The CCPA MONITOR Reporting on Business, Labour and the Environment Volume 9 No. 7 The Canadian Centre for Policy Alternatives December 2002/January 2003 UNCLE SAM AND US: CANADA’S SECRET CONSTITUTION Canadians fooled by trade deals three times—and counting By Stephen Clarkson “He fools me once, shame on him. rules governing investment. And they cover much, much He fools me twice, shame on me.” more economic ground, as I explain in my new book Un- This pearl of folk wisdom relayed by my mother-in- cle Sam and Us. But since these rules are for governments law to my daughters has been on my mind recently as to obey, they can’t be presented simply as economic is- I’ve reflected on how Canadians have collectively been sues. They must also be discussed in the language of poli- fooled about trade liberalization—not once, not twice, but tics. And there’s the rub. three times and counting. It was a shrewd move on the part of our political lead- Actually, the majority of Canadians weren’t fooled by ers to avoid engaging with trade liberalization as a politi- Brian Mulroney and his allies into accepting the original cal issue because, as soon as it is seen in terms of its im- “free trade” agreement with the United States in 1988. In plications for governance, citizens who had agreed that the federal election that year, 57% of the electorate voted markets should be efficient or that services should be com- for the two parties opposing the FTA. But they were petitive, strongly object to their country’s political sys- cheated by the electoral system tem being undermined without their which translated 43% of the vote into “My primary argument is that the knowledge or consent. a big majority of the seats in Parlia- three supposedly economic trea- My primary argument is that the ment for the Conservatives, who pro- ties which Canada has already three supposedly economic treaties ceeded to sign the highly contested which Canada has already signed are deal. signed are so politically pregnant so politically pregnant that they com- The second time the public was that they comprise a second, ex- prise a second, external constitution taken for a free-trade ride involved ternal constitution for Canada.” for Canada. My secondary position another kind of chicanery. This was is that, while having an external con- in the federal election in 1993 when the issue was the FTA stitution is an unavoidable—and, if fairly constructed, being strengthened and expanded to include in a even desirable—feature of , this particular North American Free Trade Agreement. Having said he economics-based constitution is badly flawed and in ur- was so opposed to NAFTA that he would renegotiate it if gent need of major correction. We should beware of be- elected, Jean Chrétien proceeded to sign the text on Jan. ing fooled again. 1, 1994 soon after he became prime minister and had ar- With all the imagery around national constitutions— ranged a face-saving exchange of letters with then U.S. their founding fathers in sepia photographs, their baroque President Bill Clinton. language, the near-religious awe with which commenta- A year later, Canadians were sold a bill of goods about tors refer to them—the notion that trade agreements could economic “liberalization” for a third time when Canada be a constitution may strike you as odd, so let’s return to joined other countries as a founding member of the World more familiar ground. Trade Organization, a powerful international institution Do you remember the big constitutional debate that that was intended to transform the rules of the game for preoccupied phone-in shows across the country in 1980 global commerce and investment. and 1981 about who should be protected in the Bill of The legerdemain to which the public was exposed Rights that was championing? Members when these three landmark treaties were signed was based of Parliament and Senators sat long hours on a joint par- on their presentation in the language of economics. Who liamentary committee that heard submissions from hun- in her right mind would oppose making markets more dreds of groups and citizens arguing their own cause. efficient or object to having more competition in telecom- Do you remember Doris Anderson, that doughty cru- munications—if that meant lower long-distance phone sader for women’s rights, taking on Lloyd Axworthy, then bills? Who could object to “free” trade? Trudeau’s cabinet minister responsible for the status of NAFTA and the WTO do address economic issues, of women, in the wintry days of 1981? Their exchange pro- course. They determine tariff levels. They lay down new (Continued on Page 6) http://www.policyalternatives.caThe CCPA Monitor 1 December 2002/January 2003 Canada’s new external constitution was adopted in secret (Continued from Page 1) voked a conference of dedicated feminists who ultimately become politically unthinkable not to hold a referendum convinced the Liberals to enhance their position in what in each province to validate the Charlottetown Accord, became the Charter of Rights and Freedoms. Other pro- which almost every political leader endorsed, including testing groups, such as the