Sunday, June 16, 2013

Stephen Harper's Impressive Math on CETA

While visiting  Britain and France this week, prime minister Stephen Harper pointed out that Canada and the European Union do approximately $8 billion worth of trade annually, and that the much -touted Canada -EU trade deal (CETA)  will expand this trade as much as 20%.  What could be better than that?

Well, excuse me if  I am not so easily impressed. As is increasingly the case in all so-called trade deals nowadays , market access  for Canadian beef and manufactures and services has to be purchased at the cost of things that having nothing to do with "free trade " as such.  In the case of CETA, that something else is higher drug prices. A group of large European  pharmaceutical companies, including Bayer, Sanofi-Aventis, Novartis, Hoffmann La-Roche and GlaxoSmithKline, have successfully lobbied to make  stronger protection of drug patents a key deal-breaker.

The best estimates of the impact of higher drug prices stemming from the CETA deal  range between $1 billion and $3 billion--the best guess is about $2 billion per annum.  Is it worth paying $2 billion per year in higher drug prices in order to have a greater overall volume of trade worth $1.6 billion?  Aren't trade agreements supposed to be better for consumers as well as for  drug companies?

 For puzzled citizens , some historical perspective may be helpful.  For about three decades, trade agreements were actually trade agreements.  The standard pattern--the social contract, as it were--was  that tariffs (import duties) were imposed on commodities in order to protect domestic producers (usually manufacturers) from foreign competition.  Five successive rounds of negotiations conducted under the auspices of the General Agreement on Trade and Tariffs (GATT) between 1947 and 1967 only involved about 60 countries, mostly in the developed capitalist world, but they did a great job of negotiating thousands of tariff reductions that had the effect of making products cheaper for consumers and forcing inefficient producers to become more competitive.  The basic deal was--consumers benefitted first, and foremost in a clear transparent fashion. Transition costs from inefficient industries going under would be offset by consumer gains and overall gains in employment and economic growth. 

But then  the trade agenda expanded , and the number of countries greatly expanded and then the process was slowed down, and then we began to see a proliferation of regional and bilateral trade deals that reflected the asymmetrical power relations of the parties and which contained provisions like the energy security provisions of NAFTA and stronger protection of  intellectual property rights, stronger protection of rights of capital, including even a right of those corporations to sue democratically elected governments if  social or environmental policies interfere with their business?

My question is: who are the real protectionists here? Am I to be criticized as a "protectionist" because I only want an agreement in which the earliest and clearest beneficiaries are ordinary consumers and the least advantaged among us?  Because I want a  CETA that either doesn't include pharmaceuticals or which does include pharmaceuticals but only if it has the effect of making drugs cheaper?   I say: the real protectionists are the ones who promote this corporate-driven agenda.

I'm all for increasing exports of Alberta beef, and it would be nice to create more wealth. But this is not an obviously great deal. We should follow the lead of the Ontario government and make the deletion of stronger drug patents a condition of our support for this highly questionable trade agreement.