Trade Minister Needs to Break Out of Bureaucrat’s Bubble on TPP

Are Trade Minister Chrystia Freeland’s officials misleading her about the Trans-Pacific Partnership (TPP)?

Freeland signed the agreement Thursday in New Zealand, but repeated her assurances that critics shouldn’t worry — the government hasn’t committed to ratifying it and consultations and a full debate will precede a vote in Parliament. That could be up to two years away.

Yet so far the consultation process has not penetrated the ideological bubble created by trade department officials.

Take one example. By far the biggest concern of critics (including Nobel Prize-winning economist Joseph Stiglitz) is the Investor State Dispute Settlement (ISDS) provision. This allows corporations to claim damages if they believe a government’s laws or regulations unfairly harm their interests or hurt profits.

Freeland seems to be either ill informed or misled about the provision’s impact. At a panel discussion in Vancouver last month she seemed unaware of the ISDS. Her fellow panelists, both economics professors, downplayed the threat.

For many of us who have dealt with trade bureaucrats promoting these investment protection agreements it is easy to suspect that Freeland is being deliberately misinformed by her own staff.

The Trudeau government is eager to portray itself as open to persuasion on the TPP. To bolster the position that they still might say no, the government has engaged in a flurry of consultations across the country and has made a point of inviting concerned citizens to send in questions and criticisms to Global Affairs Canada: TPP-PTP.consultations@international.gc.ca.

Sounds good. But the execution raises serious questions about how genuine the consultation will be.

First, the vast majority of consultations have been with groups supportive of these agreements: Provincial government ministers, business groups, industry reps, universities, etc. Of 74 such meetings (as of Jan. 31), there have been a handful with “students” (but not with student council representatives who have actually studied the TPP) and a couple with labour — with the Canadian Labour Congress and Unifor.

There have been no meetings with NGOs who have taken the time to examine the TPP closely, like the Council of Canadians and the Canadian Centre for Policy Alternatives, with First Nations (whose agreements with governments can be trumped by ISDS) or environmental groups.

Obviously there is still time for such engagement, but the process so far does not bode well for balanced input.

The more serious sign that trade officials are busy manipulating their minister is revealed in the answers the government provides to Canadians who take it up on the offer to engage. When they write to the government asking about investment protection and the ISDS in the TPP, here’s the response they get: “With respect to Investor-State Dispute Settlement (ISDS), the TPP will not impair the ability of Canada or its partners to regulate and legislate in areas such as the environment, culture, safety, health and conservation. Our experience under the NAFTA demonstrates that neither our investment protection rules nor the ISDS mechanism constrain any level of government from regulating in the public interest.”

This is so demonstrably false as to shock even the most jaded cynic. Does Freeland know what is being said in her name? Since the North American Free Trade Agreement came into effect on Jan. 1, 1994, Canada has been the target of 35 investor-state claims under the agreement. Nearly two-thirds involved challenges to environmental protection or resource management laws or regulations. Canada has already paid out more than $170 million in damages in six cases (lost or settled) and abandoned most of the “offending” legislation and regulations. We face additional corporate claims totalling more than $6 billion in potential penalties for NAFTA “violations” such as the Quebec government’s decision to ban fracking under the St. Lawrence River.

This does not take into account the legislation and regulations (federal and provincial) that have never made it out of their cribs, killed by the chill of knowing they wouldn’t pass ISDS muster. A recent UN report quoted a former Canadian official as saying: “I’ve seen the letters from the New York and D.C. law firms coming up to the Canadian government on virtually every new environmental regulation… Virtually all of the new initiatives were targeted and most of them never saw the light of day.”

In one of the most egregious cases decided under NAFTA, Bilcon of Delaware, a tribunal effectively overruled federal and provincial governments’ environmental concerns last year and allowed a quarry to go ahead in Nova Scotia. University of Ottawa law professor Donald McRae, one of the tribunal members, wrote a detailed dissenting opinion warning of the negative impact of the decision.

“Once again, a chill will be imposed on environmental review panels which will be concerned not to give too much weight to socio-economic considerations or other considerations of the human environment in case the result is a claim for damages under NAFTA Chapter 11,” McRae wrote. “In this respect, the decision of the majority will be seen as a remarkable step backwards in environmental protection.”

Even one of NAFTA’s strongest supporters, Toronto trade lawyer Larry Herman, expressed concern that the dispute tribunals were unilaterally expanding their mandate to circumvent domestic courts. The decision, Herman observed, “will feed ammunition to those who oppose international arbitration as a form of dispute settlement.”

Just as these unaccountable panels are expanding their powers to interfere in the democratic legislative process, Canada is about to extend these arbitrary powers to corporations in nine more countries in the TPP.

Yet so far the “ammunition” provided by this evidence has run smack up against the Kevlar vests in the Global Affairs bureaucracy. The department’s name has changed under the Trudeau government, but its approach is powerfully reminiscent of the bad old days of the Department of Foreign Affairs and International Development, when a priesthood of trade bureaucrats protected the Holy Grail of “free trade” against all detractors. So deeply did they believe in their mission that factual analyses of agreements like NAFTA and the Multilateral Agreement on Investment (MAI) were not even acknowledged, let alone heeded.

