Sunday, September 28, 2014

Neo-conservative economists try browbeating Canadians on FIPA

Harper quietly announced his government ratified the FIPA investor-protection treaty with China.

Justin Trudeau quietly avoided the issue. (Although it’s clear he supports FIPA given he criticized Harper for putting limits on Chinese investment in the tar-sands.)

But some neo-conservative economists were much more vocal.

Economist Kevin Milligan

Kevin Milligan tweeted that opponents of FIPA are ultranationalist hypocrites:

What happens if you apply the Green/nationalist ‘sovereignty über alles’ framework to international climate treaties? Or is that just difft?

Only an economist could be this obtuse. Yes giving up democratic rights to stop destructive behaviors and preserve the world for future generations is a smart thing to do.

Right-wing politicians and economists are silent on how FIPA is good for Canada.

But China is a totalitarian dictatorship. Why would we want to cede sovereignty to fascist oligarchs who want unfettered access to our resources, especially the dirty-energy tar-sands? The two are the very opposite, not the same!

Economist Stephen Gordon

Stephen Gordon uses the same nationalist rhetoric implying critics are flag-worshipping racists.

He insists FIPA can’t stop a government from passing laws that protect the environment.

Of course, he’s an neo-con economist with an ideological vested interest. Not a lawyer with expertise in international trade agreements.

Trade expert Gus Van Harten

One such expert is Gus Van Harten. He is not a neo-Nazi, as Gordon might have you believe, but an Osgoode Hall law professor who has written two books on investment treaties. One criticism he has:

Chinese companies will be able to seek redress against any laws passed by any level of government in Canada which threaten their profits. Australia has decided not to enter FIPA agreements specifically because they allow powerful corporations to challenge legislation on social, environmental and economic issues.
Chinese companies investing heavily in Canadian energy will be able seek billions in compensation if their projects are hampered by provincial laws on issues such as environmental concerns or First Nations rights, for example.


Given Australia — which already does a lot of trade with China — can export its resources to China without a FIPA treaty, why on Earth do we need one?

Trade expert Lawrence Herman

Another critic is Lawrence Herman who is a senior fellow of the C.D. Howe Institute. He says:

A concern I have is that these arbitration decisions are rendered by ad hoc tribunals, appointed for a given dispute only. … Yet these impermanent tribunals are often deciding issues of social or economic policy of national importance.
Australia – a country that shares many interests with Canada – now says it will no longer sign such investment protection agreements, arguing that if Australian businesses are concerned about sovereign risk in other countries, they should make their own assessments about whether they want to invest in those places.

Crybaby Capitalism

Why do free-market economists demand a social safety net for businessmen who want to move their businesses to China? Talk about hypocrisy!

What does Canada have to gain?

Gordon’s logic behind FIPA is not at all assuring. He says because we have a massive trade deficit with China — buying a lot more goods from them then they buy from us — we have to let them buy up Canadian assets to balance things out:

Capital flows are the obverse side of trade flows. It makes no sense to claim to be in favour of international trade but against international flows of capital. …
As it happens, Canada runs a fairly large trade deficit with China: roughly $30 billion per year. This means that as far as China is concerned, trade with Canada is essentially a matter of them accumulating large amounts of Canadian assets.

Wow that sounds like an appealing offer! No wonder Harper tried to bury the announcement!


Germany recently raised concerns about investor-protection rules in the Canadian-Europe Trade Agreement (CETA.) If Germany doesn’t trust Canadian businessmen with these kind of powers, why would we trust a totalitarian superpower with them?


