Free Trade: Twenty Years Later

By Garnet

Free trade is like an aging socialite. Every birthday it looks in the mirror, it sees more wrinkles and gray hair.

On January 2, the FTA agreement, which brought free trade to Canada and the United States, turned 20, and the Canadian Centre for Policy Alternatives rang in the bash with a bright light to expose every one of those wrinkles, every gray hair.

When this baby was born, the upper classes lauded the deal as one that would bring prosperity to  both countries. In Canada, they told us that we would see more, higher paying jobs, rising living standards that would be shared among all economic groups, whether working class or owners.

Canadians didn’t buy it: The free trade Progressive Conservative Party got a minortiy of 43 per cent of the votes, whereas the Liberal and New Democratic Parties, both of which fought free trade, received a combined 51 per cent of the vote. Yet the Progressive Conservatives won a majority government. Free trade was realized.

Since that time, who has been proven right?

That’s where the Centre for Policy Alternatives study comes in. They took a look at companies as part of the Canadian Council of Chief Executives, the group of top companies that effectively negotiated the agreement on behalf of Canada, to see how their companies had done.

They’ve done remarkably well. Out of 41 companies with available statistics, they more than doubled their combined revenue to $310 billion from $142 billion.

The workers lost. At the same time as revenues soared, they cut their combined workforce by over 188,000 jobs.

But here is where it gets interesting.

The 13 companies in the group that increased their combined employmemnt by 88,580 increased their revenues by $65 billion. The 28 companies that reduced their workforce by 205,062 workers managed to increase their revenues by $93 billion.

The big three auto-makers shrank their workforce by over 50 per cent, to about 43,000 from 87,626, but increased their revenue by 70 per cent to 67.3 billion in those 20 years, while at the same time losing market share to other companies.

Oil companies saw the largest rise in profits, a 290 per cent jump to $53.4 billion from $13.7 billion. Again, that came at the expense of more than 6,000 jobs.

What this amounts to is a massive incentive to cut jobs, to put ordinary working people out of work, so that companies can pass on exorbant profits to their shareholders who never put a day’s work into building the company.

At the same time, workers’ real incomes have been stagnant or dropping for 80 per cent of the population.

We can do far better. If workers had the power to decide the future of their economy democratically, then we would see a situation where workers interests were put first. However workers are kept confused by the actual reslults of trade agreements such as NAFTA and the FTA and currently the SPP agreement. That is evidenced by continued public support for free trade that can’t be ignored by socialist movements. As long as workers are left in the dark about how the economic system works, how can they be expected to understand the need for change?

If socialists hope to achieve any change, we must reach out to everyday working class people and get this message across.

The full report can be found here: http://www.policyalternatives.ca/documents/National_Office_Pubs/2007/FTA_20_Years_Later.pdf

It’s definately worth a read.