RM Issue #030616
The NAFTA debate -- 10 years later
National Post Saturday, June 14, 2003
This month marks the 10th anniversary of Canada's decision to ratify the North American Free Trade Agreement, which lowered tariffs, duties and other barriers to continental trade. As NAFTA's supporters predicted, the agreement has strengthened Canada's economy by providing easier access to millions of consumers in the United States and Mexico.
But a decade ago, not everyone agreed free trade was the way to go. Although protectionism is now held in disrepute by most mainstream economists, recall that many doomsayers once predicted ruin if Canada joined NAFTA. It is worth revisiting their prognostications -- for they give a sense of what the opinions of today's globaphobes are worth.
Among the most vocal of NAFTA's opponents was Maude Barlow, leader of the Council of Canadians. In 1992, she predicted the United States would exploit NAFTA to drain Canada of our "industry, high technology, resources and political will." Our Parliament, she said, would become meaningless, as Washington would "force Canada to fully consult the U.S. before Canadian laws and regulations are made or changed."
An ideological ally of Ms. Barlow, Tony Clarke, postulated in 1993 that, under NAFTA, "government aid for worker training and regional development projects ... could all be challenged and forbidden as 'unfair trade subsidies.' " Ms. Barlow speculated NAFTA would leave provincial legislatures impotent as well: "NAFTA could be used to strike down provincial institutions like the Caisse de Depot in Quebec," she wrote.
Economic cataclysm was also predicted by NAFTA's enemies. In 1992, nationalist publisher Mel Hurtig warned NAFTA "will be a nail in the coffin for the industrialization of Canada." Ms. Barlow claimed the same year that NAFTA could destroy Canada's "generic drug industry." Also in 1992, Bob White, then head of the Canadian Auto Workers, predicted "a free-trade deal with Mexico could result in General Motors, Ford and Chrysler pulling out of Canada and moving their plants to Mexico."
It is amazing that anyone in Canada took any of this seriously -- for, even then, we had heard all of it before: The apocalyptic predictions bandied about regarding NAFTA mimicked the "end-is-nigh" pronouncements that greeted our Free Trade Agreement with the United States in 1988. That year, Mr. Hurtig said "there will not be a country called Canada a generation from now" if free trade were passed. And Mr. White declared the deal would wound Canada by "restricting our political sovereignty" and imperiling our ability to make "decisions both domestically and internationally in our own best interests."
The naysayers were wrong in 1988. And they were wrong in 1992-93 as well. Since 1993, as the costs of doing business in North America have come down thanks to NAFTA, continental trade flows increased 109%. As NAFTA's boosters foresaw, Canada could compete with the United States and Mexico - - and win. Our merchandise exports to the two nations have increased 95% since NAFTA came into force, reaching a combined $350-billion in 2001. We are the largest trading partners of close to 40 U.S. states. The years since NAFTA passed have seen a strengthening, not a weakening, of Canada's economy.
At the heart of the anti-free-trade criticism of 1988 and 1992-93 lies the defeatist, all-too-Canadian fear that this country lacks what it takes to compete in a globalized economy: Like all defensive-minded Canadian nationalists, Ms. Barlow and Messrs. White, Clarke and Hurtig thought Canada would wither and die when exposed to unprotected competition with the United States. But not one of the predictions we reviewed earlier has come to pass. Canada remains very much an industrialized country. We still make cars. We still have a vibrant generic drug sector. Our laws and foreign policies are created in Ottawa, not Washington. Quebec still has its Caisse de Depot system. No Congressman has forced us to abandon our worker training programs. More importantly, we've recently been recognized as the strongest economy in the G7. Not bad for a country that, according to Mr. Hurtig, is supposed to be extinct.
We write all this not to mock these false prophets, but to put modern doomsday predictions in context. Ms. Barlow, remember, has not followed her discredited predictions into well-deserved obscurity. Rather, she continues to rail against the United States -- arguing against everything from bulk water sales to the Free Trade Area of the Americas pact. Meanwhile, the Toronto Star this week published an op-ed by Bruce Campbell, executive director of the Canadian Centre for Policy Alternatives, who complains that expanded free trade would prevent Ottawa from being an "active manager of the economy," fighting U.S. "domination" and "strengthen[ing] social services and cultural exemptions" -- in other words, all the discredited arguments Ms. Barlow et al trotted out 15 years ago. It's true what they say: Nothing dies as hard as a bad idea.
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