From Free Trade to Forced Trade: Canada in the Global Economy
By Peter Urmetzer
Penguin Canada, 248 pages, $22
I s the long debate over Canada and free trade almost entirely an argument over numbers? It often seems so. Bob Rae, pointing to the three years immediately following the 1988 Canada-U.S. free-trade agreement, wrote in his memoir that, when he was Ontario's premier, 300,000 manufacturing jobs were lost in the province. My local Liberal MP, in his latest "householder," claims that Canada enjoyed 3.3 per cent growth in 2002 and created 560,000 new jobs. He doesn't explain whether they are part-time or full-time jobs, in manufacturing or in the service sector. He doesn't say how many jobs were lost.
It's a pleasure to escape from such selective statistics to a book that takes a much broader look at Canada as a nation overly obsessed about its trading performance. In his new book, Peter Urmetzer scolds the proponents and opponents of free trade for their partisan counting, saying that it is "akin to giving only half the score in a hockey game." But then, Urmetzer is neither a politician nor an economist. He has a doctorate in sociology and lectures on Canadian society and social inequality at Okanagan University College in British Columbia. This book is, one gathers, written for undergraduates, who are not slow at asking pointed questions. It is, therefore, a fine book to recommend for the general reader confused by too much glib talk.
The title is, at first, perplexing, suggesting that there is an evolution toward "forced trade," He uses that term in two contexts that are intriguingly parallel. First, he cites the fate of Canada under French, and then British, colonialism down the centuries of fur trading, and then of timber and mineral extraction, products that were exchanged for manufactured goods from Europe "under coercive conditions." He adds: "The British Empire engaged more in racketeering than free trade."
Secondly, in his chapter on free trade and the Third World, in which he castigates the World Bank more forcefully than did Joseph Stiglitz in his much-praised Globalization and Its Discontents, Urmetzer speaks of the bank providing the indebted countries "with another dose of First World medicine -- strict adherence to free market principles" under so-called structural adjustment programs. In the book's final paragraph, he writes: "While the consequences of free trade have been negligible for Canada and the First World in general, the same cannot be said for the Third. In poor countries, the repercussions of forced trade likely include a rise in poverty, at least in relative terms."
The consequences for Canada "negligible"? Or, as Urmetzer puts it elsewhere, "neutral at best"? So he says. The core argument in his book is that there is little evidence to prove a particularly positive relationship between free trade and economic growth. Even though Canada pursued free trade several times, from the Reciprocity Treaty (1854) to the 1911 election, its economy grew strongly under the protectionist National Policy and, in fact, enjoyed "a century of unprecedented prosperity."
Conversely, he suggests that the Liberal campaign under John Turner against free trade during the 1988 election was "more based on political opportunism than heartfelt conviction." Certainly since 1993, he adds, the Liberals have been willing to support any organization with free trade in its title or purpose, whether in Asia-Pacific or the Americas. He suggests that it has simply been the Big Idea of these years, to which politicians have subscribed or objected.
That said, Urmetzer is surprisingly positive about the World Trade Organization (WTO). He thinks that it has suffered from an unfair share of bad press. Industrial nations had joined because the alternative, he suggests, would be "an anarchic system where the United States dominates." The WTO offers some hope of establishing ground rules and containing power imbalance -- the United States, unlike the World Bank, has only one vote in 144. Then he contradicts himself, admitting that the WTO "perpetuates contemporary imbalances in global power," condones or ignores many subsidies, including those embedded in military contracts, and shouldn't be expected to fight to save the environment. It ought, he suggests, to focus more strictly on free trade, giving priority to agriculture and textiles for the sake of the Third World.
He devotes three useful chapters to the relevance for today's trading world of the notions of Adam Smith, David Ricardo, Marx and Keynes. But this lingering on the historical background means that he has skimped on any detailed critique of NAFTA, saying nothing about the threat it carries to our health services or fresh water. He passes with a single mention over what he allows are "the most controversial and therefore the most notorious" of the 28 agreements regulated by the WTO, the agreements dealing with services, intellectual property and investment; yet this is where the action is in current negotiations.
Never mind, for Urmetzer has piled enough lively opinions into these pages to stir controversy among his students. For instance, he says of the free-trade thesis that "its greatest shortcoming [is that]it completely and sometimes wilfully ignores production." And he is engagingly modern, referring to Adam Smith's legendary self-interested butcher as female.
Clyde Sanger is Ottawa correspondent for The Economist, where he freely trades his opinions on Canadian politics.
The first chapter
Readers can find the opening chapter of From Free Trade to Forced Trade: Canada in the Global Economy on our Web site, http://wwww.globeandmail.com, on Monday, June 30.