Key Points From the Cabinet Memorandum (Aug 7, 2002) Seeking a Mandate for WTO Negotiations Leading up to the Sep 2003 Summit

September 1, 2002

The memorandum to cabinet conveys the same PR message that the trade ideologues are giving to the Canadian public: trade is good (no qualifiers); liberalization is good (no qualifiers); that's why we're at the WTO; go back to sleep; we've got things under control. (Although the very fact we got this document indicates dissension in the ranks.)

The document repeats the worn out assertions about the miracle powers of trade and investment liberalization as the cure-all for world poverty and other ills that afflict our planet. This despite the worldwide debate, and the empirical evidence of deepening inequality and poverty in the last two decades of multilateral trade agreements and IMF-imposed structural adjustment programs to integrate developing countries into the global economy. Per capita GDP in Africa hasn't moved in over two decades. In 25 African countries per capita GDP is lower than it was in 1975, in 12 countries per capita GDP is lower than it was in 1960. The four best "pupils" of the from former Soviet Union republics in terms of their adjustment to the global economy, have per capita GDPs that are now one-half the level they were when they started out in 1991

It touts the benefits to Canada of export growth and job creation under NAFTA while ignoring the job destructive effect of import growth. One of the government's own studies, for example, found that job destruction from imports was greater than the job creation from exports. It ignores that fact, despite almost 14 years of continental free trade, that average family income in Canada is still below its 1990 level. It trumpets an annual Canadian growth rate of 2.5% during 1990-2001, but growth was 5% in the three decades before the current era of globalization began (1980).

Second, the negotiating mandate is preoccupied with achieving commercial opportunities for Canadian exporters to the exclusion of other concerns and considerations. It dismisses critics' warnings that public services like medicare and education are covered under the WTO services agreement (GATS), and could be undermined by it. It offers no substantive rebuttal. Rather it simply denies this basic contradiction and advises denial as the pillar of its communication strategy. Nor does it mention a negotiating position or any strategy for protecting public services. (It only mentions a negotiating strategy to protect cultural policy objectives--Annex A). Apparently, DFAIT has no negotiating strategy for defending Medicare. This demonstrates that the bureaucrats in charge of these negotiations are not serious about protecting medicare. They view it merely as a political management issue, not a genuine negotiating issue.

It takes the same line on critics' arguments that the right to regulate in the public interest is threatened--denial. However, it appears to contradict this in its negotiating position in the area of non-tariff measures where it states its goal to "remove and/or reduce existing trade distorting NTMs and to discourage or prevent the implementation of new ones." All laws and regulations must pass the litmus test of " least trade distorting." It supercedes other tests of effectiveness in terms of meeting the public interest. The clear implication is that trade panels would be in a position to second-guess domestic regulators.

Third, there is a major contradiction between its PR line as the friend and advocate for the developing world and the reality of its negotiating position which seeks to block developing country demands at every turn. Canada comes across as kind of a colonial administrator that knows what is best for poor countries-- full integration into the global economy through investment and trade liberalization and strict adherence to Washington consensus-type policies. (The irony is that the most successful recent examples from the developing world are countries like China and India, which did not follow the orthodox path to integration prescribed by WTO rules and structural adjustment programs.)

For example:

  • Canada refuses, under special and differential treatment talks (par 59-61), to accept to accept more flexible rules for poor countries.
  • On implementation issues from the Uruguay Round Canada with other developed countries has been stalling on a long list of developing country demands and is not willing to budge unless developing countries make new concessions.
  • On subsidies (par 32), says that Canada will resist carve-outs for development related subsidies and for the implementation of multilateral environment agreements.
  • Nor is it willing to cede any development policy space to small economies (par.65).

Fourth, Canada is pushing hard in the working party for negotiation on an MAI in the WTO to be launched at the Cancun ministerial summit in September 1993 (par 54). Although it does not elaborate any specific objectives we know from Inside US Trade (August 30), which is the bible for trade policy experts and watchers, that Canada is leading the charge for the broadest possible definition of investment along the lines of the NAFTA definition. It wants an approach where all measures are covered unless they are explicitly taken off. (top down). Canada will also likely push for a NAFTA-style investor-state mechanism to be included in the MAI although a WTO Secretariat paper says that many countries would resist this. Canada's trade negotiators continue to purse these regressive features, despite the appalling record of challenges to environmental protection and other public interest regulations under NAFTA's investment rules.

Fifth, while acknowledging that there will be an environmental impact assessment of Canada's WTO position is downplays them as unlikely to be significant. Scrutiny of this assessment is necessary to see the weight given to increase energy use related to trade, increased pesticide use due to industrialization of agriculture and increased resource depletion. It opposes so called multi-functionality approaches tariffs or NTMs for resource conservation or environmental protection purposes. Annex A indicates that governments must be constrained in how they implement (MEA) trade obligations to ensure that they are not a disguised restriction on trade. This implies the pre-eminence of trade over environmental considerations.

Bruce Campbell is Executive Director of the Canadian Centre for Policy Alternatives.