Canada’s trade liberalization agenda
A recent history of the expanding definition of “trade barrier”
Over the past few years, and most certainly with the Conservative Harper government, Canada has
increased its commitment to a liberalized trade agenda – one that puts higher emphasis on business
priorities over public interest.
This policy shift comes as the word “protectionism” gets used with increasing frequency in Canada.1
Often it’s in reference to “Buy American” policies in U.S. economic stimulus legislation, which require
that steel and other industrial products bought with federal infrastructure money be made in the U.S.
But as U.S. President Obama and other national leaders grapple with how to respond to the economic,
environmental and energy crises affecting our world, we see that many forms of government policy are
coming under fire as “protectionist.”
Here are some examples:
- Former U.S. vice presidential candidate Sarah Palin complained about the import duties in the
United States on Chinese tires that are produced in a less environmentally friendly manner than
American tires.
- Pesticide bans in Quebec are targeted as obstructions to corporate profit.
- Canada’s public health care system is challenged under NAFTA as representing an unfair monopoly
that shuts out American insurers and health care providers.
- Energy legislation in the U.S. that could curb imports of tar sands oil on the grounds that it is too
carbon intensive (which really puts the true environmental cost of the tar sands in very mild terms)
is decried as protectionism.
- The Canadian government continues to complain about U.S. state or municipal protocols that
encourage governments to procure goods or services locally for the sake of boosting the U.S.
economy and creating new jobs.
Most of us would probably recognize these government policies and measures as reasonable forms of
protection. They are designed to protect people from environmental abuse, and to protect workers from
economic shocks. Public policy that fosters local economic growth is also commonplace, with every
major economic power, including the United States, the European Union, China and Canada, using it.
But Canadian provinces and the federal government are now busy signing and negotiating new trade
agreements that would undermine environmental, social and economic policies designed to protect,
develop and enrich local communities while fostering more sustainable practices. The question is: why?
What is behind Canada’s internal and international trade agenda?
Canadian trade officials at the federal and provincial level are working furiously to establish a
comprehensive set of federal, provincial and territorial agreements on trade, investment and labour
mobility. These agreements stem from the 1995 Agreement on Internal Trade (AIT). The aim of the
AIT was to eventually bring provincial and municipal governments (and their agencies) in line with
international trade regimes that limit public policy options affecting business.
Under these new interprovincial agreements, the provinces (and sometimes even large corporations or
individual investors, as in Alberta and B.C.) can invoke new dispute procedures to challenge government
policies and actions, even ones that make things better for the public – from protecting the environment,
water and public health, and providing public services such as health care and child care, to using public
funds to stimulate local economies. Trade officials describe their initiatives as “trade liberalization” – an
agenda that would limit the role of government by promoting policies of deregulation and privatization.
Increased deregulation of financial services, for example, stems from a blind faith in market logic to sort
out how and where money is invested (or drastically yanked out of national economies). Letting socalled
market realities regulate how energy is produced and distributed is also part of this laissez-faire
(do nothing) logic. This is, of course, precisely the policy approach that has been disastrous for domestic
and global economies, and what has played a key role in forestalling meaningful efforts to address
climate change and other pressing ecological challenges.
But the federal government and many provinces continue to champion these same “free trade” policies,
and are seeking to entrench them in internal trade agreements for the purpose of letting businesses do
what they want while constraining the policy and regulatory options of present and future governments.
Trade officials have “strengthened” the AIT with new labour mobility and dispute resolution chapters
that again privilege trade flows over other social goals. Several provinces are also negotiating bilateral
free trade agreements – such as the Trade, Investment and Labour Mobility Agreement (TILMA) between
Alberta and B.C., and the recently signed Ontario-Quebec Trade and Cooperation Agreement – which
both push trade liberalization even further than the AIT.
These agreements were signed based on a myth. In reality, there are few barriers to interprovincial trade,
investment and labour mobility. Canadians are free to live, work and invest anywhere they choose in this
country. There are no customs stations along provincial borders and no tariffs on interprovincial trade.
The real goal of domestic trade liberalization is set out in one simple TILMA Article that gives investors
the right to challenge regulations they do not agree with. This article is reproduced in the Ontario-
Quebec pact under the heading “No Obstacles:”
“Each Party shall ensure that its measures do not operate to restrict or impair trade between or through
the territory of the Parties, or investment or labour mobility between the Parties.”
When you think of it, virtually any government action can be seen as offending this clause. After all,
everything a government does is likely to affect the market, or “investment,” in some manner. That
means that all government policy could be seen as protectionist!
What you can do
This booklet is designed to help you understand this internal trade agenda and how it relates to new
international agreements such as the Canada-EU Comprehensive Economic and Trade Agreement and
the proposed procurement agreement with the United States. We will provide you with tools to fight
these unfair trade deals as well as strategies on how to create fair trade communities and a fair trade
future for Ontario. We will show how there are very real and pressing risks to a number of community
initiatives, including “buy local” policies, which are designed to boost local economies or foster
sustainable development, create local jobs and promote strong public services, and ways you can press
your elected politicians into action on these issues.
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1 Taken in part from the 2009 report “State of Play,” by trade lawyer Steven Shrybman, available here.
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