Noel Schacter, chief trade policy negotiator for the B.C. NDP government in the late 1990s, recalls dealing with federal officials.

“Federal government trade negotiators sold free trade by overstating the upsides and underestimating the downsides,” he says. ¨This was especially true of investor-state provisions, which had the potential to be lethally damaging to critical social policy areas such as medicare or the environment. These public servants appeared to have little knowledge of these social policy areas and little concern. During my tenure I never saw any independent analysis that demonstrated why provisions in trade treaties were necessary or how the broader public good would be served. It often felt like being in a temple of true believers and those of us who questioned the doctrine were heretics.”

Is there any way to counter the pernicious influence of these free-trade zealots? The most powerful antidote would be independent analyses of the controversial areas of the TPP — in other words, genuine consultation. The only time this has been done was under the NDP government of Glen Clark, which provided funding for many social sectors — such as First Nations, women, unions, and environmentalists — to hire experts and study the impact of the Multilateral Agreement on Investment on their constituencies. The resulting studies led the B.C. government to oppose the MAI (which eventually failed to win needed international support).

If Prime Minister Justin Trudeau and Freeland are truly committed to broad consultation beyond the business community, they should follow the same model.

The Canadian Environmental Assessment Agency already does something similar. Its Participant Funding Program “supports individuals, non-profit organizations and Aboriginal groups interested in participating in federal environmental assessments.” It would be a tragic irony if this consultation program led to new environmental legislation — which then triggered a multi-billion-dollar claim by a foreign corporation under the TPP.

 

On TPP, Trudeau Must Think Like a Keynesian

Place your bets. Will Justin Trudeau and his economic advisors choose a neo-Keynesian approach to the growing economic disaster facing the country or will it stick to the neo-liberal ideology that has been the stock response of Liberal and Conservative governments for the past 30 years?

Trudeau’s planned deficits (though very modest ones) for three or four years suggests the possibility of a return to government intervention in the economy. But his infrastructure program is not really incompatible with neo-liberalism: even the most devout free-marketeer will agree, under pressure, that we actually need roads and bridges and sewer and water lines.

The real test of where the Liberals are going to take the economy is tied up in the government’s pending decision on the Trans Pacific Partnership — the TPP. The fact that the Liberals have not yet committed to the TPP (Trade Minister Chrystia Freeland said recently “We’re very much not there yet.” — a significant retreat from her initial statements) suggests there is a real debate going on in the PMO about signing another investment protection agreement.

There is now a large body of research and commentary exposing just how detrimental the TPP is to Canada’s economy and democracy. But there has been little in the commentary that looks at the actual record of these deals — specifically the first ones signed; NAFTA and its predecessor the Canada-U.S. Free Trade Agreement. A trip down memory lane will be helpful in understanding where the TPP (and its EU counterpart, CETA) will take us.

Cost of doing business?

We pay a high price for these treaties in terms of lost sovereignty — but what is the pay-off? Do these agreements actually increase trade and foreign direct investment (FDI) — their stated purpose? Studies looking at the FTA and NAFTA after 10 years revealed that such agreements have little positive impact. While Canada-U.S. trade (imports and exports) did increase dramatically in the 1990s, a study by Industry Canada concluded, “the impact of (free trade) after controlling for other variables on Canadian exports to the U.S. was modest, (just) nine per cent… the strong U.S. economic expansion and the real exchange rate were mainly responsible for the large expansion of Canadian exports to the U.S. in the 1990s.”

As for foreign direct investment (FDI) positive numbers presented by “free trade” supporters are also extremely misleading. While most people assume that foreign investment means new production and jobs, in Canada it doesn’t. In 1998, the Investment Review Division of Industry Canada prepared a report that looked at FDI in Canada. In 1997, it reached $21.2 billion — the second-highest total on record. However, according to the study, fully 97.5 per cent of that total was devoted to acquisitions of Canadian companies. And 1997 was not an aberration. On average, between June 1985 and June 1997, 93.4 per cent of FDI went to acquisitions. In 2001 the figure was 96.5 per cent.

Our race to the bottom with these deals reveals that things just keep getting worse. NAFTA resulted in a loss of over 275,000 of the best jobs in the country. By focusing exclusively on exports and abandoning any policy initiative aimed at strategic industrial development, Canada’s economy has been going backwards in terms of value-added industries. According to the Post’s John Ivison “the oil and gas sector’s share of total exports has increased to 23 per cent in 2014 from six per cent a decade earlier, just as a manufacturing industry like the automotive sector has slipped to 14 per cent from 22 per cent.” The trade deficit for 2015 was dismal. From October 2014 to October 2015 it reached $17.4 billion — the worst one-year total on record.

Investment protection agreements are not primarily about trade — they provide “investors” (that is, transnational corporations) with extraordinary rights that trump the sovereignty of those countries that sign them. But it only works at all if you have a capitalist class that actually takes advantage of these rights — by taking risks, investing in innovation and engaging in aggressive overseas marketing — such as in the five Asian countries who are partners in the TPP. Otherwise we simply agree to become a punching bag for transnational corporations doing business here in Canada.

But there is a huge risk in signing these deals because they require a leap of faith in Canadian corporations actually shifting their focus away from the U.S. as a market for exports. If past behaviour is any guide, they won’t.

