Mark Bourrie

OTTAWA, Dec 31 2003 (IPS) — North America’s trade deal drove down the real wages of Canadian workers by about 20 percent – if they did not lose their jobs altogether, says globalisation critic Murray Dobbin, author of a critical book about Canada’s new prime minister, Paul Martin.

“All of the studies have shown that workers in Mexico, the U.S. and Canada have not profited from NAFTA,” says Dobbin, whose book ‘Paul Martin: CEO for Canada’, argues the multi-millionaire prime minister broke the unions in his companies, closed domestic shipyards and registered his fleet under “flags of convenience” to drive down wages and workplace rights.

“Proponents of the deal have a mantra of ‘competitiveness’, but what we’ve seen is a race to the bottom as governments erode workers’ rights, wages and environmental regulations to try to be more competitive,” Dobbin told IPS.

The federal government manipulated the Canadian dollar’s exchange rate, the country’s unemployment benefits system and other mechanisms to effectively deny workers an increase in their real wages through the 1990s, he adds.

Dobbin said the erosion of jobs and buying power occurred when Canada racked up huge trade surpluses. “It’s ironic that these surpluses came at a time when workers have seen the greatest erosion of their real wages since the Great Depression of the 1930s.”

But Canadian officials disagree. The governing Liberal Party, which came to power in 1993 partly on a platform of “reconsidering” NAFTA (the North American Free Trade Agreement), now supports the deal.

The trade agreement between Canada, the United States and Mexico will mark its 10th anniversary Jan. 1.

U.S. investments in Canada ballooned to 215 billion dollars (166 billion U.S. dollars) in 2001, an increase of 150 per cent in the past 10 years, according to government figures. During the same period, Canadian investment in U.S. companies jumped 230 percent, to nearly 200 billion dollars.

Overall, Canada has been one of the world’s few economic success stories, generating 560,000 new jobs and growing 3.4 percent in 2002, the fastest rate among the top seven industrial economies, says Ottawa.

With the United States by far the country’s leading trade partner, Pierre Pettigrew, Canada’s former minister for international trade, said Canadians expect to see more NAFTA benefits once the U.S. economy recovers.

“Canadian businesses and Canadian labour are quietly cheering and very hopeful that that sense of optimism is coming back into the U.S. market,” Pettigrew said at a recent trade conference.

“The North American Free Trade Agreement has been a tremendous success. From 1993 to 2001, Canada’s merchandise exports to its NAFTA partners increased almost 95 percent. Mexican exports increased by 221 percent, and U.S. exports increased by 86 percent.”

Pettigrew, who wrote a book supporting globalisation before joining the Canadian cabinet in 1996, says he sees NAFTA as an important step toward greater world economic integration and more free trade.

“These regional and bilateral agreements help to open specific markets, build negotiating capacity, strengthen the appetite for further liberalisation, and even blaze a trail for WTO (World Trade Organization) rules.”

Business groups, which campaigned in support of the deal in the 1988 and 1993 federal elections, still strongly support NAFTA

“Canadians, in general, are pretty big fans of NAFTA … it seems to have worked pretty well for us,” said Finn Poschmann, an analyst with the business-oriented C.D. Howe Institute, a Toronto-based think tank specialising in economic and social policy.

The Canadian government supports the Free Trade Agreement of the Americas (FTAA), which would further strengthen the hand of industries to challenge governments’ regulation of the economy, environment and workers’ health and safety.

In fact, only the New Democrats, the fourth-ranked party in Canada’s Parliament, oppose NAFTA and globalisation, with most criticism of the deals coming from nationalist groups such as the Council of Canadians, trade unions and think tanks like the Canadian Centre for Policy Alternatives (CCPA), which regularly issues studies into the impact of trade deals.

CCPA economist Andrew Jackson, who has studied Canada-U.S. free trade extensively since the first bilateral agreement was signed in 1988, says “it is hard to sustain the argument that workers have fully shared in the relatively modest productivity gains that some have attributed to the FTA, and hard to deny that economic integration has tended to tilt the bargaining scales against workers”.

Some development activists in Canada had hoped the transfer of jobs to Mexico would improve the lot of workers in that country. Dobbin says Mexico gained some jobs and exports, but at the price of a huge jump in imports that have caused Mexico to have a lopsided balance of trade in the U.S.’ favour.

Dobbin says Canada has lost 300,000 industrial jobs to Mexico and low-wage, anti-union southern states in the U.S. But, he says, those jobs have been transitory in their new locations.

”Now, jobs are leaving the NAFTA region for China, where people work for 14 cents an hour. In the end, no one can compete with that.”