A German Christmas market is a magical thing, even if you don’t celebrate that holiday. Sparkling lights and music, sweet pastries or hearty sausages to eat, warm things to drink, toys and ornaments and mittens to buy. But also in the midst of the Munich market I visited last December, two tables of serious young Germans protesting the Canada-Europe Trade Agreement (known as the Comprehensive Economic and Trade Agreement or CETA). I found that jarring and somewhat astonishing in a country renowned for an economy successfully built on trade.
There’s a lot of buzz just now around international trade agreements, most of it negative. Many feel trade deals favour foreigners over domestic businesses and talk about “taking back control of our country.” Donald Trump declares NAFTA “the worst trade agreement ever negotiated.” Hillary Clinton is tap-dancing on trade partnerships she helped frame and once promoted – in a bid to keep Sanders supporters in the Democrat camp. Britons have voted to leave the EU and put a haze of uncertainty around their trading relationships. Other EU countries are signalling discontent with a system that encourages free movement of people and goods. Just last week the Wallonia region of Belgium voted against CETA, which the EU has said must be unanimously approved by all member states.
Global trade is not new. The Silk Road connected Asian and European economies two millennia ago. The Dutch West Indies Company established a trading post in what is now Wall Street. The Hudson’s Bay Company created a Canadian economy based on beaver hats for posh Europeans before trade in natural resources and manufacturing became drivers of wealth for this country.
Capitalist economies have for the most part historically been based on the assumption that global trade creates growth and growth is good. We measure our health in terms of quarterly corporate results, rising stock markets and increasing GDP. We have had faith in the affirmation that “a rising tide lifts all boats.” But recent experience has been that the tide has lifted some boats while sinking others. There are rising middle classes and growth in China and India. In richer countries in North America and Europe, there’s been a hollowing out of well-paying middle-class jobs and growth is stalling – even as the wealthiest 1% has prospered.
How should Canadians think about this? Prime Minister Justin Trudeau recently stated “the fact is that NAFTA has been incredibly good for all three of our economies,” creating opportunities and jobs. He believes data will outweigh campaign rhetoric after the US election. At the same time, he hedged on the question of pipelines that some would argue are critical to Canada’s economic health, but that others oppose on environmental grounds.
I wonder if all this means that people are ready to rethink our prevailing economic models. The idea of limits to growth has been around at least since Thomas Malthus in the 18th century, promoted by the Club of Rome in the 1970s and surfacing in many ways in this century. What are the trade-offs between economic growth and environmental sustainability? Do we welcome people who come to our country for economic opportunity? If “free” trade is not really “free” – in the sense that it has social and economic consequences that make some people “losers” – are we creative enough to imagine policies that mitigate those negative side effects? Are we ready to reassess how we measure value and wealth?
At the Munk School we have been engaged in exploring the impact to Canada of proposed trade agreements like the Trans-Pacific Partnership, the topic of an expert workshop we convened earlier this year at the request of International Trade Minister Chrystia Freeland. We’ve been examining aspects of the international trade regime – topics such as causal links between the proliferation of trade agreements and a wave of democratization, how regional preferential trade networks evolve, the potential impact of Brexit, how innovation now plays into the wealth creation equation, and whether innovation can be focussed upon the creation of opportunities for the poor. We believe Canadians should not be complacent – these are important questions to which we must pay more attention.
October 18, 2016