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REPORTS: AMERICAS |
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Wednesday 5
November 2003
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Nations
Learn From Canada's Free Trade
Mistakes - Expert
Paul
Weinberg
TORONTO, (IPS) - The cautious approach
of Brazil and other Latin American
governments towards expanded free
trade in the Americas results in part
from the political and economic price
that Canada paid for greater trade
access to the gigantic U.S. market,
says an expert here.
The failure of Canadian negotiators to
win an exemption from U.S. trade law
for this country's manufactured goods
and commodities in two trade deals
continues to haunt leaders in Latin
America, says Ken Traynor, a
spokesperson for Common Frontiers,
part of an alliance of unions and
citizens' coalitions opposed to the
Free Trade Area of the Americas (FTAA).
''The Brazilians sit there and they
know that history as well. They read
all of the same books; they have
watched it happen, and they say, 'we
are trying not to make the mistakes
that were made in the past','' says
Traynor.
Central and South Americans, he adds,
understand that notwithstanding
existing free trade agreements, their
home-grown and developed products
cannot compete fairly with equivalent
U.S. products in the lucrative U.S.
market because of protectionist
measures adopted by the Congress and
President George W. Bush.
Latin Americans know "just how
anti-dumping and countervailing duties
have cost them billions of dollars
worth of exports to the United States,
and they have a message from the Bush
administration that (it is) willing to
subsidize
agricultural exports like crazy,"
adds Traynor in an interview.
Trade ministers from the 34 nations of
the Americas (minus Cuba) are
scheduled to meet in Miami later this
month for further talks on the FTAA,
an accord that will produce a free
trade zone of 800 million people whose
countries produce one dozen trillion
dollars in goods and services.
The agreement, which is supposed to be
finished by 2005, expands on the
existing North American Free Trade
Agreement (NAFTA) signed by Canada,
Mexico and the United States in 1992.
The success of U.S. trade law at
keeping Canadian products like
softwood lumber out of the U.S. market
under NAFTA has caused major Canadian
business groups, like the Canadian
Council of Chief Executives, to call
for more Canada-U.S. economic
integration.
But Lawrence Herman, a Toronto-based
international trade lawyer and
supporter of the current free trade
regime, says no political will exists
in either Ottawa or Washington for
such a re-negotiated deal. If it did,
Canada, as the smaller partner in both
population and economy, would lose the
ability to establish its own trade
policy.
''There are economic advantages to
being part of the United States. But
it is not going to happen,'' said
Herman in an interview.
At a conference here last month,
'Canada, Free Trade and Deep
Integration in North America',
union-based economists provided plenty
of statistics to demonstrate the
impact of free trade.
The largely foreign-based auto
manufacturers, for instance, have been
shifting their investment and
production from Canada to the southern
United States and Mexico, where unions
are weaker or non-existent and labour
costs are lower.
''In 1999, we provided 16 per cent of
all vehicles sold in North America;
now we are down to 13 per cent and
that will fall further,'' said Jim
Stanford, an economist with the
Canadian Auto Workers.
Canada has already lost three of a
dozen auto industry plants and more
closures could be on the list next
year, adds Stanford.
Centred in the southern Ontario
industrial heartland, the Canadian
auto sector employs thousands of
people both in manufacturing vehicles
and making and supplying auto parts
and steel.
Interventionist measures that allowed
previous Canadian governments to
stimulate and encourage domestic
companies or branch plants of
foreign-based firms to expand their
job-producing operations here have
largely been dismantled because they
contravene international trade rules.
Supporters of free trade in the late
1980s, like then Prime Minister Brian
Mulroney who negotiated NAFTA, argued
that reducing tariff and other
barriers to trade and investment and a
single North American market would
encourage Canadian manufacturers to be
more ''productive and efficient".
Initially, exports of Canadian
products to the United States rose
from 25.7 per cent of nominal gross
domestic product (GDP) in 1989 to 45.5
percent of GDP in 2000, says Andrew
Jackson, senior economist with the
Canadian Labour Congress.
But the government's own analysis
shows that 90 per cent of the strong
export growth after NAFTA and the
first U.S.-Canada free trade deal
stemmed from factors outside of those
agreements.
These include, says Jackson, the
strong growth of the U.S. domestic
market, a rising U.S. trade deficit
with the rest of the world and a
significant drop in the value of the
Canadian dollar that made the
country's products competitive.
Canada's important resources and auto
sectors were already becoming more
export-oriented before the first trade
deal was signed in 1988, adds Jackson.
What has changed since then is the
tendency of larger Canadian goods
producers to become more North
American oriented, rather than
concentrating on the smaller domestic
market.
''Deeper integration of the
manufacturing sector in the North
American economy has done little to
decisively shift the structure of
(Canada's) industrial economy away
from natural resources and relatively
unsophisticated manufacturing towards
the more dynamic and faster growing
'knowledge based' industries,"
adds Jackson.
By aligning itself with Washington as
a free trade advocate at the upcoming
talks in Miami, Canada will be out of
step, as nations like Brazil take
tougher stands in areas neglected in
Canada's FTA and NAFTA negotiations,
says Traynor.
''The dominant political view (in
Ottawa) is how we engage and relate to
both U.S. economic and political
power,'' he adds.
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