NAFTA was supposed to challenge large Canadian corporations to compete with the U.S. on productivity. It never happened. Two studies on competitiveness (1991 and 2001) by Harvard Business School’s Michael E. Porter concluded that “The U.S. is just much more entrepreneurial . . . Research uncovered key weaknesses in the sophistication of (Canadian) company operations and strategy.” Some Canadian firms did compete internationally but did so on the cheap. Post-NAFTA they relied more for their profits on “natural resource advantages or lower labour costs than other G7 competitors instead of sophisticated products and processes.”

Little if anything has changed. Indeed, with the Canadian dollar at seventy cents and falling, Canadian companies are even less likely to take advantage of the TPP to invest in and export to the Asia Pacific countries. The one thing that will change if we sign the TPP is that corporations based in nine additional countries will be able to invest in Canada with new and powerful rights — including the right to sue the Canadian government for any measure that affects their future profits.

Keynes vs. Friedman

Perhaps Mr. Trudeau believes he can have it both ways: tinker a bit with some neo-Keynesian policies of intervention but stay in the big boys club and avoid Bay Street condemnation by signing the TPP. Unfortunately it simply doesn’t work that way. An examination of what happened to Ontario’s effort in strategic public investment demonstrates in spades just how incompatible the two approaches are.

Ontario’s Green Energy Act promoted domestic solar and wind generation. However, in November 2012, the “buy local” aspects of the program were ruled in violation of WTO rules. In May, 2013 Canada lost its appeal. Ontario immediately announced that the made-in-Ontario content requirements for wind and solar projects would be scrapped. The program was effectively dead. And every time Canada signs another “trade” deal the noose tightens around any government-sponsored effort to transition to a clean-energy economy.

Even if these agreements actually enhanced trade, international trade will almost certainly remain in the doldrums for the foreseeable future. This is the case not just because of the slowdown in growth in China but because most developed countries are struggling and following neo-liberal policies of austerity and suppression of wages — the same deadly combo Canada has experienced. It all adds up to chronic low demand and diminished world trade.

One can only hope that Trudeau and his advisors will conclude that when approaching economic growth they should focus on the things they can change and avoid those they can’t. Between 75 and 80 per cent of our economy is domestic: good and services produced and consumed here. If the government actually wants to grow the Canadian economy it has to find a way out of its trade straight jacket and stimulate the domestic economy. The country that rejects the ideological extremism of neo-liberalism first will have a huge advantage over the next 10 years.

But to do so requires an actual rejection of some key neo-liberal policies — including, of course, rejection of any more investment protection agreements. Additionally, as I argued in a recent column, a return to fair and robust taxation sufficient to bring the government share of the economy back to 1980 levels — levels necessary to permanently stimulate the domestic economy.

If the NDP is looking for ways to prosecute a new adversary the economy is it — it will dominate the political landscape for the rest of the Liberal mandate. There are compelling arguments: An industrial strategy focused on accomplishing the climate change promises of the Paris summit, a return to strings-attached federal transfers to prod the provinces to reduce tuition fees and increase social assistance levels (or even a guaranteed annual income), imposing a living-wage standard on all federally-funded projects, pressing Trudeau on his promises on CPP and EI and ending oil subsidies, eliminating the tax breaks on capital gains and dividends, adding a couple of tax brackets on wealthy Canadians, and perhaps a tax on idle corporate capital (half of one per cent would bring in over $3 billion).

Pierre Trudeau’s first government faced an NDP caucus and leader that pressed him from the left on numerous fronts. Is it too much to hope that history might repeat itself?

 

Does Justin Trudeau Want Fair Elections or Not?

Prime Minster Justin Trudeau’s election pledge (and subsequent confirmation) that Canada will not have another election under first-past-the-post has morphed into a growing controversy. Trudeau’s evident attraction to one option for electoral reform — the so-called preferential ballot, or instant runoff vote (IRV) — and his stated opposition to proportional representation has some analysts and commentators smelling a rat.

That’s because IRV is a system that favours parties who are able to lay claim to the ideological middle ground. That is, with a preferential ballot (where voters’ second choices determine the outcome in most ridings) the centrist party can garner second choice votes from both the right and left wing parties — as the Liberals clearly did in October’s vote.

Is the fix in — is Trudeau’s (and more importantly the Liberal brain trust’s) sudden love affair with electoral reform just a plan to stay in power permanently? Trudeau, as you would expect, denied any such nefarious motivation.

But more on Trudeau’s ambiguous position later. Let’s look at the claim behind the suspicions.

A political junky friend of mine established the following rules for applying IRV to Canada’s federal scene. “When I did the calculations, I assumed that BQ votes would split roughly 70 per cent to the NDP and 30 per cent to the Libs and that Con votes would split roughly 70 per cent to the Libs and 30 per cent to the NDP. I also assumed that Green votes would split roughly 50-50 between the NDP and the Libs and that Liberal votes would split roughly 70 per cent to the NDP and 30 per cent to the Conservatives.”

Applying that formula to a hypothetical riding the outcome might look something like this:

Let’s assume first choice ballots were: NDP 35, Liberals 30, Conservatives 25, Greens 10. As the Greens received the fewest votes, these are redistributed based on the second choices of the Green voters. That might give you: NDP 40, Liberals 35, Conservatives 25.

