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Vancouver Participatory Economics Collective

This is the blog for the Vancouver ParEcon Collective. Posts are made by collective members, regarding participatory economics, vision, strategy and related issues.

Saturday, November 11, 2006

TILMA: Free trade in western Canada

BC – Alberta free trade: a quiet “tectonic shift”

The Trade Investment and Labour Mobility Agreement

In April of this year, the notably neo-liberal governments of BC and Alberta signed a trade deal called TILMA (Trade Investment and Labour Mobility Agreement), set to begin taking effect in April of 2007. While Maclean's magazine observed that some economists call it “the most important free trade agreement in Canada since NAFTA”, it has received very little ink in the mainstream press – and even the response of the alternative press has been distressingly slow at best.

What is it?

The touted purpose of TILMA is to dismantle non-tariff barriers to trade between BC and Alberta. Thus the deal “gives businesses and workers in both provinces seamless access to a larger range of opportunities across all sectors including energy, transportation”, and so on, according to the BC government website. (Notice that energy is first on the list.) The (Vancouver) Province newspaper sums up the agreement's promises thus:

Streamlining business registration and reporting requirements so that businesses in one province are automatically recognized in the other;

Improving mobility so that workers certified for an occupation in one province will have their qualifications recognized in both provinces;

Providing businesses in each province open and 'non- discriminatory' access to government procurement of goods and services in the other province;

Adjusting investment rules to make them identical in both provinces;

And creating a dispute avoidance and resolution mechanism.” (May 7/06)

This is all pretty much boiler-plate stuff. Yet TILMA has been called “sweeping” and “bold”; the Canadian Council of Chief Executives says TILMA “goes further than any other government in Canada to tearing down the barriers" big business despises so much.

So why all the fuss? Well for starters TILMA incorporates the energy sector – something previous trade deals have left largely untouched. Also, the deal goes much further than even NAFTA in allowing businesses and individuals to challenge provincial and municipal laws before a TILMA dispute panel. And that dispute panel has the power to make binding decisions and to award up to $5 million to complainants -- payable of course by the taxpayer.

Is it really needed?

Most research supporting such a trade agreement comes from industry groups. Industry-backed studies typically see government regulation as producing only a drag on the economy. This ignores the costs of new obligations introduced by “free trade”. Surely the costs incurred by governments for legal consultations will be substantial. Also, the risk of being sued for what used to be considered a legitimate function of government must be substantial and costly.

In any event, serious studies of the extent of non-tariff barriers between provinces (like that of UBC's Brian Copeland) find them to be quite negligible and concentrated in a few industries – a situation that doesn't exactly call for a broad and sweeping free trade regime.

Who likes it and who was left out

Alberta's Intergovernmental Relations Minister Gary Mar told a chamber of commerce meeting that TILMA is "everything Canadian business asked for." In particular, proponents of TILMA see great opportunities for the energy sector, particularly around oil and gas. BC's Economic Development Minister Colin Hansen says the oil and gas sector “is very excited about this agreement coming into play." He dismisses suggestions from business circles that giant Alberta-based oil producers will muscle out independent providers in BC's booming northeast.

Meanwhile, the labour federations of BC and Alberta were not consulted in the crafting of the agreement. Indeed, the Globe and Mail's Murray Campbell says TILMA “was negotiated secretly and presented as a fait accompli.

While both provincial governments make much of TILMA's alleged benefit to labour mobility, it will do little to alleviate the real reasons behind the labour shortage in both provinces: lack of investment in training.

Another can-opener

Students of trade deals have learned (the hard way) how to best communicate the nature of these complicated agreements to the general public, who of course have little opportunity to learn the intricacies of trade policy. Gone are the days when opponents of the Canada-US Free Trade Agreement predicted the immediate end of Canadian sovereignty (or our beloved health system) with the simple signing of a document. These days, savvy leftists make arguments which reflect the ground-level processes at work when these deals are inked. Rather than ushering in immediate corporate control of our economy, NAFTA and its brethren are best seen as weapons of the wealthy which help to pave the way to more corporate power and less democracy. Since we're mixing metaphors, I have to say I'm fond of comparing trade agreements to a can-opener: a tool wielded by powerful corporations in order to rip open an economy over the objections of its citizens.

Agreement on Internal Trade: TILMA's weak predecessor

To get an idea of where this new TILMA can-opener comes from, it helps to look at Canada's Agreement on Internal Trade (AIT), put into effect in 1994. The AIT has a familiar purpose: to remove barriers to trade between Canada's provinces. Yet, virtually all proponents of free trade agree that the AIT is far too weak to have the desired effects. The reasons for this weakness are several: first of all, the AIT requires consensus among the provinces for any trade liberalization to occur. Also, the document doesn't go deep enough: many industries are exempted. Third, the AIT lacks strong incentives (or threats) for provinces to make the changes business wants to see. Efforts by the usual neo-liberal suspects have been made to correct these weaknesses, but they have not succeeded; the AIT remains anemic in their view.

Thus arose TILMA, which side-steps AIT's consensus problem by dealing in only the two most rabidly conservative provincial governments, while other provinces are urged to get aboard lest they miss the train. Similarly, by incorporating the energy sector and by providing the potential for $5 million lawsuits, TILMA certainly lives up to Hansen's hype about it being business' dream come true.

The timing

It bears repeating that one of the stated goals of the creators of NAFTA was to lock-in a set of neo-liberal economic rules at an opportune moment. US officials realised that the neighbouring governments of Mulroney and Salinas were about as pro-American as they could hope for. Further, their idealogy was inevitably going to get these business-friendly governments voted out of power. Thus, NAFTA was intended as a legal buttress to hold that high-water mark.

The possibility that a similar concern motivated TILMA's crafting can't be discounted. Alberta's Ralph Klein, in power for 14 years in Alberta, announced his resignation shortly before TILMA was signed. He and BC's Premier Gordon Campbell, who is looking shaky after five years in power, started the drive for TILMA some three years ago.

Where's the left?

Traditional oppositional voices have been oddly silent on TILMA. Even the website of BC's opposition New Democratic Party includes nothing about the deal. Ditto for the extensive rabble.ca site. Honourable exceptions have been CUPE and the Council of Canadians. The Progecon blog (one to keep an eye on) has also carried very good analyses of TILMA.

It makes one wonder whether such tepid resistance points up a flaw in the Canadian left, so often mobilized to resist Yanqui imperialismo: an issue which can't be couched as US aggression is a hard sell. This is, I must say, just a hypothesis, and admittedly a weak one as the Council of Canadians is surely one of the most nationalist of left organisations.

Parting shot of reality

It's important to remember that policies of free trade and deregulation, though strongly desired by business interests always seeking a fast buck, over the medium- and long- term produce lackluster growth. (Witness the 1990's: lots of hype about incredible economic performance, but really a sort of middling growth rate.) So while the two western-most provinces seek to curtail government subsidy, Ontario (having kicked out Mike Harris' Conservatives) will have none of that. There the government “has offered millions of dollars in subsidies to individual auto-sector firms, a strategy the Liberals say has attracted $7 billion in new investment.”


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