The Canadian Imagination

What it means to be Canadian; examining and reworking Canada as a nation.

Sunday, November 06, 2005

Free trade

The current conventional capitalist wisdom is still that
Freer and fairer trade will lift more human beings out of poverty than all of the assistance programs in the world combined.
- Paul Martin, Prime Minister of Canada
However, the minor problem with establishing a free trade zone of all the Americas is that the participants do have some right to expect it to be a multilateral free trade zone in more than name.

Quite apart from the strong and suddenly sharply visible polarisation between socialist movements and big business; quite apart from Chavez' and a significant percentage of the world's claims that the United States government is fascist and imperialistic (and for the first time in a long time, both polarities now each have a rallying face); quite apart even from knowing that an alternative to the Free Trade Area of the Americas (FFAA), the Bolivarian Alternative for the Americas (ALBA), does exist: any unofficial observer can easily identify multiple instances in which the United States -- and the European Union, and just about every other developed country -- seems to expect free trade to flow in one direction, but subsidies to be allowed to stand in the other.

The wisdom holds firmly that embracing the equation of supply and demand is the path toward a global utopia ... and yet many non-western countries, after an initial externally-enforced shift away from their original multifunctional agriculture in favour of export-oriented monocultures, have for decades and sometimes centuries been firmly locked into fixed single-commodity export economies upon which they are now highly dependent, but upon which they have far too small a share of the world market to be able to exert any real influence. Post-colonial countries whose native agricultures have been overhauled to benefit the then-colonising country are particularly vulnerable: witness, for example, Guyana's irrelevance to the world at large as a rice market, its almost complete inability to influence the price of rice regardless of whether or not it chooses to sell -- and yet 40% of Guyana's foreign exchange revenue comes from its rice exports.

Freer trade in isolation can never alter this equation: but it can reduce the international price of rice further by playing off one small -- or sometimes even not-so-small -- country against the other. Net agricultural and raw resources exporters lose. Net importers of these commodities win.

Refusal to honour existing bilateral and multilateral trade agreements only exacerbates these issues, even among countries that come perhaps as close to approximating parity as perhaps any country can with the sole remaining superpower. The United States has repeatedly defaulted in its commitment to free trade even within the much smaller-scale, three-partner North American Free Trade Agreement (NAFTA). The softwood lumber dispute in particular is fast reaching notoriety in Canada. Every avenue of appeal has determined in Canada's favour, that United States tariffs are inappropriately (and under NAFTA, illegally) high: yet the government of the United States refuses to alter the situation. In fact, even after all avenues of appeal have been exhausted and repeated judgements for true free trade have been repeatedly ignored by the United States, Secretary of State Condoleezza Rice still tells Canada bluntly that:
I think it's extremely important not to speak in apocalyptic language about this issue. It is an important issue, but it is a trade dispute ... I think the word of the United States has been as good as gold in its international dealings and in its agreements.
- quoted in the Globe and Mail
to which Canadian International Trade Minister Jim Peterson retorts:
We've been off the gold standard for an awful long time in this country. We want to see NAFTA respected.
Yet United States citizens would have no way of realising that there is even an issue here, let alone that perhaps they, even more than their neighbour to the north, stand to benefit directly if the NAFTA rulings were to be followed. Even on CNN and FOX newscasts concerned about the escalating cost of building lumber due to increased demand (eg. as a result of Hurricane Katrina): no mention whatsoever is made of this "trade dispute" ... even though simply abiding by the terms of NAFTA could bring the cost of building lumber in the United States down significantly and quickly. In the face of such deliberate stonewalling, Canadian options -- outside an outright trade war -- are non-existent.

And so we come full circle, back to the free trade-supporting prime minister of a G8 country which has always considered itself more friend than ally to the United States:
The fact is that President Fox, myself, President Bush, all of us believe strongly in the free trade of the Americas. But we know that it's got to be based on rules -- and rules that are listened to.
- Paul Martin
How then to be able to embrace a Free Trade Area of the Americas? How to still believe that, in the question of free trade, the United States is truly acting in good faith?

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