Surrender of sovereignty an unfair trade

Vancouver Courier
January 18, 1998

Consider the following observation by author Robert D. Kaplan from last month’s Atlantic Monthly: “The 500 largest corporations account for 70 percent of world trade. Corporations are like the feudal domains that evolved into nation-states; they are nothing less than the vanguard of a new Darwinian organization of politics.”

In an exceptional essay that should be on every political science syllabus, Kaplan shows that Western democracy could be a temporary phenomenon. He says that popular government, at home and abroad, is giving way to a new authoritarianism, but our great prosperity renders us blind to the impending tragedy. We late-20th-century democrats still cleave to purblind notions about the absolute supremacy of reason, elections and free markets.

To be sure, real-world fiscal accountability has disabused even Britain’s Labour Party of its quasi-Marxist delusions. Today, under Prime Minister Tony Blair, the party of Tony Benn and Neil Kinnock is just a lighter shade of Tory blue. But economic theory isn’t a zero-sum game with absolute winners and losers. An axiom of economic theory states that everything has an opportunity cost, but this fundamental truth is lost on free-trade theologians, which is why their rabid support for the secretive and highly sensitive Multilateral Agreement on Investment is so disturbing.

Under MAI, Canada would join 28 industrialized nations in what would be, for all intents and purposes, a gigantic economy wherein any distinction between foreign and domestic business disappears. For a trade-dependent country like Canada this sounds great, until you examine the political cost. Foreign trade accounts for 40 per cent of our gross domestic product—compared to half that for the U.S. Put another way, the U.S. is twice as able to control its economic fate as Canada is.

Bargaining away our right to say “no” to another country’s conduct on our soil compromises what little national sense we have. In the 1970s we gave up trying to define ourselves and concocted the sophistry of multiculturalism. We denied the fact of our own essence and asked immigrants if they would be so kind as to lend us some of theirs. Today, after 20-odd years of being a cultural crazy quilt, the ennui and frustration is draining our political culture.

Now, MAI threatens a more serious version of the same. Instead of setting national economic priorities and addressing our own public policy problems (such as regional inequality), we’ll let other countries make economic decisions for us—decisions that will hardly put Canadian interests first.

Last January in a speech to the U.S. Chamber of Commerce, federal Trade Minister Sergio Marchi admitted that Canada was too small to trade with itself, and claimed that a national consensus found free trade to be not only necessary but beneficial. Marchi hit upon Canada’s fundamental economic problem, but rationalized it away.

To pro-free trade voices like the Globe and Mail’s editorial board, Kaplan statement seems to refer to a glorious world where economics supersedes politics. As the Globe wrote on Nov. 25: “As barriers to trade have fallen, companies have put investments where they make the best economic sense, making the world a wealthier place… Creating a consistent and transparent international climate for foreign investment—the objective of MAI—is thus in the interests of all.”

This is neo-con casuistry at its worst. For the Globe, money is the only standard of wealth, and there are no losers. But reality is not nearly so simple. The more Canada exposes itself to the vagaries of international economics, the more difficult it is to formulate national policies. For example, the economic turmoil in Asia affects Canada (or at least B.C.) far more than the U.S. because the U.S. has the luxury of trading within itself.

A country is more than a revenue generator; it’s a society of people. Economics may provide them with the necessities and luxuries of life, and trade may play an important part, but it cannot rule their lives or give meaning to their lives. Those who take the easy way out by making a virtue of necessity (trade) compound our structural weakness. 

The concept of free trade itself is dubious, since no trade is free of government control. (The most subsidized business in the world is the U.S. military.) A world with multinational corporations running amok (even more than they are now) would create a world in which ethics, ecology, culture—everything human, valuable and economically inefficient—is subordinated to multiple bottom lines. Even the great liberal economist Adam Smith held a place for regulation and tariffs.

The tragedy is that Canada is one of the biggest supporters of free-trade pacts like MAI and NAFTA (North American Free Trade Agreement), but it’s always easy to make a virtue of necessity. Then again, if MAI is so virtuous, why are negotiations being carried out in virtual secrecy, and why do cabinet ministers reportedly develop laryngitis when asked about it?

International trade has always driven Canada’s economy, but under MAI, which is supposed to be signed in May, Canada’s economy becomes everyone else’s economy.

That’s the danger.