Canada Needs to Have a Serious Talk About Trade Policy

Canada’s short, largely unwanted, fourth-wave federal election campaign will come to a head on Monday, September 20. Over the past five weeks, the Justin Trudeau government’s pandemic response, job and housing precarity, and climate change vied with trust in government as top issues for voters. Opposition parties are making connections between these challenges and our […]

Trade policy has received next to no attention this election, despite the post-pandemic collapse of corporate supply chains, the unequal distribution of COVID-19 vaccines, and the climate crisis. It will be impossible to confront these problems without a progressive trade policy.

Canadian Conservative Party leader Erin O’Toole (left) and prime minister Justin Trudeau (right) at an election debate in Gatineau, Quebec, Canada, on September 8, 2021. (Justin Tang / Canadian Press / Bloomberg via Getty Images)

Canada’s short, largely unwanted, fourth-wave federal election campaign will come to a head on Monday, September 20. Over the past five weeks, the Justin Trudeau government’s pandemic response, job and housing precarity, and climate change vied with trust in government as top issues for voters. Opposition parties are making connections between these challenges and our rigged corporate trade regime, but it takes some digging through their platforms to find it.

This is too bad, because there are some good ideas for progressive, worker- and climate-centered trade reforms among the policy platforms of several of the parties running. These ideas, such as Green New Deal campaigns to expand the caring economy, decarbonize, and transition carbon-intensive sectors and workers to good, green jobs will go unheard. Canadians would have benefited from a trade reform debate.

Canada’s New Democratic Party (NDP) has been a champion of fair trade for decades. But its proposals are generally not very detailed and often rely too much on abstract rhetoric. In its 1997 platform, for example, the NDP called for trade deals “that work for people, not against them.” Drawing on demands from global labor and environmental movements, the party proposed including “real, enforceable and progressive social, labor and environmental standards” in new agreements.

These ill-defined calls for more progressive trade deals were never challenged because, by the late 1990s, the media had lost interest in trade policy and considered the issue of free trade settled. Conveniently enough, the idea that free trade was the only form of trade policy conceivable was exactly what the Liberal government of the day, business lobbyists, and pro-austerity economists wanted everyone to believe. In this ideological context, it was difficult for alternative trade visions to break through, at least during elections.

Today, virtually all liberal politicians and many business leaders qualify their support for free trade with the caveat that it should also be fair trade. Evidence of this can be seen in the “inclusive growth” and “inclusive trade” agendas of the World Economic Forum and the Trudeau government, respectively. Both slogans are a response to the widespread acknowledgment that trade liberalization has benefited some groups — such as monopolist and globally mobile capital — at the expense of workers and the environment.

The Biden-Harris administration appears to be taking the inequitable nature of trade agreement architecture more seriously than most Western governments. Biden continues to resist corporate pressure to launch new trade negotiations (with Kenya and Brazil, for example) and rejoin the Trans-Pacific Partnership. Instead, he and his trade and labor officials are emphasizing domestic job creation. After three decades of neoliberal restraints imposed by global trade and investment treaties, this objective will have to be met through strategic use of what limited policy space the administration has available.

The 2021 NDP platform looks very Biden-esque. The party is augmenting its fair-trade strategy with plans to strengthen Canadian industry through strategic use of industrial strategy in the aerospace, shipbuilding, construction materials, pharmaceuticals, and personal protective equipment (PPE) sectors. The party’s plan is to put special emphasis on salvaging auto jobs that are at risk due to the transition to electric vehicles. The prospect of job loss in the auto sector seems inevitable unless Canada can steer investment toward local battery and zero-emission vehicle production.

Like the Conservative Party, the NDP proposes to “require the use of Canadian-made steel and aluminum for infrastructure projects across the country.” And, like the Green Party, a separate sustainable procurement strategy in the NDP platform would favor Canadian suppliers of low-carbon building materials and other goods, as supported by Blue Green Canada and several Canadian industry associations.

There are other similarities between the NDP and Conservative platforms on trade, possibly a result of the latter’s hope of attracting working-class voters. Both parties are proposing to be more careful in screening foreign takeovers of Canadian firms — though the Conservative Party seems intent on mainly blocking Chinese investment. And both the NDP and Conservatives propose to empower workers to bring forward anti-dumping investigations of job-impacting foreign imports, as US workers currently can.

But limited sops to labor in the Conservative platform by no means suggest a change of heart in the party’s economic ideology and sectoral priorities. Leader Erin O’Toole promises to expand Canadian fossil fuel production and criminalize protests against “critical” pipeline and other energy infrastructure. The Conservatives promise to pursue closer trade, security, and military ties with “free” (i.e., white Anglophone) nations as a containment strategy against China.

