Free-trade deals are excessively praised and criticized. Their virtues are never quite as great as advocates insist; their liabilities are never as evident as detractors claim.
So it will be with the Trans-Pacific Partnership. On balance, the TPP will benefit the 12 countries signing on, including Canada, because the economics of free trade are such that over time aggregate benefits outweigh losses. Over time, however, can mean decades.
In the short term, losses seem easier to count or imagine, and the lobby groups that defend the real or imagined losers always put up a bigger stink, then amplified by the media, than the possible winners.
A long time must pass before anyone can discern the net impact of a free-trade agreement and, even then, being precise is difficult. Some job losses ascribed to free trade would have occurred anyway, as with additional markets and more jobs in other areas.
The terms of trade, important as they are, represent only one factor in a company's or country's competitiveness. It is not government but the private sector that will or will not take advantage of the opportunities opened by such deals. Governments have little influence over the decisions of firms.
The impossibility of discerning the aggregate effect of the TPP makes it all the more disappointing that the NDP reverted to knee-jerk opposition. In bandying about the assertion that 20,000 auto-sector jobs would be lost, party Leader Thomas Mulcair not only misstated the source – the union Unifor claimed that 20,000 might be "at risk" – but tied himself to bits and pieces of the Canadian economy (auto parts and supply management) rather than looking at the whole picture. The NDP's campaign has been in decline and this reversion to blind protectionism showed it. (Liberals, predictably on trade, ducked.)
On the other hand, it was somewhat ironic listening to the Stephen Harper government tout the TPP with the usual exaggerated claims ("No job losses," Trade Minister Ed Fast declared), given that this government was skeptical, reluctant and late in entering the negotiations.
Six countries decided years ago they should try for what they called the first comprehensive, modern free-trade and services agreement.
The Harper government sniffed around the edges of the negotiations, then slowly decided Canada wanted in with little enthusiasm because the government feared the consequences of not being in such an agreement. After all, Canada already had free trade with the United States, Mexico, Colombia, Peru and Chile, and almost unencumbered trade with Australia and New Zealand.
The big player with which Canada did not have such a deal was Japan. Better access to that market propelled Canada to negotiate – not the markets of Brunei, Vietnam or Malaysia. Canada had to worry also that the TPP might trump the rules of the North American free-trade agreement, without Canada having been present at the table.
The United States and New Zealand were not entirely certain they wanted the Canadians at the table, knowing the Harper government would drag its feet on protecting supply-managed agriculture, which of course it did, opening only a tiny crack (3.2 per cent of the domestic dairy market, an even smaller share for the other products) in the cartels for dairy, poultry and eggs.
Even then, the Harper government, in late-election mode, agreed to pay off these farmers with a staggering $4.3-billion – one of the greatest raids on the Canadian treasury ever countenanced by a Canadian government to buy off a lobby. At least the auto makers had to pay back the money given to them by Ottawa in their time of distress.
The problem with this payment, apart from its grotesque size, is that it follows no coherent and co-ordinated plan to get rid of supply management over time. Instead, it keeps the system going, on the assumption supply management will eventually die from its own contradictions.
Instead, some small farmers will take the government's (a.k.a. taxpayers') money and retire. They will sell their valuable quota to bigger farmers, so that Canadian supply management might come to resemble parts of U.S. agriculture whereby large, wealthy farmers and agribusinesses suck subsidies from Washington, of where its politicians believe, wrongly, that they are protecting the family farm with subsidies.
While these subsidies are offered with one hand, the Canadian government will still enforce stratospheric tariffs to protect most of the market. Taxpayers will, therefore, be paying twice: for high prices and direct subsidies, a double loss for them.