easier still to imagine buy local food policies at all public facilities, including hospitals,” writes Trew. “But of course if the contracts run over the threshold for goods or services, good luck trying to force catering and other food service firms from abiding by reasonable local content quotas. Under CETA, there is no obligation for corporations to do so, and even legal procedures they can invoke if anyone tries.”
As for the “benefits” of CETA, Trew says these must be “enormous” to justify depriving municipalities of important powers. The federal government claims that CETA will add $12 billion, or 0.77 per cent of GDP to the Canadian economy, phased in over time, based on numbers crunched by European economists prior to the financial meltdown of 2008.
But since then, an official sustainability impact assessment of CETA done for the European Commission has predicted gains to Canada of between one quarter and one half of that value. “That drops the value of CETA to Canada to between $3 and $6 billion ‑ not much at all, and possibly still too high” according to economist Jim Stanford, who predicts net job losses from CETA.
Another reason to oppose CETA is water. The investment rights protected in the deal would extend to private water firms if the Ontario government agrees to commit drinking water and sanitation in its offer to the EU.
Trew gives the example of a contract awarded by Hamilton to Philips Utilities Management Corporation for water and wastewater treatment. “The community faced ten years of environmental disasters and financial upheaval,” he writes. “The workforce was cut in half within eighteen months, millions of litres of raw sewage spilled into the Hamilton Harbour, homes were flooded and major additional costs were incurred. Numerous charges over years were laid by the Ontario Ministry of the Environment against the contractor for not meeting effluent standards. The private water contract changed corporate hands four times. In 2004, City Council ended its experiment with privatization and brought operation of its water and wastewater systems back in‑house. Had CETA been in place at the time, Hamilton could have faced an investment dispute by the private water firm ‑ even if that firm was based in the United States and not the EU.”
Yet another issue to consider is the drug reforms demanded by the EU in the intellectual property chapter, which would increase the cost of public employee drug plans by almost $3 billion per year across Canada. According to business groups close to the negotiations, the EU will not sign a deal without these reforms.
“Free trade” has little to do with trade, Trew says. “These agreements were always about a specific type of economic governance that purposely undermines democracy and empowers already powerful multinational firms. The goal of free trade is export‑oriented growth with as few barriers to capital and investment flows as possible. There are no jobs in CETA. There are only reduced options for communities like Hamilton.”
The same will be true for other municipalities. It’s time to kill this deal, before it strangles local governments across Canada.