handicapped, were also given the Liberal premier of Quebec, Robert Bourassa. satisfaction. Once again the radio phone-in shows buzzed with Do you remember Bora Laskin, the courtly, white- impassioned conversations over arcane phrases like “dis- haired chief justice? Trudeau had asked the Supreme tinct society” and whether “Charlottetown” would be Court to rule on the constitutionality of his attempt to get good or bad for the West, good or bad for national unity. Prime Minister Margaret Thatcher in London to amend At the end of the campaign in which the country’s politi- the British Act so that Canada would fi- cal, economic, and media élites argued near unanimously nally—after 114 years—be free of British control and as- for the Yes (with the notable exception of Preston Man- sume legal sovereignty over its own political rule book. ning, then leading a fledgling Reform Party), the public And do you recollect how Laskin voted No. The referendum was lost, and his colleagues contrived such a “At the end of the campaign in and the Canadian constitution re- Solomonic judgment—the Liberal which the country’s political, mained unamended from its 1982 for- prime minister’s unilateral initiative mat. was valid according to the black letter economic, and media élites T T T of the British North America Act but his argued near unanimously for Even if you aren’t in a position defiance of provincial opposition to a the Yes to the Charlottetown to remember Charlottetown, I hope measure that would affect the prov- Accord, the public voted No.” you can at least agree that constitu- inces’ powers violated a convention of tional politics is serious business be- consent—that Trudeau was forced to cause it’s about issues that determine engage in one last round of negotiations with the recalci- the framework and the rules within which governments trant provincial premiers in order to achieve sufficient operate: agreement among them to pass the Court’s test of con- • Constitutions contain the political equivalent of the Ten sensus? Commandments, that is, norms or principles that dic- What about René Lévesque? Do you recall his bitter tate how governments should behave. Even if they anger at his fellow premiers for giving up their opposi- weren’t handed to us on stone tablets, a constitution’s tion to Trudeau’s project and making him the victim of norms cannot be easily changed. Suprapolitical, they are what he saw as a power ploy against Quebec? beyond the reach of parliaments to alter. And Queen Elizabeth: who can forget the image of • Having established rule and decision-making institu- her signing, in one of her unmatchably frumpy hats, the tions, constitutions set limits to the powers of the gov- new Constitution Act in April 1982 on Parliament Hill as ernments they create. thousands shivered in the rain to witness this historic • They sanction the superior status of certain rights and moment of patriation? so redistribute power to those who acquire them. We If you don’t remember these events, because such saw this in Canada when women and Aboriginals memories belong to your parents’ generation, you’re more found that the Charter had indeed strengthened their likely to recall Canada’s last round of constitutional poli- situation. tics because it happened only 10 years ago. Intensive de- • They establish courts which are called upon to settle bate had begun in 1991 when the Mulroney government disputes over the meaning of these rights. In writing suggested giving Ottawa greater power over the economic their rulings, judges may actually create new rights, union (at the expense of the provinces) and restricting the as happened when the Supreme Court read into the Bank of Canada’s role to controlling price increases (at Charter a right not to be discriminated against for the expense of promoting full employment). Orchestrated one’s sexual orientation. by Joe Clark, nationally televised consultations in every Constitutions have three other characteristics which region of the country engaged not just the usual cast of we should look out for: premiers, but selected citizens who rapidly nixed • To be considered legitimate, constitutions generally Mulroney’s aspirations to entrench his neoconservative need to be ratified. If they lose their legitimacy, citi- economic ideas. zens may start to question why they should be obeyed. What’s more, constitutional politics had become more • A constitution incorporates the ideology of those who inclusive. Aboriginals were invited to the final negotiat- won the power struggles that created it. Pierre ing table in Charlottetown at the insistence of Ontario Pre- Trudeau’s advocacy for a bill of rights articulated a mier Bob Rae. And by the late summer of 1992, it had liberal, individualistic vision that finally prevailed (Continued on Page 7) The CCPA Monitor 6 December 2002/January 2003 Trade deals entrenched the property rights of corporations (Continued from Page 6) over the provincial premiers’ con- panies in or Japan can de- trast, the WTO does have rules that servative and collectivist resist- mand similar access to the whole Ca- specify which economic subsidies are ance. nadian