As nobody has reached a majority, the Conservative votes are then distributed based on the second choices of the Conservative voters. With 17 Conservative percentage points going to the Liberals and eight to the NDP you get NDP 48, Liberals 52. So the Liberals win — whereas under first-past-the-post the NDP would have won.

Using the same rough formula regarding voters’ likely second choices here’s what could have happened in the October election:

The Liberals would gain 15 seats from the Cons, seven from the NDP, one from the BQ and lose one to the NDP for a total of 206 (actual count: 184).

The Conservatives would lose 15 to the Liberals and seven to the NDP for a total of 77 (actual count: 99).

The NDP would gain seven from the Conservatives, one from the Liberals, one from the BQ and lose seven to the Libs for a total of 46 (actual count: 44).

The BQ would lose one to the NDP and one to the Libs for a total of eight (10).

The Greens would remain unchanged at one.

So under IRV the Liberals, with 39.5 per cent of the vote would be awarded 61 per cent of the seats. That is even more undemocratic than the system that IRV is supposed to fix. Under first-past-the-post that 39.5 per cent vote “only” got the Liberals 54 per cent of the seats. Under first-past-the-post in the October election the Conservatives received pretty much what they deserved: 32 per cent of the vote got them 29 per cent of the seats. But under the allegedly more democratic IRV their 32 per cent vote would have given them just 23 per cent of the seats. (For the NDP it was a wash — their 19 per cent got them 13 per cent of the seats under both IRV and first-past-the-post.)

Of course this reflects just one election but it is easy to see why the Liberals would love to have IRV in place. In an election where they started off in third place they ended up winning by successfully occupying the middle ground. Of course you have to be smart to do that consistently — but the NDP and Conservatives would have to be even smarter given that their political bases include large chunks of voters on the left and rig

It is simply a mistake to refer to IRV as a form of proportional representation because that is not what it sets out to achieve. Proportional representation is just what is suggests: a party receive seats in Parliament proportional to the percentage of votes it receives nationally. In the recent election strict proportional representation would have seen the Liberals awarded 134 seats, the Conservatives 108, the NDP 67, the Greens 11 and the Bloc 16, mandating a minority government and some form of inter-party co-operation.

The agitation for electoral reform amongst civil society groups has been focussed almost exclusively on the fact that people’s votes are wasted under first-past-the-post — that the parliamentary seats awarded often have little relationship to the total number of votes received. Fair Vote Canada points out one glaring example: “In 2008, the Bloc Québécois and the Green Party achieved almost the same number of votes — but Bloc voters elected 49 MPs and Green Party voters elected zero.”

But, while the wasted vote phenomenon is most obvious with small parties like the Greens it can be just as true for the mainline parties. The last two elections were typical — both the Conservatives and Liberals achieved majorities of 54 per cent of the seats with just 39.5 per cent of the votes. Justin Trudeau’s statements and actions on the issue reveal that he knows what the problem is but is loath to do what is necessary to solve it. He told iPolitics: “I’ve met and heard from far too many Canadians who are frustrated that they don’t feel like their votes count.”

That is precisely the complaint that proportional representation is designed to address. But while Trudeau identifies the problem he has repeatedly rejected the only genuine solution. Trudeau voted against an NDP motion calling for a system of proportional representation called mixed member proportional (MMP) on Dec. 19, 2014. In a free vote the Liberal caucus was evenly split with left-wing Liberals generally voting for the motion.

Following the vote Trudeau’s office replied to a letter from the Canadian Electoral Alliance, a group supporting pro-rep, criticizing Trudeau’s “no” vote. It stated, in part: “[Mr. Trudeau] does not support proportional representation, as he very deeply believes that every Member of Parliament must represent actual Canadians… not just the political party that appointed them to the House of Commons.”

But this is such an obvious red herring that it cannot sustain 18 months of scrutiny — the timeline for legislation on the issue. Trudeau’s stated objection to pro-rep assumes that it involves a system in which voters will not have a local elected representative — in effect, that MPs will be appointed by the parties. But MMP, the system contained in the 2014 NDP resolution, does retain the riding system so every voter has access to a locally elected MP. The parties provide lists of regional candidates who are also voted for and used to top up the final number of MPs for each party in line with the percentage of votes each received. No MP is just “appointed.”

Asking people whether they want IRV or MMP is about the same as asking whether they would prefer a watermelon or a toaster. The two electoral reforms address different issues. IRV seeks to increase the legitimacy of the elected Member of Parliament by ensuring the winner actually receives 50 per cent or more support based on voters’ preferences. But MP legitimacy has not been a major cause of concern in Canada.

First, MPs in our multi-party system are not freelancers — they are tied to parties that express a set of values and policies and supporters expect them to vote for those values and policies. Most of the day-to-day “representation” done by MPs is related to help with filling out forms or addressing unfair treatment at the hands of some government agency. But these minor concerns don’t determine how people vote.

The desire for electoral reform is driven not by a passion for better quality representation in the riding — it is driven by a desire for a genuine, robust democracy where peoples’ votes actually count. The evidence in favour of pro-rep is overwhelming. Eighty-five percent of our peer countries in the OECD have some form of proportional representation and as Fair Vote Canada argues they get what we want: “fair results, a representative Parliament, greater voter engagement, more collaboration, more accountability, better representation of diversity and voter choice, and stability.”

