World Trade Organization Talks Back On - But Why?
Feb 22, 2007
By Larry Brown, NUPGE National Secretary-Treasurer
After a few weeks of hiatus the negotiations at the World Trade Organization (WTO) are officially back on. Unfortunately, rather than use the weeks of interruption as a chance for sober second thought, the WTO and government leaders have revived the talks without ever considering any of the substantive reasons for doubting the wisdom of this path. It all seems to be driven by a single article of faith: free trade is good therefore more free trade is better. Never have so many people laboured so mightily for such an unproven and discredited holy grail.
Canada’s representatives are operating on ideological autopilot on this subject. They continue to advocate for a position that has lost its credibility. The concerns (and the hard research) of the large number of Canadians who oppose an extension of the current free trade agenda are consistently ignored. Our government, quite openly, is exclusively working for and advocating for the leaders of large businesses. If anything, the position of the Harper government is worse than the Liberals, with even less consideration of Canadian’s views.
Organizations across the country and around the world, have repeatedly asked for any empirical evidence that freer trade has benefited our countries or our citizens. The General Agreement on Trade in Services (GATS), a subset of the WTO itself, has a clause that calls explicitly for an empirical review. That’s never happened. What we get instead is rhetorical statements about how great free trade is and will be.
But the evidence is compelling that this is a blind alley for Canadians. Under the existing free trade regimes, Canada has lost well over 224,000 manufacturing jobs since the end of 2002. One definition of insanity is to keep doing the same thing over and over while expecting a different result. If under free trade rules Canada has lost over 224,000 good manufacturing jobs, does it make sense to think more free trade will suddenly reverse that trend?
Some companies are doing quite well, of course. We’re always told that when companies make big profits, we all do well because they re-invest those profits in new plants and equipment. Except under free trade regimes, they don’t reinvest in new plants or new jobs. In the third quarter of 2006, profitable companies in Canada spent a record $90.3 billion dollars on mergers and acquisitions, on buying one another instead of investing in new manufacturing jobs in Canada. That’s in just four short months.
Since the world embarked on this corporate style free trade experiment, inequality has deepened and sharpened. The richest 2% of the world’s population now own more than half of the world’s assets. Corporate leaders in Canada only take 2 days to ‘earn’ what their workforce takes the rest of the year to earn.
It’s not that serious doubt about the benefits of free trade is some kind of secret. The World Bank is very pro-free trade, of course. But even they issued an analysis that shows the benefits from freer trade are marginal at best. According to their study, most of the benefits go to developed countries, not the poorer nations of the world. The total benefit, even for developed nations, is economically insignificant according to the World Bank’s calculations.
The United Nations Food and Agriculture Organization concluded the last 40 years of international trade in agriculture has not benefited the developing countries and, least of all, the least developed countries.
To make the point more telling, we only need to look at the recent Davos session, which involves meetings of the ultra-rich and ultra-powerful from around the world. Something interesting took place at the Davos session this year. Discussions focused on the fact that globalization isn’t working for everyone, that the free trade regime underpinning corporate style globalization has meant stagnating wages and rising job insecurity in developed countries.
The business elite at the Davos session worried that ‘popular fears’ could turn into a political backlash that could lead to protectionism – or at least make broad free-trade agreements harder to achieve in the future.
Morgan Stanley research shows that the winners in this process are the owners of capital rather than labour. Their analysis demonstrates, for example, that real labour incomes in the U.S. have only grown at roughly half the rate of labour productivity.
Of course many of the powerful business people at the Davos session believe the problem is one of perceptions, and that fears about trade undermining living standards in developed countries are misplaced.
Perception? Or cold hard fact? Under free trade regimes, in the European Union, United Kingdom, United States, Canada and Japan, the share of national incomes that goes to corporate profits has shown a steady increase from the year 2000, up from 11% to about 16%, while the percentage that goes to worker’s wages has dropped from nearly 15% to under 13%.
More poverty internationally, measurably more hunger, less equality within and between countries, jobs lost in Canada and the U.S. and Mexico as manufacturers pursue the endless quest for the lowest common denominator. It’s not a very edifying picture.
So, as our government charges pell-mell into the renewed negotiations on the WTO, let us once more pose the question. If the corporate sector and their government allies get what they want, more and better free trade, what will be the result for people? We know what the result will be for large companies, and we know that from hard experience. But what do we get out of the deal?
We’ve had enough of the empty ideological claims. Give us the facts. And, if our government doesn’t have the facts, can’t show in any plausible way that their agenda is good for this country, or for anyone other than corporate leaders, they simply have no mandate or business pursuing that agenda.
Comments are now closed