During debates on the Stephen Harper government’s market-opening (and pro-mining) trade deals in Latin America, O’Toole showed little patience or respect for human rights defenders. He was instead skeptical of the severity of human rights abuses in countries like Honduras. O’Toole dismissed anyone (including this writer) who came before the committee with critical viewpoints on the Canada­–European Union (EU) deal. He would regularly misquote or misrepresent the research of experts to undermine their credentials.

In one disturbing case, O’Toole asked a Honduran human rights activist, Bertha Oliva — whose husband, Tomás Nativí, a professor and political rights activist, was disappeared by the Honduran state in 1981 — what courses her husband had taught at university. The question seemed to insinuate that this information was pertinent to — or may even have justified — his targeting by the state. The NDP opposed the Canada-Honduras Free Trade Agreement, but it passed into law under Harper’s Conservatives with the support of Liberals in Parliament.

Sustainable Development

The Green Party plans to make international trade policy fair and more conducive to both climate action and sustainable development. Piggybacking on the work done by past configurations of the party, the Greens’ manifesto presents a more detailed and comprehensive vision of trade reform than the NDP’s. The 2021 platform shares with its Liberal and Conservative counterparts a commitment to maintaining Canadian competitiveness in the clean tech sector through conditional patents and more public-private research partnerships — a green capitalist approach.

The Greens’ platform also proposes reforms to the World Trade Organization (WTO) that would make the body responsible for ensuring that trade is consistent with a global carbon budget. It’s an interesting variation on long-standing calls from some environmentalists to house environmental governance at the WTO because of its relatively strong dispute resolution process. But the organization’s twenty-five-year failure to accommodate reasonable expectations from developing countries to better balance their sustainable development needs makes it hard to trust the WTO to fairly manage something as complicated as a carbon budget.

In parallel to this global mechanism for managing trade in high-carbon goods, the Greens propose, as do the NDP, that Canada should apply a carbon border adjustment, or tariff, on imports that are higher in carbon than Canadian-made products. Carbon border adjustments are also being considered by the EU and receiving attention in the United States. The Greens’ gloss on the policy is that it ought to “ensure Canadian companies paying carbon taxes are not placed at a competitive disadvantage with foreign companies located in countries with no such taxes.”

Labor unions and environmentalists are warming up to carbon border adjustments as a possible counterpart to the inevitable raising of carbon taxes on domestic production. Developing countries, meanwhile, worry they will be yet another unfair barrier to their exports into Europe and North America.  This could potentially decrease their chances to develop high-value industrial capacity. Karen Hansen-Kuhn of the Institute for Agriculture and Trade Policy has done a very good job outlining the complicated puzzle of how carbon border adjustments will affect developing countries and an international just transition.

Both the NDP and Greens propose the elimination of investor-state dispute settlement (ISDS) from Canadian trade and investment deals. Both parties would cease negotiating any new agreements that included these increasingly controversial corporate rights provisions. Just this month, an ISDS tribunal ruled in favor of a Canadian firm operating in Colombia under a Canadian free trade deal with strong investment protections. The tribunal determined that, although the Colombian government’s efforts to protect a sensitive wetland area from mining were legitimate, the government nonetheless violated the firm’s rights to “fair and equitable treatment.”

Unlike the Greens and the NDP, the Liberals are proposing to expand Canada’s network of investment treaties containing investor-state dispute mechanisms. Deviating from the party line, foreign affairs minister Chrystia Freeland has expressed concern that ISDS treaties violate nations’ sovereign rights to set strong human rights and environmental standards.

The Trade Reform Debate We Almost Had

Polls are signaling that the election will produce more of the same — a relatively strong Liberal minority government with the NDP holding a balance of power. But there is a chance that the Conservative Party, currently in opposition, will be asked to form a minority government of its own.

It was hard to get any policies aired above the fray of a violent, if small, anti-vaccine campaign that dogged federal leaders, Trudeau in particular. The prime minister’s decision to call an election in the middle of a fourth wave of COVID-19 infections upset many voters and made trust in government the hot button topic of the election.

The issues of leadership and trust therefore have overshadowed other critical issues such as adequate and affordable housing, climate change, indigenous reconciliation, and yes, international trade. Canada’s two left-of-center parties have put forward some good ideas for progressive trade policies. But in the absence of a more robust debate on trade and international issues, this election cycle has simply punted the problems they pose further into the future.

Without changes to the way trade is governed, we will be forever hampered in our ability to decarbonize, meet our climate responsibilities, and adopt a more rigorous industrial strategy without fear of carbon leakage or offshoring. Canada must adopt a progressive trade policy so it can aid its own sustainable development needs and those of other countries.

This post was originally published on Jacobin.

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