And if Prime Minister Trudeau genuinely wants more legitimate MPs he can have that along with proportional representation. There is nothing stopping him from including a ranked ballot as a feature of a proportional system. Now he just has to do it and continue to reject calls for a referendum. Sixty-three per cent of electors voted for parties supporting making every vote count — as strong a mandate for any policy that a government is likely to get.

 

‘Canada Is Back?’ Not Until Taxation Is Truly Fair

Justin Trudeau is fond of saying “Canada is back,” and in some genuinely gratifying ways it seems to be the case. But by far the most important and substantive evidence for this claim is still missing: an indication that the new government is willing to seriously address the issue that a genuine return to normal rests upon. That issue is how do we recover from nearly 20 years of systematic looting of the national treasury through reckless tax cuts for high-income earners and large corporations?

Don’t get me wrong. I feel the same relief as every other Canadian that public scientists can now speak their minds, that Stephen Harper’s war-mongering is history, that we are overnight no longer a pariah on the world stage, that there is at least hope that Ottawa will take aboriginal concerns seriously and that ministers with a passion for their portfolios are more likely to deliver the goods.

But these are the low-hanging fruit of the “Canada is back” mantra, because none of these initiatives cost much money. The only commitment so far to address the enormous social and other deficits racked up over two decades is a modest tax increase for the highest income earners. Otherwise the cupboard is bare. And past Liberal governments, of course, helped make it so.

To reverse this ideological recklessness, Justin Trudeau will have to demonstrate an extraordinary challenge to his party’s 20-year commitment to smaller government. On whether he even wants to — and if he does, whether he is up to the task — the jury is out. One thing is certain: without sustained public pressure Trudeau’s Liberals will be content to administer the fiscal status quo they inherited from Harper.

Their first test is on the table right now. I am referring to a report produced by the group Canadians for Tax Fairness, or C4TF (disclosure: I am on the board), detailing the extensive damage done to the Canada Revenue Agency (CRA) by the Harper government. The report is unprecedented in that it was produced with the cooperation of 28 (current and recently retired) tax auditors, fraud investigators and managers of the CRA. According to C4TF, many of them had approached the group over recent years with revelations of Conservative changes that weakened the agency’s ability to collect revenue owed to the government.

Detailed in the report are several allegations by the employees, including:

  • Politicians and lobbyists are increasingly finding ways to influence CRA operations.
  • Corporate lobbying to avoid prosecution is a reality.
  • Employees are aware of political interference about proceeding with investigations.
  • There are high attrition rates of experienced professionals.
  • There has been a reduction or shutdown of enforcement offices across the country.

The CRA hit back at the allegations in the report, quoting high employee satisfaction surveys and identifying plans to increase “large audit” spending by 12 per cent.

In terms of lost revenue, the key finding in the report was the government’s systematic gutting of the tax division responsible for investigating offshore tax havens and recovering the revenue lost to the resulting tax evasion and avoidance. C4TF estimates that there is at least $199 billion in Canadian wealth hidden in tax havens around the world, resulting in the loss of up to $10 billion in revenue every year.

The report calls on the Trudeau government to fundamentally change the CRA’s priorities — away from harassing charities, NGOs and ordinary taxpayers making errors and onto the wealthy and large corporations where the vast majority of revenue is lost.

The media, however, is not focusing on the billions in lost revenue and the damage done to the CRA detailed in the report, and instead is highlighting the issue of how the 28 CRA employees who gave information have allegedly violated the ethics rules that they agreed to as part of the oath of office they signed. There is whistleblower legislation, but it does not protect employees who openly criticize public policy.

The Ottawa Citizen quoted Donald Savois, an expert in the area, calling on the government to investigate what he sees as a breach of ethics. It should have written and editorial calling for the government to fix the CRA.

Talking the talk

There are some encouraging signs that the government might actually make the issue a priority, though it comes not from the economic ministries. Foreign Affairs Minister Stéphane Dion has made the most encouraging comments: “I’d like to address the global economy. It seems like each time we address the problem, like the circulation of funds, there are businesses using tax havens and they are doing things in our countries, but they don’t pay tax. It’s an enormous problem. Whenever [it comes up], I’m told, ‘Well, that’s up to the international level to resolve.’ I’d like to see what Canada could do.”

Dion is an influential minister and has the respect of Trudeau, but it will be Finance Minister Bill Morneau who will ultimately decide how much of a priority to make of the tax haven issue. He is clearly aware of it and under enormous pressure to find revenue that doesn’t require actually raising taxes, stating: “We’re going to work on this issue and other issues and through that work we would expect that we’ll ensure that Canadians and Canadian businesses both large and small will pay their appropriate rate of tax.”

Morneau has already changed Canada’s position regarding corporate tax dodging. The practice of transnational corporations of transfer pricing and tax shifting — shifting profits made in higher tax countries to low tax locations — robs global governments of between $100 and $240 billion a year. The new government signed onto an international agreement negotiated by the OECD and the G20 called Base Erosion and Profit Shifting, aimed at forcing corporations to pay taxes in the countries where the profits are actually made. Canada ranks as the third largest loser in the G20 when it comes to the amount of untaxed corporate revenue.