market. acceptable and which are not. In rul- • Constitutions also express the ing out subsidies that promote a balance of power between the Limits on Government country’s exports, the WTO gave Ot- winners and losers involved in Under the FTA, Canada agreed to tawa a weapon with which to pursue their drafting. Women and Abo- forgo setting domestic prices for oil for subsidizing the exports of riginals were strong enough to and gas below the level of their ex- its Embraer regional jet aircraft at the get their interests written into the port price to the U.S.. The ideological expense of those made by Bombar- constitution. René Lévesque and load of this provision was expressed dier in Quebec. (The same rules ena- gays were not. when former Alberta Premier Peter bled Brazil to pursue Canada for the With these characteristics of con- Lougheed exulted that the West could same sin.) ventional internal constitutions in never be subjected to another Na- mind, let’s take a look at how NAFTA tional Energy Pro- Rights and the WTO—with very few people gram of the type it Like domestic con- realizing it—have become an exter- had abominated un- “NAFTA is a thousand stitutions, trade agree- nal, if virtually secret, constitution for der the more inter- pages long because it is ments create rights. Canada. ventionist Liberals, full of many specific lim- But, unlike the Char- T T T who had decreed a its which the Canadian ter, the rights NAFTA Norms and Principles of the Secret low national price for sets up are for corpo- Constitution oil and gas as a com- government accepted. rations, not citizens. What also makes these NAFTA’s counterpart to the first petitive advantage And they are for commandment is: “Thou shalt give for Canadian indus- limits constitutional is American (and in national treatment to foreign invest- try and consumers. their irreversibility.” theory Mexican) cor- ments.” This means that federal, pro- What Alberta’s pe- porations operating in vincial, and municipal governments troleum exporters Canada, not for do- must give foreign firms the same ben- won, Ontario’s manufacturers lost. mestic firms. efits they give firms owned by Cana- NAFTA is a thousand pages long Connoisseurs of the Charter will dians and controlled in Canada. because it is full of many specific lim- recall that Parliament proposed in Because of Canada’s historically its which the Canadian government 1981 not to entrench property rights high level of foreign ownership, Ot- accepted. What also makes these lim- since owners of property were al- tawa had stoutly resisted interna- its constitutional is their irreversibil- ready well protected by the legal sys- tional pressure to give national treat- ity. By signing one of these treaties, tem. NAFTA, however, introduces ment to investment until the FTA the signatory governments are obli- property rights into Canada’s consti- came along. It wanted to continue gated to implement their provisions tutional order, but only for American developing industrial strategies to in their statutes, which cannot be re- (and Mexican) investors, who as a help domestic entrepreneurs over- scinded without breaking the treaty. result enjoy greater legal armaments come the inherent disadvantages they When free trade advocates talk about with which to attack government suffered by operating in a small, open “locking in” constraints on what gov- regulations in Canada than do their economy. ernments are allowed to do, they are domestic competitors. That Canadian As a suprapolitical norm con- acknowledging that these limits are corporations enjoy similar rights in tained in the texts of the WTO and constitutionalized and so put beyond the U.S. and Mexico is not of much NAFTA, national treatment isn’t writ- the reach of future politicians who comfort to those concerned about ten into Canadian laws. But if any Ca- might be elected on the strength of their federal, provincial, or municipal nadian government restricts its pro- having more activist ideas about us- governments’ integrity. grams’ benefits to domestic firms, it ing the state to achieve social justice One of the most powerful parts violates this new external constitution or economic growth. of the WTO is the agreement on in- and may suffer penalties as a result. To say international economic tellectual property rights, many of The WTO adds the most-favoured- rules have constitutional weight is not which were formulated in response nation norm to national treatment. to suggest they are necessarily per- to the demands of the world’s largest This means that, if Alberta allows verse. Mulroney failed to persuade pharmaceutical corporations. In stark an American firm to offer its services Washington to include a subsidy code contradiction to the idea of free flows in either the FTA or NAFTA. In con- in the health care system, then com- (Continued on Page 8) The CCPA Monitor 7 December 2002/January 2003 WTO and NAFTA have constitutionalized neoconservatism (Continued from Page 7) of commerce, these rules grant monopoly rights to the stitution, the issue used to be whether it was Ottawa or holders of drug patents. With branded products protected the