  1. Stephen Gordon appears to be an accomplice to the wily fox (Stephen Harper) as he guards the chickens (citizens) in the hen house. FIPA is not a good deal. The investor-state mechanism has the ability to financially bankrupt our country across a few decades. I see something more sinister afoot. Currently, we have dozens of trade agreements around the world with investor-state clauses imbedded in them. Under FIPA , China has the ability to conjure up trade disputes, real or imagined and have them arbitrated by 3 arbiters in secret, behind closed doors. To provide context, one might suggest 3 arbiters could be resolving trade issues with Canada across 50 agreements. One of the problems is the same 3 unaccountable people could work on all of the trade issues from Canada at the same time. If the arbiters decide to modify, amend write or re-write current legislation our country has nothing to input into the process. In essence, Canada would be governed by an entity over which they can not exercise any form of control. In fact, a dozen people could eventually control global trade. Nations across the globe, locked into similar agreements, are prone to overt manipulation by an entity, which is not subject to legal controls of any kind. Being a bit of a cynic, it is not difficult to imagine that Harper is actively constructing the foundations for a world that is controlled by a single entity that is not amenable to any type of intervention. When you add in the role of the unaccountable international banks, the problem of control and domination is quite evident. It is not a far-fetched notion to believe we are being assimilated into a structure with only one unaccountable government body deciding all issues on our planet. It is worth noting that Germany realizes the folly of the investor-state mechanisms and may relegate CETA to the dumpster if those mechanisms are not removed. Canada ought not ratify CETA unless those mechanisms are removed. Just my point of view.

    1. Thanks for the insight. In my opinion, these free-market ideologues are strongly anti-government. But what that means is they are strongly anti-democracy. They keep reducing the role of the democratic state, with inflation-targeting monetary policy, free-trade deals, investor-protection treaties, and "starve the beast" fiscal weapons of mass destruction: i.e. bankrupting democratic government.

      These businessmen are trying to establish a global plutocracy which balkanizes the international community preventing the people from establishing rules and regulations that protect the environment and prevent abuses of labor, including child and slave labor.

      The people are going to have to take their democracy back. This requires populism. The people have to rise up against free-market reforms that destroy democracy - and the economy - free trade being the most insidious.

      Let the elites sneer about populism and protectionism. But either we stand up to the name-calling or be herded like sheep. Free-market reforms have made a train wreck of the global economy. More poison will not lead to a cure. The liberal and conservative aristocracy is not better than democracy. Democracy, as Winston Churhill said, is the best of all worse alternatives, and that includes plutocracy and aristocracy.

  2. There are some things that citizens might do in order to halt the demise of our democracy. One of the key items is for under paid workers to stand up for their right to earn a living wage. The only way to accomplish this, in my opinion, is to form affiliations with some of the larger Canadian unions, then launch a campaign to have other citizens openly boycott the selected business until either the business offers a living wage or ceases to exist. For example, I wonder how many cups of coffee Tim Horton's would sell in China where workers make the equivalent of 18 cents an hour for most jobs. If large corporations such as Tim Horton's can not pay a living wage to their workers in our country, why would Canadians continue to buy their products? Due to demographic differences, the legislated minimum wage does not necessarily represent a living wage. Commodities usually cost the same, whether you earn 10 dollars an hour or 100 dollars an hour. The key difference is in quality of life or lack thereof. A surprising number of people earning "minimum wage" have to rely on "food banks" to sustain their existence.

    1. Australia shows that a living wage works. They have a $16.50 CAD minimum wage and 6% unemployment rate.

      Here in Canada a so-called "expert" manufactured evidence to claim a 13% increase in our minimum wage killed between 70,000 and 164,000 jobs for young workers. The facts show this is absurd.

      DVC: Neo-con assault on minimum wage based on manufactured evidence

  3. Great post and comments.

    How to get more Canadians identifying and thinking as citizens concerned with the public good before private interest, seems to me the challenge.

    1. Good point. Over the past 30 years we have been suckered into accepting free-market fundamentalism which basically states that greed is good: if people focus on their private interests this will work out for the public good.

      Given this absurd doctrine has led to soaring inequality, deteriorating living standards, financial meltdowns and boom-to-bust economic cycles, obviously it doesn't work.

      Now we are stuck in a never-ending slump like we were in the 1930s. Back then we realized we had to act in the public good for the public good. As Roosevelt said at the time:

      "We have always known that heedless self-interest was bad morals; we know now that it is bad economics."


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