The government’s apparent willingness to go after tax cheats — corporate and individual — is good news. But this is just one step in terms of achieving tax justice and fairness, and in recovering the over $60 billion a year lost through tax cuts. Letting the need for a genuine national conversation about taxes slip to the back burner would be a mistake. Now that we have a government that says it believes in governing, the question of comprehensive progressive tax reform needs to be front and centre.

 

Thinking about Paris

The next time any of us go out to a restaurant, to a sports event or to a music venue will be imagining what it would be like to be suddenly confronted by ISIL Jihadists shooting at us with machine guns? In all likelihood we will. And we should, because every Western nation involved in illegal wars and regime change in the Middle East is a target for such attacks.

But simply imagining such an attack does nothing to increase our understanding of the Paris assault not does it lead us to a place where we can begin to examine our own government’s role in the Middle East and what kind of role we might play instead – a role that would actually lead over the long term (nothing will change in the short term) to a stable, just peace in that region.

While we are reflecting on the horror of the attacks in Paris we have a responsibility to remember and reflect on the fact that literally everyday at least 129 Muslim men, women and children die and hundreds are injured in conflicts initiated or worsened by our governments. How many people sitting in thousands of French, British, American and Canadian restaurants, stadiums and music venues tonight know the history of the hideous destruction of Iraq, the illegal and brutal regime change in Libya (creating a violent failed state from which ISIL operates with impunity), our support of totally corrupt regimes in Iraq and Afghanistan, our carte blanch for Israel’s illegal occupation of Palestine, the encouragement of Syrian opposition groups five years ago to take up armed struggle against a regime they whose brutality they were acutely aware of and whose strength they underestimated?

Citizens in Western democracies have not only the responsibility to know what their governments are doing in their name but they are uniquely able, given their democratic rights, to demand of their governments that they end their arrogance and imperial hubris, quit giving Israel everything it asks for in destabilizing the Arab world, and acknowledge that a major reason behind Western military interference in the Middle East is the apparently limitless greed of American and European oil giants.

ISIL’s evil genius in the Paris attacks was to precisely attack ordinary citizens going about their ordinary activities and the fact they chose Paris is especially significant: the City of Light, the symbol of the enlightenment, where Western civilization can be said to have reached its pinnacle.

It is highly unlikely that ISIL saw these attacks as a way of waking up French citizens to the illegal actions of their government in the regime change in Libya, or to send a similar message to other Western citizens about their governments. But surely that is a message we need to take anyway. When suicide bombers say they are killing us in revenge for what we are doing to their countries, why don’t we believe them?

We can continue to enjoy our exceptional freedoms and outsized standard of living and declare that we are not interested in “politics” as we head to the shopping mall for our newer model big screen TV.

But unless we wake up and wake up our fellow citizens will we begin to avoid shopping malls for fear that the next bomb will go off there?

Pacific Trade Deal Will Test Trudeau’s Resolve

Justin Trudeau has proven to be much more bold in his first couple of weeks than almost anyone imagined. Unlike Jean Chrétien and his 1993 election Red Book, Trudeau actually seems to be intent on keeping many of his promises.

Most importantly he has done what no other premier or prime minister in my memory has ever done. He has put numerous people in ministries who actually have a passion for their portfolios: a doctor in charge in health care, a potato farmer in charge of agriculture, an Aboriginal former treaty commissioner in justice, a former CIDA staff person in charge of international development. Prime ministers who want to exercise executive control don’t do this. Trudeau, it seems, genuinely wants to run a government by cabinet.

But the real measure of how bold Trudeau will be is how he deals with the economy. After all it is the economic ministries — finance, the treasury board, international trade most prominent among them — that are most directly responsible for managing capitalism, something every federal government has to do no matter what their ideology is. The Liberals have always been a Bay Street party and any move away from that tradition seems unlikely. The biggest test Trudeau will face on this front is right on the top of the issues pile: the Trans-Pacific Partnership trade agreement.

First off, let’s be clear that these “trade” agreements are only nominally about trade — they are actually, as economist Jeffrey Sachs says “investment protection agreements.” And for every Canadian government starting with Brian Mulroney’s the almost exclusive economic policy for this country has been a focus on attracting international investment. Former finance minister (and later prime minister) Paul Martin made this explicit — and set out to attract foreign investors by lowering the cost of doing business with labour flexibility programs, slashed corporate taxes and a 40 per cent reduction in federal social spending. Stephen Harper never saw a trade/investment deal he didn’t like — no matter how bad the terms were for Canada.

But after literally hundreds of such bi-lateral deals have been signed, countries around the world are finally waking up to the fact these corporate rights agreements are at the root of many of their economic and social problems because they systematically undermine national sovereignty and the capacity for democratic governance. The two deals the European Union has been negotiating with Canada (CETA) and the United States (the TTIP) may never come to pass as EU civil society, and several national governments (Germany, France, Austria, Hungary, the Netherlands and Greece), are pushing back hard. And perhaps Trudeau might ask himself and Canadians: if Europeans are moving in the direction of rejecting two agreements similar to the TPP what do they know that Canada doesn’t?

