CIIT Committee Report

Supplementary Opinion

New Democratic Party

            In many respects, Korea is an ideal trade partner for Canada.  It is a democratic nation with a respectable record on human rights and an ideal avenue for Canada to expand its access to markets in Asia.  Certainly a mutually beneficial trade relationship would be a good thing for both countries.  However, the current Government’s negotiations towards a Canada-Korea bilateral agreement are not in keeping with Canada’s fair interests.  It is a sell out for Canadian families and workers employed in the manufacturing sector because it relies on a very simplistic model that has been proven a failure.

            This committee seems convinced that we should simply trust the government to negotiate a deal that is in Canada’s full interest, despite the volume of witnesses and evidence that have told us this will not be the outcome.  The record of this Conservative government is clear on trade negotiations: look at the softwood lumber sellout.  We were told over and over again to trust the government and that it had negotiated the best deal possible.  But since the agreement was implemented in October 2006, over 10,000 jobs have been lost in the forestry industry.  Rubber stamping the Canada-Korea free trade deal is taking us down the same path.

            No Assurances from the Government.

            The government has failed to provide meaningful information clearly demonstrating that the bilateral Canada-Korea trade agreement will not have adverse consequences on employment in Canada, particularly in the manufacturing, automotive and shipbuilding sectors.  Moreover, it started working on the studies it did decide to undertake after the negotiations had already started, which created a natural bias in favour of concluding an agreement, as Dr. Jim Stanford pointed out before this committee.[1]

            Echoing this point, Mark A. Nantais of the Canadian Vehicle Manufacturers' Association testified that “You may recall that Hyundai closed its only plant in Canada, in Quebec, in 1994. Unfortunately, the government's economic analysis failed to study these long-term economic impacts, which is why we have had such difficulty accepting claims that there will be no economic downside to Canada's auto industry and economy as a whole as a result of the proposed free trade agreement.”

            A study conducted by the Canadian Auto Workers Union, in addition the opinion of other witnesses who made compelling cases, have all estimated that the potential job losses in Canada as a result of the bilateral agreement with Korea would be in the thousands.  This kind of situation could not come at a worse time.

            As pointed out by Dr. Teresa Healey, Senior Researcher at Canadian Labour Congress, “it is expected that high value-added manufacturing industries will be negatively affected. These include the electronics, machinery, and automotive assembly and parts industries, and the textile and apparel industries, among others. Using real-world assumptions, the Canadian Auto Workers concludes that at least 33,000 jobs will be lost.”

            Canada’s Manufacturing Sector in Crisis.

            The Canadian manufacturing and automotive sectors, which are one of the main contributors to quality employment and prosperity for middle-income families in the country, are experiencing a major crisis that has been ongoing for years due to a rising Canadian dollar, high energy prices and a growing trade deficit with Asia.  Job losses since November 2002 have now topped 291,000.  In the last year alone, 132,000 jobs have been lost.  There has been no action on the behalf of this government or previous governments that would constitute a real remedy to address this crisis.

            As pointed out by before the committee by Scott Sinclair of the Canadian Centre for Policy Alternatives, “The proposed deal would be a blow to Canadian manufacturers and manufacturing workers at a critical time when they are struggling to cope with this crisis. They are justifiably looking to Canadian governments for supportive policies, not initiatives that would make their current situation even more difficult.” It is at the point of a sectoral depression, one that will affect the rest of the economy.  It would be dangerous to implement any agreement that would make this situation even worse.

            Canada’s economic relationship with Korea is much more tied to the fluctuation of our currency than to a free trade agenda.  As pointed out in a report by Industry Canada that investigated the impact of the Canada-US Free Trade Agreement on Canadian exports concluded, the Free Trade Agreement only accounted for about 9% of the increase in Canadian exports during the period of 1989-2000, while the rest was due to the depreciation of the Canadian dollar.[2]  Logically, a similar situation will manifest itself if a Canada-Korea free trade agreement is adopted.

            Looking for a Practical Approach.

            Korea by nature is an export oriented economy that aggressively dominates the markets in which it concentrates its exports.  Furthermore, Canada already has a significant trade deficit with Korea, topping $2.5 billion in 2006.  A bilateral trade agreement with Korea would not make sense for Canada. 

