CIIT Committee Report

Supplementary Opinion

Bloc Québécois

Trade with Korea:  At What Cost?

When the members of the Committee on International Trade decided to look into the repercussions for the Canadian economy of a free-trade agreement with South Korea, they voiced their concerns about the outcome of such an agreement.  For its part, the Bloc Québécois was worried about the effect on Quebec’s manufacturing sector, whose international competitiveness has been hit hard by the soaring Canadian petrodollar.  We support the principle of diversifying export markets; but we support it as a way to enable vulnerable sectors to become less dependent on trade with the United States and thus less vulnerable, not as an excuse for exposing them to ferocious and often unfair foreign competition at a time when a number of our industries are already at a disadvantage.

The Report identifies a number of points that must necessarily be part of any future free-trade agreement with South Korea.  We do not disagree with the Report’s recommendations, in fact we would have liked to see them taken further.  Moreover, since the Report does not recommend signing a free-trade agreement with Korea, we will not oppose it.  However, we consider it necessary to review several qualifications and concerns that govern our attitude to any agreement with Korea.

First of all, although we appreciate the difficult circumstances in which the current WTO bargaining round is taking place, we must point out yet again that the current government is obsessed with devoting all its energy to concluding bilateral agreements, when the best way to open new markets in a context favourable for the Quebec economy would be through multilateral agreements.  Certainly it is vital to reduce dependency on the American market, but the impact of new agreements must be carefully calculated, and a much more cautious and especially a much less doctrinaire approach to them must be taken.

In the present case, the issue of the time chosen for negotiating an agreement was raised by a number of stakeholders.  The current manufacturing crisis, combined with the historical difficulty that Canadian manufactured goods have encountered when attempting to penetrate the Korean market, give the impression that Canada wants to go to war on a sick horse.  Some stakeholders claimed that we could see our competitors cornering the Korean market, and Canadian companies missing the boat, if Canada does not sign a free-trade agreement.

But Canada’s eagerness to sign an agreement before its competitors at any cost only heightens the risk of signing a less advantageous agreement than its competitors, which could prove worse than the absence of any free-trade agreement at all.  We cannot allow anxiety to guide trade policy if we want it to be credible and effective.  In the long term, this struggle for new markets will only result in an ever-increasing number of more or less suitable treaties, which ultimately risks doing more harm than good to Canada’s economy.  It must also be borne in mind that Korea is a member of the WTO and that therefore 80% of Canadian products are already exempt from duties and quotas, which considerably reduces the negative effects of market exclusions caused by the absence of an FTA with Korea.  In addition, the rise in the Canadian petrodollar has affected the competitiveness of Canadian products on the Korean market in a way that no free-trade agreement could ever hope to match.

Given these facts, the following questions arise:  What is the advantage of signing a free-trade agreement with Korea?  And why do it at such a bad time for the manufacturing sector?  So far, the arguments in favour do not seem to us to be adequate.

We think that before flinging itself into an assault on Asian markets, Canada must craft a genuine industrial policy.  It must free up funding to promote Canadian products abroad.  It must improve the manufacturing sector’s productivity through government programs for investment in research and development.  It must give the manufacturing sector the capability to meet its competitors on equal terms.

The current government’s laissez-faire economic policy is true economic Darwinism, based on so-called “natural” economic laws that are in fact entirely artificial.  It enables Ottawa to sit back and watch Quebec’s manufacturing sector being bled white, while protesting that it can do nothing because of the “immutable” laws of the international market.  Just because the Conservatives want to believe their own dogma, are we supposed to let our economy lose its manufacturing sector, and the value added of the products we export, and fall back on nothing but natural resources and services?  The Bloc Québécois cannot endorse this lack of vision, or allow Quebec’s economy to be reduced to this point.