provinces that had jurisdiction to develop a particu- by the WTO from the competition of the generic pharma- lar policy or whether the proposed policy was in conform- ceutical producers, drug costs have escalated, putting ity with the Charter. Now the question becomes whether Canada’s health-care system under further financial any government has jurisdiction to legislate in a field strain. where foreign corporations may have an opposing inter- est. Courts There is no question that transnational corporations However good or bad a constitution’s principles, lim- doing business around the world are well served by the its, and rights may be, they have no significance unless it WTO and NAFTA, which arm them with general princi- also contains a judicial mechanism ples and specific rules aimed at reducing nation-states’ through which these provisions can be capacity to take social, cultural or en- interpreted and enforced. Both NAFTA “Threats by U.S. corporations vironmental measures in the interest of and the WTO provide for arbitration, to sue the federal govern- their societies. In this sense, the WTO but of very different quality and NAFTA constitutionalized the ment under Chapter 11 have ideological program of neoconserv- A constitutionally explosive aspect already made Ottawa aban- of NAFTA lies in the novel provision in atism, representing a colossal break- its Chapter 11 that gives American (and don attempts to control ciga- through towards creating a global mar- in theory Mexican) corporations the rette advertising and to ket unrestrained by government. right to sue Canadian governments be- eliminate MMT, an alleged For both objective and subjective rea- sons, this situation cannot be expected fore international tribunals for meas- neurotoxin, from gasoline.” ures that “expropriate” their earnings. to last. One such tribunal overruled Canada’s Objectively speaking, the breakthrough ban on the export of PCBs, even though Ottawa was towards economic liberalization has knocked off kilter the bound by an international environmental agreement not previous balance between states and markets that was es- to export hazardous chemicals. tablished after World War II. As corporations and their Threats by U.S. corporations to sue the federal gov- political representatives block governments from dealing ernment under Chapter 11 have already made Ottawa with issues of concern to their publics, unresolved crises abandon attempts to control cigarette advertising and to will become cumulatively more pressing. eliminate MMT, an alleged neurotoxin, from gasoline. The more the public demands action and the more Canadians are accustomed to rigorous neutrality, politicians explain that it’s the WTO and/or NAFTA that transparency, and accessibility in the judicial system pro- prevent them from acting, the more visible will become vided under their domestic constitution. But Chapter 11 the external constitution—and the more unpopular. The tribunals have proven to be heavily biased towards cor- contested legitimacy of the external constitution was porate and against government interests, are largely se- dramatized by the demonstrators who closed down cretive, and are virtually closed to observation and par- Seattle three years ago last November when the WTO held ticipation by civil society. the meeting that was meant to launch a new “millennial” What makes the WTO’s massive rule book so power- round to negotiate still more rules. ful is its impressive legal process for adjudicating com- You will recall a blur of demonstrations that showed mercial conflicts between member states. Canada, which environmentalists, trade union leaders, and human rights played some part in designing its strong dispute settle- activists protesting at meetings of the World Bank (Wash- ment process, has already been found in violation of WTO ington, 2000) or the International Monetary Fund (Prague, norms on several occasions. Most famously, its various 2001), or the Economic Summit (Genoa, 2001) or the Or- policies, which had been painstakingly developed by Con- ganization for American States (Windsor, 2000) or the servative and Liberal governments over the decades to Summit of the Americas (Quebec, 2001). Some protesters support domestic magazines living in the shadow of the deliberately caused trouble, but most travelled at consid- overwhelming American magazine industry, were erable personal sacrifice as citizens wanting to express deemed in violation of its WTO obligations. The laws their concerns. that were perfectly legal according to Canada’s old do- Unlike the intense but civil tone that marked the pub- mestic constitution turned out to be “illegal” according lic discussion of our constitution’s Charter, the tear gas, to its new external constitution. pepper spray, arrests, attack dogs, and police brutality These international economic treaties have trans- clearly conveyed the message at these international meet- formed the Canadian legal order. Under our original con- ings that the citizenry was the enemy. Far from promot- (Continued on Page 9) The CCPA Monitor 8 December 2002/January 2003 Street protests only way for Canadians