The Europeans have finally figured out that these agreements have little to with trade and have a lot to do with empowering global capital. Two of the most important aspects of these deals which explicitly undermine democracy and are their investor-state dispute settlement provisions, which many Canadians are already familiar with, and the privileged role that large corporations are given in the legislative process once these agreements are signed. Investor-state dispute settlement provisions allow corporations to sue governments directly for any new laws or regulations that reduce their future profits.

But what many Canadians may not know is that the TPP and other such deals allow corporations to intervene directly in the process of making new laws and regulations that may impact them. Article 26.2 of the TPP (“Publication”) states that any proposed new measure must be “made available” to corporations “in a manner that enables interested persons [corporations] and parties [governments] to become acquainted with them… and provide interested persons and other parties with a reasonable opportunity to comment on those proposed measures.”

Not only will these provisions cause a chill effect (where governments simply don’t pass laws they know will be challenged), but corporations will also be given privileged access to influence new laws — something no other sector of society is given.

Unusual suspects raise alarm

None of this is new. These anti-democratic measures have been exposed over and over again by civil society groups in countries around the world. But now there are some unusual suspects raising the alarm — some of them otherwise strong promoters of globalization. Among them: Jeffrey Sachs, Joseph Stiglitz, the United Nations and in Canada Jim Balsillie, former co-CEO of Research in Motion. If Justin Trudeau really wants to be bold and refuse to sign the TPP deal negotiated by Stephen Harper he has some pretty powerful and influential allies he can point to.

Sachs, one of the world’s most prominent economists, a Columbia University prof and a director of the Earth Institute. He has denounced the TPP: “These proposed agreements are mostly investor protection agreements… investor protection of property rights of investors, of prerogatives of investors, of IP [intellectual property] of investors, of the regulatory environment of investors, and so forth.” As for the TPP’s investor-state dispute settlement provision, Sachs states: “… it creates an extra-legal venue for arbitration that has proven in many investment treaties in recent years to be highly deleterious for basic government regulatory processes and especially around issues of health, safety, environment and other issues.”

Nobel laureate Joseph Stiglitz is equally blunt: “The real intent of these provisions is to impede health, environmental, safety, and, yes, even financial regulations….” He gives a compelling example: “In the future, if we discover that some other product causes health problems (think of asbestos), rather than facing lawsuits for the costs imposed on us, the manufacturer could sue governments for restraining them from killing more people.”

A recent United Nations report on the promotion of “democratic and equitable international order” similarly lambasts these agreements for inviting foreign corporations to intervene and sabotage laws and regulations, citing numerous Canadian examples.

Said one former government official quoted in the report: “I’ve seen the letters from the New York and [Washington] D.C. law firms coming up to the Canadian government on virtually every new environmental regulation…. Virtually all of the new initiatives were targeted and most of them never saw the light of day.”

And in Canada there is Jim Balsillie, apparently the only prominent Canadian business figure with the guts to defend the national interest — while also defending the interests of the innovative industrial sector of the economy. His conclusion on the TPP: “I think in 10 years from now, we’ll call that the signature worst thing in policy that Canada’s ever done.” He predicts that “troubling” rules on intellectual property rights will cost Canada billions in wealth creation and “make Canada a ‘permanent underclass’ in the economy of selling ideas.”

More calls for bold action

If Trudeau wants to be bold he not only has these allies. According to auto industry spokespersons, Harper misled them regarding how much they will lose. Those concerned about the potential abuse of the Temporary Foreign Workers Program are also alarmed at the provisions governing the “movement of persons.” And Trudeau has to know that if he is really planning to take an international leadership role in confronting climate change, provisions in the TPP (like investor-state dispute settlement) will make such leadership extremely difficult: any initiative involving new regulations or restrictions on future tarsands development could trigger multi-billion dollar investor challenges.

Trudeau should also be aware that the OECD’s forecast for international trade show a long-term decline suggesting that he would be better off focusing on enhancing the domestic economy, which accounts for almost 70 per cent of Canada’s gross national product.

One of Trudeau’s first acts was to join the Japanese PM is praising the TPP. His Trade Minister Chrystia Freeland has said “free trade” is critical to the prosperity of the middle class.

And even a cursory reading of the history of Liberal governments and their relationship to big business has to make us highly sceptical about the possibility that Trudeau will actually reject the TPP.

But given that, his (and Freeland’s) repeated promises to consult widely and have a full debate in the House of Commons is curious. So, too, was Trudeau’s visit to the offices of the Canadian Labour Congress this week (the first PM to do so since 1958) — where he repeated his promise of listening to labour’s TPP concerns.

If Trudeau intends to sign off on the TPP he is pursuing an odd strategy: encouraging civil society groups to criticize the TPP and raising expectations about his response. In any case he has thrown down the gauntlet. The obvious group to pick it up? The Leap Manifesto.

Let the contest begin.

Want democratic reform? Let’s start with the country’s newspapers

Observing the cathartic effect of the end the Harper regime reveals just how traumatized millions of Canadians were by nearly 10 years of rule by this vindictive prime minister. The analogies and metaphors keep coming: like getting out of jail, like waking up from a nightmare, like the end of an occupation.

This election will provide students, pundits and authors with career-building opportunities to dissect the results. Part of that analysis will, of course, examine the unprecedented assault on democracy carried about the Conservatives. As it should, because undoing the damage must be the litmus test for the new Liberal government and Parliament.