            Nevertheless, it is desirable that Canada and Korea, both democratic nations with relatively high standards of living, work together to negotiate sectoral trade agreements that are clearly beneficial to both countries.  These agreements could relate to the energy, softwood, automotive and agricultural sectors, to name a few.

            The type of jobs created in Canada to facilitate Canadian exports by this agreement will not offset the loss of high quality, family sustaining jobs that will be lost as a result of Korean imports.  The vast majority of Canada’s imports from Korea are cars, electronics and machinery equipment- all manufactured, value-added goods.  On the other hand, Canada’s main exports to Korea are unprocessed, natural resources such as wood pulp, coal and aluminium.  This is not an ideal situation and the agreement being pursued by the government would only make this situation worse.  Any bilateral agreement should ensure that the amount value added jobs created in both countries would be equal.

            Those who will lose their job as a result of this agreement will not be able to find new jobs in the manufacturing sector.  They, as many before them, will be forced to look for work in the services sectors, which provides on average lower salaries and less benefits.  The services sector does not move the engine of trade in Canada: it accounts for only 13% of Canada’s exports.  If Canada’s export industries fall on hard times, because of the natural cycle of the market or otherwise, we will only have our manufacturing industry to rely on to keep the engines of the economy moving.

            This committee has heard from many witnesses in the trenches of the manufacturing crisis that have all echoed the same point, as George MacPherson, President of the Shipyard General Workers’ Federation of B.C put it, a “F[ree]T[rade]A[greement] with South Korea the Government of Canada will drive another stake into the heart of a viable Canadian shipbuilding and marine manufacturing industry. But this stake, in comparison to others in the recent past, has all the signs of being the fatal one.”

            A Viable Fair Trade Policy.

            New Democrats believe that Canada’s trade policy should be based on the principles of fair trade, which seeks to build trading partnerships with other countries that support the principles of social justice and human rights while also expanding business opportunity.

            The NDP was pleased that this committee adopted its recommendation that the government stops exclusively pursuing the free trade model at the expense of all other alternatives and that it should invest in other avenues of trade growth, including above all a vigorous trade promotion strategy that builds the Canadian brand abroad, along the lines of the Australian experience.  It is shocking to see that the European Union spends in excess of 500 times more than Canada on promoting its wine industries 

            It is unfortunate however, that the majority of the members of this committee failed to recognize the importance of fair trade as an over-arching principle, not just an afterthought, of trade negotiations.

            The NDP strongly believes in an alternative and a better form of trading relationship that can be established with Korea and any other country; one that includes within an overall fair trade strategy the following:

1. Providing a comprehensive, common sense Impact Assessment on all international agreements that demonstrates that trade deals Canada negotiates are beneficial to Canadian families, workers, and industries.
2. Ensuring that the trade agreements Canada negotiates support Canada’s sovereignty and freedom to chart its own policy, support our ability to be a competitive force on the world stage, and support the principles of a multilateral fair trade system.
3. The fundamental principle that all trade agreements must promote and protect human rights by prohibiting the import, export, or sale in Canada of any product that is deemed to have been created under sweatshop conditions, forced labour, or other conditions that are not in accordance with fundamental international labour standards and human rights.
4. The fundamental principle that all trade agreements should respect sustainable development and the integrity of all ecosystems.
5. That any time the Government of Canada signs a free trade agreement, the decision to proceed with enabling legislation be subject to a binding vote on whether or not to accept the terms of the agreement.

            Regretfully, the committee also failed to recommend the following, which given the current situation in the automotive and manufacturing sectors, the NDP believes is in the public interest:

1. That the government does not sign any trade agreement that would lead to a net job loss in the Canadian manufacturing sectors.
2. That the Canadian automotive sector be excluded from the Canada-Korea trade agreement, given that no clear evidence was presented by the government on how this agreement would affect employment in this sector.
3. That raw log exports from Canada be prohibited in any Canada-Korea trade agreement.

            The NDP reaffirms the positions articulated in its two previous dissenting opinions submitted to this committee, of March 28, 2007 and December 3, 2007, in which it outlined its deep concerns over the government’s unrestrained free trade policy and outlined its vision for a fair trade policy that puts the pursuit of social justice, strong public-sector social programs and the elimination of poverty at the heart of an effective trade strategy.