bout de papier, Vol. 6, No. 3 (1988), p. 44
Free Trade — The Real Story edited by
John Crispo, 205 pp., Gage Educational
Publishing Company. $6.95
The book is a collection of interesting essays on issues relating to the Canada-U.S. Free Trade Agreement (FTA). David Bercuson, the Calgary historian, details how a number of our prime ministers supported some form of free trade with the United States to achieve a more secure export market. Economists Richard Lipsey and Robert York analyze the agreement, rebut some of the arguments against it, and conclude it is both good for Canada and simply a further step down the road Canada began with the GATT. Murray Smith of Ottawa’s Institute for Research on Public Policy argues the FTA will place for the first time clear obligations on both countries in respect to traded services. The agricultural economist T.K. Warley of Guelph examines the gains and shortfalls for Canadian agriculture and decides that “by any calculus, for the agricultural sector as a whole, the economic gains outweigh the losses”.
Economist Paul Wonnacott thinks the automotive clauses are about as good as could be expected and is pleased problems with the pact were addressed here before they became even more intractable. The C.D. Howe Institute’s Edward Carmichael looks at energy and some of the hysteria relating to it; he concludes our oil and natural gas, uranium, and electricity sectors will benefit from the stability and confidence free trade in energy will provide. The Toronto economist A.E. Safarian examines the implications for direct foreign investment, noting guaranteed access to the American market should encourage new foreign investment in both Canadian manufacturing and a number of primary resource and primary manufacturing industries where Canadians have a comparative advantage. Trade lawyer Debra Steger, while conceding the agreement’s dispute-settlement mechanism is not perfect, thinks it “will evolve over time into an integrated, authoritative, independent, international agency”.
Alan Rugman of the University of Toronto explains why small, medium and large business in Canada support the FTA so strongly; a key reason is their recognition that while few of the 70 percent of all Canadian jobs already in services are affected, an economy made more prosperous overall by freer trade will benefit a host of services, including financial services, education and many other consumer and producer services. The Queen’s University economist Richard Harris, noting the Canadian ratio of exports to GNP is greater than 30 percent, contends there are good reasons to be optimistic about the overall job-creating effects of free trade. Policy analyst Katie Macmillan, also of the C.D. Howe Institute, begins with opinion surveys that women are less likely to support the agreement than men, but concludes that both as consumers and as job-holders free trade offers Canadian women generally an opportunity to improve permanently their economic status. Another economist, Donald Wonnacott, while calling for adjustment assistance programs for persons negatively affected by the FTA, asserts that rejecting it on the basis that some jobs might be lost is “like saying ’no’ to the International Revolution. In those days one could easily count the jobs at risk, but not the higher-income jobs that were eventually created”.
Economist Thomas Courchene asserts Canadian consumers will benefit from increased real incomes and so will the regions (“The resource sectors [Eg. energy in the west and Quebec and fishing in the east] are also clear beneficiaries. Moreover, by opening up north-south trade the FTA addresses in one fell swoop both the distance and market-size burdens of the regional economies [ie. their centre-dominated peripheral destiny within Canada]”). Richard Lipsey, in a second contribution, refutes a number of the sovereignty arguments made by critics of the FTA, reminding readers that fully seventy-one countries currently participate in regional trade communities without having complained of lost policy independence (“Sweden has many high-cost social policies – indeed many more than does Canada — yet little Sweden trades tariff-free with such economic heavyweights as Germany and France”).
An important contribution by the GATT expert, Frank Stone, sees the FTA not as demonstrating a falling away of Canada’s traditional role as a Gatt champion, but as a bilateral way of strengthening the multilateral trading system. Stone says, “On balance, it is difficult at present to make a convincing case that the bilateral FTA will stand in the way of global tariff liberalization … Following the formation of regional, preferential groups in Europe, the member countries proceeded in three successive rounds of negotiations in the GATT to bargain substantial reduction in their tariffs against outside countries, including Canada and the United States, at least for non-agriculture products.”
The concluding comments by the book’s editor is vintage Crispo. He blasts the anti-free trade biases he perceives in the Toronto Star, CBC, and elsewhere in the Canadian media; notes correctly that the real choice facing Canadians is between implementing the free trade agreement and growing U.S. protectionism “as exemplified by the various versions of the infamous omnibus trade bill, the growing support for gutting the auto pact, and the hundreds of industry-specific protectionist bills circulating the halls of the U.S. Congress”, and concludes that the challenge is for all those who favour the FTA to “counter the propaganda campaign being waged against the FTA by refuting it point by point”, ’, The reason opponents of the FTA dislike this book so much is precisely because its contributors have risen well to Crispo’s challenge.
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Originally published in bout de papier, Vol. 6, No. 3 (1988), p. 44. Read the rest of this issue →
