Canada and Globalization

Oct. 4

Globalization

• ◼ Globalization takes a variety of forms: economic (trade, investment), social (migration), cultural, etc.
• ◼ The impact of globalization upon the state and the economy is widely debated.
How new is globalization?

A classic description:

• ◼ 'The need of a constantly expanding market for its products chases the [capitalist class] over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere.'
• ◼ 'The [capitalist class] has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country.'
How new is globalization?

• ◼ 'Modern industry has established the world market, for which the discovery of America paved the way. This market has given an immense development to commerce, to navigation, to communication by land.'
• ◼ Marx and Engels, 1848
How new is globalization?

• ◼ 'The discovery of America, the rounding of the Cape, opened up fresh ground for the rising bourgeoisie. The East-Indian and Chinese markets, the colonisation of America, trade with the colonies, the increase in the means of exchange and in commodities generally, gave to commerce, to navigation, to industry, an impulse never before known, and thereby, to the revolutionary element in the tottering feudal society, a rapid development.'
• ◼ Marx and Engels, 1848
Globalization and the State

globalization sceptics ('state-centric' theorists) vs. strong globalization thesis ('retreat' theorists)

Canada and Globalization

• ◼ External influences are hardly new to Canada.
• ◼ Globalization refers to the intensification of global linkages, especially economic, in the latter part of the 20 th century.
Protectionism

• ◼ Galt Tariffs of 1858-59
• ◼ National Policy Tariffs of 1879
Protectionism

• ◼ Naylor: 'The Macdonald tariff produced industry in Canada but no Canadian industry' Naylor called this 'industrialization by invitation'
• ◼ Bliss: 'the funny thing about our tariff walls was that we always wanted the enemy to jump over them. Some walls!'
Debating Free Trade

• ◼ Wilfrid Laurier and the Liberals campaigned on freer trade with the US in 1891 and 1911.
• ◼ Both times they lost to the Conservatives.
• ◼ 'No truck nor trade with the Yankees' - Robert Borden, 1911

Second World War

During the Second World War, Canadian and American defence policy and production for the war effort were highly integrated.

• ◼ Ogdensburg Agreement 1940 created Permanent Joint Board on Defence
• ◼ Hyde Park Declaration 1941
Postwar Trade Liberalization

Canada signed on to the General Agreement on Tariffs and Trade (GATT) in 1947.

Successive rounds of negotiations led to an increasingly open trading environment.

Growing Concerns about American Foreign Policy

• ◼ Bomarc missile crisis, 1960-63
• ◼ Vietnam War
Growing Concerns Over Foreign (esp. American) Ownership

• ◼ Pipeline Debate 1956
• ◼ Royal Commission on Canada's Economic Prospects, Gordon Report, 1956-57
• ◼ George Grant, Lament for a Nation , 1965
• ◼ Taskforce on Foreign Ownership and the Structure of Canadian Investment, Watkins Report, 1967-68
• ◼ Kari Levitt, Silent Surrender: The Multinational Corporation in Canada , 1970
• ◼ Task Force on Foreign Ownership, Gray Report, 1970-72
• ◼ The Waffle, 1969-74
• ◼ Committee for an Independent Canada, 1970-81
Federal Government Response to Economic Nationalism

• ◼ Canada Development Corporation 1971
• ◼ The Third Option 1972
• ◼ Foreign Investment Review Agency 1973
• ◼ Petro-Canada 1975
• ◼ National Energy Program 1980
Canadian Business Embraces Continentalism

• ◼ Business groups like the BCNI (which later becomes the CCCE) and think tanks like C.D. Howe Institute helped generate a business consensus by the early 1980s in favour of free trade with the US.
Canadian State Embraces Continentalism

• ◼ Royal Commission on the Economic Union and Development Prospects for Canada, Macdonald Commission, 1982-85
• ◼ Canada-US Free Trade Agreement (FTA), 1989 [http://archives.cbc.ca/politics/prime_ministers/clips/9807/]
• ◼ North American Free Trade Agreement (NAFTA), 1994
• ◼ Meanwhile, GATT was transformed into the World Trade Organization (WTO) in 1994.
The FTA and NAFTA: More than 'free trade' agreements

Along with trade in goods, these deals cover:

• ◼ services
• ◼ investment and investor rights
• ◼ national procurement policies
• ◼ intellectual property rights
• ◼ energy provisions (Canadian govts can not act to give Canadians preferential access to Canadian energy, such as oil. US consumers and business have their access to Canadian energy

protected.) More info: see http://parklandinstitute.ca/research/summary/over_a_barrel/

More than just NAFTA and the WTO

• ◼ Canada's Free Trade Agreements, Foreign Investment Promotion and Protection Agreements (FIPAs) and other international economic agreements, both current and proposed.
• ◼ List from the Department of Foreign Affairs and International Trade website:

http://www.international.gc.ca/trade-agreements-accordscommerciaux/agr-acc/index.aspx

Secure Access to US Market?

The Softwood Lumber Dispute (1982 to present)

• ◼ US producers have argued that Canada engages in unfair trading practices. Responding to the complaints, the US state has imposed various duties on Canadian softwood lumber imports to the US.
• ◼ Canada has repeatedly won disputes through NAFTA and the WTO.
• ◼ Unrelenting US pressure (and protectionism) has forced the Canadian government to the bargaining table, most recently resulting in the Softwood Lumber Agreement of 2006.
• ◼ http://www.cbc.ca/news/background/softwood_lumber/
NAFTA Chapter 11: Investment

NAFTA's investor-state dispute settlement mechanism allows foreign investors to bring claims against NAFTA governments for infringements of the investor rights outline in chapter 11 of NAFTA.

Foreign investors have used chapter 11 to challenge a wide range of state actions, including environmental regulations.

NAFTA Chapter 11: Investment

Canada settled a dispute out-of-court with Ethyl Corporation paying $13 million.

A tribunal upheld a complaint by S.D. Myers Inc. requiring Canada to pay $5 million plus interest.

• A tribunal upheld a complaint by Pope & Talbot Inc. requiring Canada to pay approximately $915,000.

In 2000 a tribunal ruled that Mexico should pay $16.7 million to Metalclad Corp.

NAFTA Chapter 11: Investment

In 2008, Dow Chemicals launched a suit over Quebec's ban on lawn pesticides.

In 2008, Corn Products International was awarded $58.38 million in a dispute with the Mexican government.

In 2009, Cargill was awarded $US 77.3 million in a dispute with the Mexican government.

In 2010, agreed to a settlement paying $CAD 130 million to AbitibiBowater.

More info: see http://www.policyalternatives.ca/newsroom/updates/nafta-chapter-11increasing-threat-public-good

Impact of Globalization

• ◼ Globalization places constraints on the ability of governments to regulate their economies.
• ◼ The extent of those constraints is a matter of great controversy.
• ◼ The net benefits or disadvantages of globalization are also hotly debated.