Canadian Big Business: Globalkation and Evolving Preferences for Free Trade A
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University of Toronto University of Bath Katholische Universitat School of Graduate Studies Department of Social and Brabant Department of Political Policy Sciences University of Tilburg Science Bath, United Kingdom Faculty of Social Sciences Toronto, Canada Tilburg, Netherlands Thesis Supervisor: EU Research Advisor: Professor Stephen Clarkson, Peter Cressey, Professor of Political Science Senior Lechirer University of Toronto University of Bath Tnnsatlantic Masten Programme in Public Poliey and the Global Economy Globalization, Business Interests, and the Development of Continental Free Trade Agreements Chnstopher Friederich Holz November* 1999 93 1480640 A thesis submitted in confomiity with the requirements for the degree of Masters of Arts in Public Policy & the Global Economy ûraduate Department of Political Science University of Toronto 8 Copyright by Chnstopher Friederich Holz 2000 National Library Biblbtynaîionih du Cana uisitions and Acquisitiom et abgraphic Services services bibliographiques The author has gninted a non- L'auteur a accordé une licence non exclusive licence allowing the exclusive permettant à la National Library of Canada to Bibliothèque nationale du Canada de reproduce, loan, distri'bute or sel reproduire, prêter, disbn'buer ou copies of this thesis in microform, vendre des copies de cette thèse sous paper or electronic formats. la forme de miuofiche/fiim, de reproduction sur papier ou sur fornuit electroniwe. The author retains ownership of the L'auteur conserve la propriété du copyright in this thesis. Neither the droit d'auteur qui protège cette thèse. thesis nor subsbntial extracts hmit Ni la thèse ni des extraits substantiels may be printed or otherwise de ceiie-ci ne doivent être imprimés reproduced without the author's ou autrement reproduits sans son permission. autorisation. Globalization. Business Interests and the Develo~mentof Continental Free Trade Anreements Transatlantic Masters of Arts ia Public Policy and the Global Economy (2000) Department of Political Science School of Graduate Studies University of Toronto The thesis is a comparative study on the role played by "big business" peak interest associations in the development of continental trading regimes in North Amenca and Western Europe (specifically the FïA, NAiTA and the Single European Act (SEA)). The paper explains the role and level of influence of business groups by examining changes that have been occurring in the international political economy over time which have increased the influencing power of business and weakened the ability of states and civil society groups (and labour) to act in certain policy areas. The increased "influencing power" of business caused by globalization and reflected in the agency and structural power of capital, allowed business groups in Canada, the United Kingdom, and at the European level, to play an active and important role in the agenda-setting, negotiation and implementation phases of these agreements. In memory of iwo special people who have had a profound impact on my life Herta Marie Holz & Elsaida Am brosine I'gner 1 will always love you and 1will never forget you "Protection is not left-wing or right-wing; it is simply passe. Liberalization is not a right- wing or lefi-wing issue; it is simply a fact of life." Jean Chretien, The Aylmer Conference, 199 1 Table of Contents Introduction Chapter 1 : Theoretical Review - Alternative Explanations for Regional Integration 1. Introduction II. Realism and the regional integration of Europe III. The Pluralist challenge: Neofunctionaiism IV. The reaiist response: Interdependence 1 I V. The SEA and the revival of neofiuictionalisrn 12 VI. The S EA: and Liberal Intergovernmentalism 13 VII. A Critique of Neofbnctionalism and Liberai Intergovernmentalism 15 Chapter II: An International Political Economy Explanation for Regional Trade Agreements 1. Introduction II. IPE Concepts: Comprehensive Concepts of Control, Fractions of Capital and Globalization III. nie dominance of the productive capital perspective: Breîton Woods and the Post-War Order IV. Globalization: the transformation of the structure of capital, the multi- nationalization of the productive firm, the weakening of states and the birth of neoliberalism V. Globalization and the rise of Finance Capital: Direct and Indirect affects on States and the Emergence of the International Neoliberal Epistemic Community VI. Accounting for Differences: Why the FTA-NAFTA and SEA are so Different VIL Epistemic Communities and Poücy Networks: Apples, Oranges and the Cornparison of Business Group Action in Europe and North America WI. Globaiization and the International System IX. Globalbation and the Development of Regionai