However, while it is critical to track these efforts, the other democratic institution which needs renewed attention is the media and in particular the newspapers in this country. Regrettably, we have adapted to the outrageous concentration of newspaper ownership in Canada, greater than in any other developed Western nation.

But the newspapers perhaps did us a favour in the last week of the campaign with their inane endorsement of the Harper autocracy for yet another four-year term. Postmedia and the Globe and Mail actually managed to write editorials justifying the re-election of a man turfed from office by a tsunami of voter revulsion.

The Globe and Mail and the National Post editorials both declared their support because of Harper’s economic record — but ignored all the actual evidence. The Globe declared: “The key issue of the election should have been the economy and the financial health of Canadians. On that score, the Conservative Party has a solid record.” And the National Post: “Harper’s commendable record in office cannot be dismissed. Our economy is in good shape…”

These declarations are infuriating because the exact opposite was recently meticulously documented by Unifor economist Jim Stanford, who co-wrote an analysis of all the prime ministers back to 1945 using 16 separate indicators. It wasn’t even close: Stephen Harper’s government had by far the worst economic record of any government in 70 years: “For 13 of the 16 indicators, the Stephen Harper Conservative government ranks last or second last among all postwar Prime Ministers. And its average ranking across all 16 indicators is by far the worst.”

It should come as no surprise that the National Post and the Globe should rank the Harper government as having a “solid” economic record. They don’t mention in their assessment the many aspects of the economy that are not solid — aspects that affect ordinary people: unemployment, growth, job creation, youth employment, job quality, real personal incomes, inequality, or personal debt.

Those who run the country’s daily newspapers reveal themselves as concerned only about “the economy” in the narrowest sense, using it as a code word for the corporate elite, the one per cent — not the economy of ordinary wage and salary earners. They throw their support behind a government that simply facilitates economic growth by getting out of the way of business, by signing “trade” deals, gutting corporate and wealth taxes, and driving down wages.

There was a time when the outrageous concentration of newspaper ownership was an issue, but it has become the new normal. Even when Conrad Black took over most of the dailies in the country in the 1990s, the commentators missed the most important feature of the media coup. While Canadian newspapers had always been pro-business, they had never before been strategically harnessed to accomplish an ideological purpose: to systematically roll back the activist state and the benefits it delivered to ordinary Canadians.

But that is why Black bought (and subsequently gutted) all those papers. He was in lock-step with the Reform Party cum Alliance Party and shared an identical objective.  When we talk of democratic reform, we absolutely must include the reform of the newspaper. There is little point in reforming parliamentary institutions if the instruments of civic literacy have been turned on their heads to produce precisely the opposite result.

Running a newspaper in a democracy should be seen as a privilege as much as it is a right. It is not like running a clothing store or a car wash — it is fundamental to the health of society, to how we decide to live together, to how our values are reflected back to us. When the news media are so completely out of touch with how a large majority of people feel about their country, there is something wrong with the state of human affairs.

News as a public good  How do we fix that? It is worth going back in history to two periods when there was an appetite for reform — the 1970 Davey Report and the 1981 Kent Royal Commission on Newspapers — both publicly established federal examinations of media concentration and its impact on Canada. (This overview is a must read if you want a reminder of a time when genuine public discourse was the norm.) Their recommendations, read in today’s context, sound positively revolutionary. Had they been implemented the history of the country may well have been altered.

Today we can take some solace in the fact that the same demented “free market” ideology that continues to play havoc with the real Canadian economy (the 99 per cent) is helping to weaken the newspaper industry in Canada. While there are many factors in newspapers’ decline, the fall in readership suggests a growing disconnect with Canadian values. Newspapers that continue to ignore the wave of contempt that swept the Harperium from power will deserve their fate.

And indeed they are dying a slow and painful death. Postmedia, the owner of the National Post and 45 other dailies (having swallowed the Sun chain’s English language papers) recently reported out on their steady decline: “Canada’s largest newspaper chain saw advertising and circulation revenues tumble at a faster pace. The owner of the National Post and numerous major city dailies reported a loss of $140.8 million… in the three months ended May 31.”

Reading the Postmedia papers is a demoralizing experience, given that nowhere do you find Canadian values reflected in their reporting or opinion pieces. But when you learn that the National Post’s paid subscribers (2014 numbers) total 83,671 out of 24 million plus eligible voters, it sort of lifts your spirits (though they do get an additional 100,000 digitally).

One answer to the democratic deficit created by media concentration (and ideological bias) is the idea of publicly subsidized newspapers — not unlike the CBC model and models in Europe. As Ezra Klein of the Washington Post writes: “We have public universities and public centers for disease research and public firefighting departments… Why should news be different?” In a democracy, the news is just as important: “What if we could create a funding source that recognized the news’ role as a ‘public good,’ …What if, in other words, we subsidized it?”

Another possible model is a for-profit newspaper owned and operated by a foundation willing to put the profits back into the paper rather than shareholders’ pockets. More on these possibilities in a future column. But when the next Canadian daily approaches its demise, perhaps local citizens and a few enlightened millionaires could buy it up and model it on the assumption that a robust, investigative news department and a variety of provocative commentators are first order reforms critical to our country’s democracy.

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