to voice their concerns (Continued from Page 8) ing a democratic community nour- FTA. Apart from that, we weren’t to a process whose purpose is to add ished on deliberation, the chain link worry our pretty little heads. It seems new rules to our external constitution fences and the serried ranks of riot po- that even our negotiators didn’t takes place by stealth. The watchdogs lice told us that, under worry as much as they should have. of Canadian sovereignty are dis- neoconservatism, the national lead- It’s clear now that they had not un- missed as extremists, though they ers, their bureaucrats, and interna- derstood the retrograde significance have been proven correct in most of tional secretariats have become a glo- of Chapter 11’s investor-state dis- the alarms they previously raised bal priesthood deciding what is good pute process on which they signed about the FTA, NAFTA, and the for the public while refusing to hear off. WTO. its views. The ’s But this time the rest of us can’t These demonstrators don’t gen- information deficit was far worse. Its claim ignorance as an excuse. Every- erally agree about very much. They many agreements, with their 22,500 one now knows that the globalization come from the left and come from the pages of text, were negotiated in se- that has been practised for 20 years right. From church groups and from cret on Mulroney’s watch and gladly according to the neoconservative anarchist cells. They represent labour signed by the Chrétien government, handbook has failed to deliver eco- unions who fear for their members’ which could not pos- nomic progress. jobs and environmental organizations sibly have known “The watchdogs of Cana- Even the World that fear for the planet Earth. what its effects dian sovereignty are dis- Bank acknowledges But the general theme that unites would be. In these missed as extremists, that cutting back the them is that economic globalization circumstances, ordi- state has created threatens their democratic values. nary Canadians though they have been worse problems Unlike Doris Anderson and her allies could be forgiven for proven correct in most of than those it was in 1981, civil society is barely seen or being fooled about the alarms they previ- supposed to solve. heard in the institutions of global eco- its political signifi- ously raised about the Readers of the main- nomic governance which have been cance. stream New York designed to exclude national citizens. Now we’re in the FTA, NAFTA, and the WTO.” Times know this Europeans, who are strongly con- process of being mis- from the paper’s ex- nected to their institutions of conti- led for a fourth and fifth time, though tended coverage of Latin America’s nental governance through the vari- now the fooling is happening simul- deterioration following its adoption ous bodies attached to the European taneously. Ottawa is involved in con- of neo-con policies. Union, nevertheless complain of a current negotiations that are already Because of such institutions as the “democratic deficit.” By contrast, Cana- proceeding at both the global and the WTO and NAFTA, global governance dians’ experience of global economic hemispheric levels. has become skewed, empowering liberalization is of a democratic • Globally, it’s the new Doha round market values at the expense of clash- vacuum. of palavers to expand the WTO’s ing social, environmental, and cul- Which brings me back to my rules even before we can know tural priorities. Should the Doha and mother-in-law’s maxim. the full implications of the exist- FTAA negotiations continue in their If many were fooled about the po- ing ones. present direction, they will only make litical side of the FTA in 1988, this was • Hemispherically, it’s the effort to the imbalance worse by further re- in part because the Prime Minister’s create a Free Trade Area of the stricting their member states and fur- Office had a strategy (revealed in a Americas by the year 2005. ther liberating transnational corpora- leaked PMO document) of minimiz- Once again we are being told not tions from the discipline of state gov- ing the information it provided about to worry: our negotiators only have ernments. the agreement—on the perceptive our best interests at heart. Doubtless If we let this happen, shame on grounds that the more the public they do, though their neoconserv- us. knew of the deal, the less it would like ative definition of what is good for –––––––––––––––––––– it. Canadian society (weaker govern- (Stephen Clarkson teaches political If we were fooled about NAFTA, ments and freer markets) and the economy at the . this had something to do with an in- public’s understanding of what it This essay is based on the analysis in his formation deficit. NAFTA was pre- wants from its government (excellent recent book, Uncle Sam and Us: Glo- sented as simply an extension to public health care and schooling) may balization, Neoconservatism, and the Mexico of the “great gains” that Ot- differ radically. Canadian State, published by the Uni- tawa had supposedly won with the Once again we seem helpless, as versity of Toronto Press.)

The CCPA Monitor 9 December 2002/January 2003