National Newswatch
National Opinion Centre

The British have a vivid phrase for behaviour that is either unfathomably stupid or unconscionably reckless. That phrase is barking mad.

A lot of mad barking is being heard all over — from business elites, politicians and governments. Perhaps it’s all the hydrocarbon fumes in the air from fracking, tar sands, tar ponds, and pipelines.

Who is prepared to deny that it’s barking mad to run a pipeline through earthquake-prone British Columbia?

Who is prepared to deny that it’s barking mad to sail gigantic supertankers through the shoals, islands and reefs off B.C.’s rugged coast?

Who is prepared to deny that it’s barking mad to ship tanker cars loaded with crude oil across northern Manitoba’s fragile permafrost? Already a delicate environment, it is now further destabilized by fossil fuel-driven climate change creating frequent derailments and track damage.

Imagine a giant oil spill in a permanently half-frozen swamp.

All of these barking mad developments arise from the most egregious of them all — the decision to make private capital the de facto government, elevating the rights of private corporations over governments and citizens — especially those in the Third World.

Investor-state clauses allowing corporations to sue governments for hundreds of millions of dollars for breaching so-called investor rights are not just the flavour of the times. They — and not democratically-elected governments — are now effectively running the global economy.

This novel — and grotesquely anti-democratic-development was pioneered by the 1989 North American Free Trade Agreement. NAFTA is the constitution of this New World Order where capital commands and government obeys.

Just as the Harper government is readying to push through the latest addition to global corporate governance — the Canada-European Union Trade Agreement — Canada was slapped with a $500 million suit by pharmaceutical multinational Eli Lilly. The company is accusing Canada of violating its obligations to foreign investors under NAFTA by allowing its courts to invalidate patents for two of its drugs, opening the door for more affordable generics.

Between NAFTA’s inception in 1994 and October, 2010, there were 66 investor state claims launched under Chapter 11 — 28 against Canada, 19 against the U.S. and 19 against Mexico.

As of that date, Canada had paid out a total of $157 million in damages and Mexico, $187 million. By contrast, the U.S. has yet to lose a NAFTA Chapter 11 case or to pay out one cent in an out-of-court settlement.

The lawsuits keep climbing. In 2011, the federal government paid forestry giant AbitibiBowater $130 million in a NAFTA-inspired investor-state suit. In 2012, Lone Pine Resources sued Canada for $250 million over Quebec’s ban on fracking. The same year, Mobil and Murphy Oil sued for $50 million over the province’s requirement that investors should put money into local research.

A 2006 study of NAFTA by economists from each of the three NAFTA nations — Canada, the U.S. and Mexico — finds that the trade deal has had “a perverse impact on the distribution of income, wealth and political power across the continent.” Not only has it failed to achieve its promise of better jobs and faster growth for the citizens of the three countries, “it has promoted an integrated continental economy with rules set by and for the benefit of the economic elite.”

The report, authored by Canada’s Bruce Campbell, Mexico’s Carlos Salas and the U.S.’s Robert Scott, says NAFTA has failed on all fronts to improve the lot of the citizens of the three countries.

Mexico’s Salas says that instead of creating economic growth in Mexico, NAFTA made employment more precarious and sent wages on a race to the bottom. “Corporate earnings have grown while inequality in income distribution has followed a volatile path.” Since NAFTA, Salas continued, employment in Mexico has become ever more precarious — of all new salaried positions, only 37 per cent had full benefits and 23 per cent had no benefits at all…

“Despite steady growth in investments in macquiladoras, the flow of account balances between firms hasn’t translated into the real technology transfer needed to strengthen and stabilize Mexico’s industrial sector — one of the great promises NAFTA held out for Mexico.”

If there is any question why parts of Mexico have been destabilized by murderous drug cartels in recent years, consider this from the NAFTA analysis. “The agriculture sector has suffered a large and steady loss of employment due to NAFTA. The share of the population engaged in agricultural activities fell from 26.8 per cent in 1991 to 16.4 per cent in 2004.

Highly-industrialized American corn farmers simply swamped Mexico’s small susbsistence corn growers, driving them off the land with nowhere to go except to the drug cartels.

Concludes Salas: “Mexico’s experience should serve as a warning concerning the dangers of any trade agreement…which is similar to NAFTA.”

Campbell sounded a similar note regarding NAFTA’s impact on Canada. While Canadians were promised increased economic growth, income and employment, closure of the productivity gap with the U.S. and the creation of a more diversified, efficient and knowledge-based economy, NAFTA instead gave them deindustrialization, growth in precarious employment, the undermining of unions, the erosion of the Canadian social state and heightened economic dependence on the U.S.

Canada has lowered its social spending, real incomes have stagnated except for those at the very top and average income has turned in the worst performance since World War II. Inequality has grown for the first time since the 1920s.

“At its core, NAFTA is about shifting the power in the economy from government to corporations, from workers to corporations, without a rebalancing of power in the continental economy, these problems will worsen,” Campbell says.

Americans are feeling the same pinch according to Scott. “Growing trade deficits with Mexico and Canada have displaced production that supported over one million U.S. jobs since NAFTA took effect. The displacement of one million jobs from traded to non-traded goods industries reduced wage payments to U.S. workers by $7.6 billion in 2004 alone…Growing trade deficits with Mexico and Canada under NAFTA contributed to inequality in wages and falling demand for workers without a post-secondary education, males in trade-related production and minorities.”

Concluded the report: “Despite its name, the primary purpose of NAFTA was not to facilitate trade among separate sovereign societies. Rather, it was to promote an integrated continental economy and establish the rules that govern it…

“In each nation, workers’ share of the gains from rising productivity fell and the proportion of income and wealth going to those at the very top of the economic pyramid grew…

“The reality is that the denial of social protections in the rules of an internationally integrated market inevitably undermines the protections established in the previously separate domestic economies after decades of political struggle.

“In that sense, the ‘vision’ of NAFTA is profoundly reactionary: it pushes nations back toward a 19th century ideology in which government’s economic function is to protect the interests of the elite while working people — the overwhelming majority in each nation — are left to fend for themselves.”

“Free trade” agreements are the petri dish for the 21st century phenomenon of the one per cent versus the 99 per cent and the collapse of the middle class.

Frances Russell was born in Winnipeg and graduated from the University of Manitoba with a Bachelor of Arts degree in history and political science. A journalist since 1962, she has covered and commented on politics in Manitoba, Ontario, B.C. and Ottawa, working for The Winnipeg Tribune, United Press International, The Globe and Mail, The Vancouver Sun and The Winnipeg Free Press as well as freelanced for The Toronto Star, The Edmonton Journal, CBC Radio and TV and Time Magazine.

She is the author of two award-winning books on Manitoba history: Mistehay Sakahegan – The Great Lake: The Beauty and the Treachery of Lake Winnipeg and The Canadian Crucible – Manitoba’s Role in Canada’s Great Divide. Both won the Manitoba Historical Society Award for popular history.

She is married with one son and two grandsons and lives in Winnipeg.

The views, opinions and analyses expressed in the articles on National Newswatch are those of the contributor(s) and do not necessarily reflect the views or opinions of the publishers.
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