Legacy of Free Trade
Uncategorized Comments (2)
By Roy Whyte
CDM May 21 2003
As many already know Canada is under a real state of change since the implementation of the North American Free Trade Agreement; otherwise known as NAFTA. These changes range from a more focused and concentrated trade with the US to unfair duties on our exports.
Now that some years have elapsed since its implementation we can examine the benefits and drawbacks. So hold on to your shorts as some of this may hurt or otherwise surprise you.
Of Canada's top 500 companies a full 35% are foreign owned. From Mel Hurtig, “Also, foreign interests control more than 50 per cent of 35 different industries in Canada, including the manufacturing and chemical industries,” he said. “Exactly zero industries in the U.S. are controlled by foreign interests, and yet U.S. investors often call us nationalistic if we try to protect our own interests”
So as of late we have seen unfair duties on Softwood lumber, wheat and threatened duties on blueberries and tomatoes.
When you are at Tim Hortons, Future Shop, Husky Oil, or taking in a Montreal Canadians game remember this, you are in foreign owned shops. Since the ratification of FTA 13,000 Canadian companies have been sold to foreigners, with about 10,000 to the Americans. With those companies go the top jobs and their decent pay. As well, head offices also go south and all the decision-making that once took place here in Canada. Many of those bought out companies do not even exist anymore!
Staying with these newly foreign owned companies another trend is becoming rather obvious – they are avoiding our tax system. Did you know that in 1994 – 81,462 profitable companies went untaxed? Profitable companies paying no income tax jumped from 66,000 in 1992 to 74,799 in 1993 and 81,462 in 1994, and this trend continues today. And there are some who wonder why our municipal, provincial and federal governments no longer have the revenues to meet demands.
Program spending at all levels of government fell from 45% to less than 35% of GDP during 1992-99, an unprecedented structural shift in the public-private sector balance
This further translates into one-sided growth for the rich over the poor:
In 1973 the richest 10% of families with children under 18 earned 21 times more than the poorest 10% of families with children under 18. In 1996 they earned 314 times more.
Today 60% of families with dependent children are earning less than in 1981.
Growth performance in the 1990s was worse than in any other decade of the last century except for the depression years of the 1930s. Average per capita income fell steadily in the first seven years of the decade and only regained 1989 levels by 1999.
While the average Canadian would say let us make sure what we do have goes to those that need it most, but sadly that is not the reality today. Between 1982 and 1998 over $11 billion have been handed out to big business from the federal Department of Industry. Included in that is a $2 million grant to the Royal Bank of Canada!
Sorry to say but gets worse, those foreign takeovers of Canadian companies reached a new record in 1999, they actually doubled from 1998! Today, nothing has changed as that trend is still continuing. Assisting this take over is our very own national banks. Our own chartered banks provided some 65% of the money necessary to purchase our nation. Just where do their loyalties lay? Scarier yet, men like Paul Martin want to remove foreign ownership levels on the banks as well.
As of late we have seen the pre-curser to the lifting of foreign ownership rates on our telecommunications industry. What does that mean?
For starters just a few players already dominate much of our telecommunications/media industry. As such a major buy-out campaign by a large American media giant would swallow large parts of the Canadian media scene in one flail swoop. A country is not truly a nation when it no longer has its own media.
Some will say – So what? To those people I say look again and look closer now and ask yourself if these real hard numbers are what they are being told by our elected officials and corporate media. They will almost always quote the number of jobs created in the export business that goes to the ever-growing two-way trade with the US. Hate to break it to them but they have been lied to.
Between 1989 and 1997, 870,700 export jobs were created, but during the same period 1,147,100 jobs were destroyed by imports. Otherwise, Canada's trade boom resulted in a net destruction of 276,000 jobs.
Think we can just simply take it all back? Think again. There is an insidious clause within NAFTA softly termed – national treatment. What national treatment does is give foreign companies the right to sue Canada if we issue any law or other such measure, which could be deemed to hurt a companies present, or future earnings.
In essence national treatment circumvents Canadian law as established by our elected representatives and the courts of our great land – otherwise American investors have equal rights in Canada as us Canadian citizens.
Chapter 11 contained within the NAFTA deal has already seen cases succeed in Canada. Remember the flap over MMT – a manganese-based gasoline additive? The additive was found to cause nervous-system disorder and as such was banned, the Ethyl Corporation sued the Canadian Government and once the lawyers got a hold of it we settled out of court for $20 million dollars and repealed the ban. For the ultimate slap in the face two cabinet ministers had to read statements that MMT isn't harmful to the health or the environment! As of today there are other cases pending in the courts.
Foreign investment as touted by our elected officials is the end all and be all. But is it? In 1997 foreign investment which was the second highest ever totaled over $21 billion. If you believe what you are told then that sounds great doesn't it?
Hold your hats – 97.5% of that “investment†went directly to acquisitions NOT investment. There is a very distinct difference there. Otherwise your elected officials are lying to you each and every time they say this “investment†is improving our nation.
Since 1985 over 8000 companies have been gobbled up under Investment Canada. Furthermore of some 200 billion in total investment 93.4% was for acquisitions not investment.
These moves are not only hurting our tax base and economy they are killing our nation. From the University of Alberta:
We are all bearing the blowback from these policies. For the young who should be the best at weathering such trends – males under the age of 35 and all workers under 24 have seen their rates of pay fall steadily, regardless of which industry or occupation they worked in, the region of the country in which they lived, or the level of education they had.
A generation ago, there was a general consensus that paying for the social programs which ensured stability and a greater level of equality were well worth the tax effort. Between 1973 and 1994, the degree of inequality was stabilized-and even reduced-by government programs such as unemployment insurance and welfare.
Since 1995, the cumulative withdrawal of funding by governments has widened after-tax income disparities at a historic rate-and at a time when the economy has been growing. Income disparities have always increased during economic downturns, but in the 1990s, disparities have grown in good times as well.
NAFTA has resulted in a nation so inter-dependant with just one nation, an ever- decreasing tax base, and a society that is suffering for it. Our governments under a massive cash crunch are constantly clawing back social services, dumping responsibilities and for a host of reasons are falling for the neo-conservative mantra of rewarding the rich over the poor.
As Canadians we need to stand up and be heard as time is running out for our nation and our very sovereignty.
Roy Whyte is the Director of WhiteBark Innovations
and edits Canadian Book News
@ May 21, 2003