CETA and Toronto “Reasonableness”

18 03 2012

Free trade agreements between countries are made with the intention of boosting trade by broadening markets which then, ostensibly, increase output and employment. Such a scenario would be a net economic benefit to trade partners, despite the fact that there might be initial growing pains and job losses which are a natural result of a shift toward economic specialization, a by-product of trade agreements.  On the other side of the debate, anti-free trade proponents argue the net economic result is one in which factories and jobs are exported to countries with lower minimum wages and production costs. The reality is much less stark  than either of these two views suggest.

The Council of the City of Toronto has asked for a permanent exemption from the Canadian European Trade Agreement (CETA) that the federal government is currently negotiating because it felt that too much autonomy over its economic and environmental decisions would be sacrificed. Since trade agreements are legally binding on signatories, municipal governments do not have jurisdiction for agreeing to or even complying with such treaties.  Municipalities operating outside any such agreement would be in violation of the treaty and probably result in countervailing trade sanctions or penalties.

The Canadian government has not included municipalities in the negotiations assuming them to be represented by provincial Premiers (whose agreement to the treaty is mandatory). Toronto clearly feels this not to be the case.  With the backdrop of a massive manufacturing decline when NAFTA was enacted, it has been argued the net economic outcome would leave Toronto in the red – a result of manufacturing job loss. The agreement would end the ‘Buy Canadian’ policy for public purchases – a policy which has bolstered local businesses – since it would require municipal governments to consider bids from European companies when contracting with the private sector.

Unions and environmental groups have joined their voices to the anti-CETA coalition arguing that the deal could lead to the privatization of Canadian waterways, increased drug costs and foreign limitations on environmental policies. Officials of the European Union have admitted that Europe will be able to export more than Canada.

It is clearly reasonable that Toronto has serious and legitimate reservations about CETA, particularly since it has not been involved in the negotiations and since elements of the agreement will have a negative impact not only on its autonomy but also its economy.  Toronto is the manufacturing heart of Canada. With a resultant balance of trade favouring Europeans on this playing field the fortunes of Toronto will take a hit. But is it reasonable for Toronto to ask for a permanent exemption from CETA?  While the answer to this may well be in the affirmative it must be admitted that it is also not realistic. Neither the government of Canada nor the EU will agree to a deal that excludes Canada’s manufacturing centre. Since CETA will be binding on the city, the request for a permanent exclusion must be viewed as an effort to have some influence on the negotiations, to have its voice heard. From this perspective CAW President, Ken Lewenza, is correct in describing the Toronto Council move as “reasonable”.

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