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Free Trade Deals Have Become The Opiate Of The Ruling Classes

We need to do a lot better than sign any free trade deal that comes along simply because it's there.

Canada is on the verge of signing on to two free trade deals that could have a broad impact on our country's laws and policies.

Don't blame yourself if you don't know much about the Trans-Pacific Partnership (TPP) or the Canada-EU trade deal confusingly known as CETA. Considering what's at stake, there has been a surprising lack of discussion on this subject, at least in Canada. Seriously: Where is the debate on this new, unprecedented era of transoceanic trade deals?

It's something we need to be talking about, and now. Both these trade deals are moving into the ratification phase. A symbolic TPP signing ceremony, no doubt designed to put pressure on negotiating countries to ratify the deal, takes place next month. Yet we still haven't debated whether these deals would actually be a net benefit to Canada.

According to a new study from Tufts University, one that's bound to be controversial, the 12-country TPP deal would reduce employment in Canada by 58,000 jobs over 10 years while adding a measly 0.28 per cent to GDP.

For the U.S. the TPP projections are even worse, with 448,000 jobs lost and an actual reduction to GDP of 0.54 per cent within 10 years.

Chart: Tufts University

The World Bank has a somewhat rosier forecast, but even their recent report suggested the TPP would have only a marginal benefit to the developed economies in the trade area. Canada would see a GDP that's 1.2 per cent higher a decade after the deal comes into force, or an increase of some 0.12 per cent per year.

The deal is "unlikely to affect overall employment in the long run," the World Bank concluded.

Are either of these forecasts correct? Your guess is as good as mine. The thing to remember about economic models is that they are built on assumptions, and what assumptions you build into your model determines, to an extent, what results you get. In other words, all economic models are biased.

But could a trade deal actually be a negative for a country? Of course it could. The key word in the phrase "free trade deal" is "deal" -- that's what these are, deals, and like any deal, a trade deal can be good or bad.

But that's not how our political and bureaucratic leadership sees it. For years now, these agreements have been pushed forward on the basis of a dogmatic dictate that when it comes to trade, any deal is a good deal. The philosophy amounts to "let's sign up to whatever deal comes along and not worry too much about the details."

In just about any other context, someone who thinks that way would quickly be marked a sucker.

U.S. President Barack Obama, centre, and other leaders of the Trans-Pacific Partnership countries pose for a photo in Manila, Philippines, Wednesday, Nov. 18, 2015.

You can see this sucker attitude in the previous Harper government's tunnel-visioned insistence on signing one free trade deal after another, lobbying for years to be included in TPP talks.

You can see it too in the blind insistence of the EU's technocrats that the Canada-EU deal will be ratified by the EU this year, despite vocal and aggressive opposition in Europe and an entire chapter in the deal (investor-state dispute resolution) that Europe might actually want to reopen.

One thing is certain: This is not an evidence-based approach to trade deals.

Did you know the Trudeau government is holding consultations right now on the TPP? No? That's probably because they aren't exactly going out of their way to tell anyone. The non-debate continues under a new government.

The Destructive Logic Of Trade Deals, Or Why We Can't Just Walk Away

That Tufts University study makes another forecast about the TPP: It will be much worse for the countries that aren't in it.

While most TPP countries would see net economic growth from the deal, developed non-TPP countries will see their GDP reduced by 3.77 percentage points in the decade after the deal, the study says, as they lose access to markets and miss out on opportunities.

Walking away from the TPP would mean shifting Canada into that column of countries that stand to lose big time if and when the TPP arrives.

In fact, this is the argument that has been used most often to justify our participation (and the participation of many other countries) in these new trade deals -- that it would simply be worse to be left out. It's telling that, at the end of the day, it's this argument (rather than any potential positives) that the pro-free trade crowd employs.

Excuse me, but what sort of economic policy is this? We're signing on to a possibly damaging free trade deal in order to avoid worse damage from not signing on to it?

How about just scrapping the whole thing and starting over? Or refocusing on more specific trade deals, with specific partner countries or for specific industries, where the benefits can be clearly seen? Has anyone considered that?

No, apparently not. Imagine the shock in Brussels or Washington or Ottawa if you even suggested something like that. Our political leadership, both within Canada and globally, is on auto-pilot. Say "free trade deal" and they're ready to sign on the dotted line.

Free trade deals have become the opiate of the ruling classes. Today, any world leader can sleepwalk their way to "economic success" by signing a trade deal, any trade deal. Take a load off and light a cigar, you don't need to think anymore.

Free trade deals, as far anyone knows, are forever. Once you sign up to a major international treaty, you can't walk away without seriously damaging your foreign relations. These deals have never been cancelled, only sometimes replaced by bigger ones.

So the future wealth of our nation -- all these nations -- is at stake, and for the long run. We need to do a lot better than sign on to a trade treaty because we assume they're all the same, and they're all a good idea.

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