Trade Agreements Chapter III: UK and European Big Business - An Active Role in the Relaunch of Europe 1. Introduction 44 II. Evolving cont&tntal tntegration: Continental choices for the United Kingdom 46 In. Relaunching Integration: the EC tries to Rebuild itself IV. Business Organization since the Treaty of Rome and the evolving preferences of European Big Business A. The Union of Industrial and Employers' Confederations of Europe (UNICE) B. The European Roundtable of Industrialists (ERT) C. British business and the ERT v. The Thatcher Govemment and British Fim Preferences for Free Trade W. British Business Interest Associations and Support for the Single Market A. The Codederation of British Industry B. The institute of Duecton (IoD) C. The Association of British Chambers of Commerce (BCC) D. The Forum of Pnvate Business (FPB) 62 VII. Globalization, Firm Preference Change and the Development of the Single European Act A, UWEuropean Big Business: Setting the Agenda for the Single European Market B. The debate over "Fortress Europe" and Free Market Europe C. Lord Cocffield's White Paper and the Negotiation of the SEA D. UK/European Big Business and the Implementation of the SEA VIII. Concluding Remarks Chapter IV: Cansdian Big Business - An Active Role in North American Continenta1 Integration 1. Introduction II, Evolving Continental Integration: Canada's Ttade History with the United States III. Canadian big business: globalkation and evolving preferences for free trade A. The Business Council on National Issues B. The Canadian Manufacturers' Association W. Canadian Big Business: Uniting Behind Free Trade v, The Fragmentation of the Canadian Labour Movement VI. The Canadian Industriai-Trade Burcaucracy: Histoncal Linkages with Business and the Neoliberal Views of Senior Bureaucrats VII. Stage 1: Setting the Agenda for Continental Inteption A* Canadian Big Business BIAS: Tramnational Action B. Canadian Big Business and NAFTA m. Stage II: Canadian Big Business and the Negotiation of Free Tdefor North America IX* Stage II?: Ratincation and the Role of Canadian Big Business Groubs X. Rebunal: Questions about the involvement of Canadian Big Business 101 XI. Concluding Remarks 102 Conclusion Interviews/Correspondence Bibliography vii ver the past quarter century, the creation of a tdyglobal economy has had a profound effect on the power structure of the international state system, on the sovereignty of states, and on the shape of public policy. At the close of this century, the world has entered a period that one U.S. President predicted would be a 'hew world order" for humankind and development. Indeed, since George Bush spoke those hopefbi words, a series of events rapidly developed that included the abrupt end of the Cold War and the dissolution of the USSR, the near-economic collapse of the Japanese and East Asian economies, and iremendous instability as global politics transfomed fiom a bipolar system into multipolar and multicivilizational chaos.' The world without order became one of deregdation, pnvatization and trade liberaiization - a three-pronged trident aimed at the heart of the Keynesian Welfare-State System by the emerging pmdigm of the times. The emergence of neoliberalism as the description of weakened state power and the prescription for state policy, emerged out of two powerful and interwoven forces that molded the shape of the state and the histone balance between govemment and market. The first of these has been the renewed globalization of business and the spread of multinational modes of production across a variety of states at different levels of development, causing increased international interdependence of which the world has never seen.' The second has ken a weakening of state power, both dejure and de facto, as nation-states have gradually lost the power to control their economies aud create policies for the benefit of theu citizens.' Globalization bas taken a hammer to the nation-state and has splintered away power in thme directions: downward to sub- 1 htington, 1996: 2 1. * The globaiizationof business is not new. Indeed, the entire British Empire was founded upon pivate ventures and private fms seeking out trading opportunitics in the "new world" and in India Examples include tbc East tndia Company which helped colonize india, and the Hudson's Bay Company that established a series of trading posts amss vast parts ofCanada This is a much more conmvmiai proposition that has divided rsdcmia Some Iike Razeen SaUy, Louis Pauly and others, suggest that govements newr had complete power over the economyh and Society and that nothhg has changed over the past th* yem. (See Saliy, 1998 and Doremus, Kelkr, Pauly and Reich, 1998) The Iate Susan Strange dong with Robert Cox and others suggest that while globalization is not new, tbe power of business over states