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President Thomas’ letter to Standing Committee on International Trade re TPP

We the North
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Dear Committee Members,

In recent months, there has been a great deal of debate about the Trans-Pacific Partnership Agreement (TPP) and what it means for Canada.

The federal government has committed to a study of the agreement’s potential impacts on the Canadian economy; however, to date nothing has been made public, and we have been told no such study yet exists.  How can the government possibly sign onto a massive international trade agreement without knowing the impacts it will have, or the potential consequences for the Canadian economy, the public and the environment?

In fact, it would be irresponsible to proceed in this way.  A genuine and independent economic impact analysis that considers all the implications of this agreement should be mandatory.

Possibly one of the reasons for this failure to do an impact study is that the government knows full well that any benefits from the TPP will be marginal at best, while the damage done will be serious.

A 2016 study from the C.D. Howe Institute predicts that the macroeconomic impact of the TPP on the Canadian economy would be a mere 0.068% growth in GDP by 2035.  Perhaps even more interesting is that the study predicts only a 0.026% drop in GDP by 2035 if Canada does not ratify the TPP.  This mirrors the recent US International Trade Commission’s study that showed that the TPP will increase the US trade deficit and will have almost no positive impact on the US economy.  

A Tufts University study shows that Canada will actually lose jobs if the TPP is put into effect, and that the problem of income inequality will be made worse.  

We do know there will undoubtedly be negative consequences if Canada chooses to ratify the TPP.  Our experts have reviewed the agreement.  We’ve looked at the results of previous free trade agreements Canada has signed.

The TPP really has very little to do with international trade in the traditional sense.  Rather, it is about creating regulatory symmetry across countries and strengthening the rights of corporations.  As a result, governments’ right to regulate would be constrained and the democratic voice of the Canadian people will be muted.

It is clear that any of the proposed benefits of the TPP would be far outweighed by the negative impacts on the Canadian people, the economy and the environment.  In light of these issues, the TPP is of great concern for the members of our union, a component of the National Union of Public and General Employees.

Although the potential impact of the TPP on public and social services has not always been at the forefront of the popular debate, this is a huge concern–not only for public sector workers, but for the Canadian public at large.  A primary reason for this is the negative list approach in the TPP.  It means that all services and investments in Canada, including any future new public services, are subject to the agreement’s provisions unless specific reservations are negotiated.

While Canada has negotiated a reservation for services that are deemed to serve a public purpose, the list of social services outlined in Annex II of the agreement is extremely limited.  Not only does the list fail to include the variety of ancillary services that support the functioning of those identified, but any unanticipated services that are deemed to serve a public purpose in the future will not be protected by this reservation.   

This is compounded by the standstill and ratchet provisions of the TPP.  The standstill provision requires governments to move only in the direction of greater conformity with the agreement (i.e. increased liberalization and privatization), while the ratchet provision prohibits governments from reversing any privatization efforts.  Not only would this increase the likelihood of the privatization of public and social services, but it would create an irreversible trend.  Significant privatization moves could not be reversed even if they proved to be dreadful mistakes. 

These aspects of the TPP effectively restrict the autonomy of Canadian governments and pose a threat to the protection of public and social services in Canada, as well as to the millions of Canadians employed in this sector.     

A primary concern for health care in particular is the impact that the TPP will have on the pharmaceutical industry.  According to recent analyses conducted by the Canadian Centre for Policy Alternatives and by Health Canada itself, the TPP will contribute to an increase in the cost of pharmaceutical drugs in Canada, by over $1 billion per year according to some estimates.  This would be the result of extending patent terms for pharmaceutical drugs under Chapter 18 (Intellectual Property) of the TPP.  An increase in the already-high cost of pharmaceutical drugs would add to the costs of health care and would jeopardize the health of many Canadians, particularly low-income Canadians.

Beyond pharmaceutical patents, the TPP’s Chapter 18 will reinforce intellectual property rights (IPRs) in general.  By extending copyright terms to 70 years, the TPP will lengthen the amount of time before content enters into the public domain.  According to extensive analysis by University of Ottawa professor and Canada Research Chair in Internet and E-Commerce Law, Michael Geist, the TPP will also have a negative impact on Internet freedom and privacy protections for users.

While Canada has negotiated some reservations to protect its cultural industries, these are relatively weak when it comes to the promotion and regulation of access to Canadian content.  Furthermore, the exceptions around culture are consistent with US interests, and thus will favour its dominant entertainment industry.  Not only will these aspects of the TPP have an economic impact on Canada’s cultural industries, but they limit cultural diversity as well.  In all of these areas, the IPR provisions embody the ways in which the TPP will bring the rules and regulations in participating countries in line with those in the US.

Although Canada has negotiated exceptions in the area of government procurement, including cultural industries as well as public utilities, social services, and public transit, these are not all-encompassing.  According to an analysis by Dentons (2016), new commitments in the TPP will open up the area of government procurement in Canada to foreign competition and give participating countries, particularly the US, greater access to Canadian entities. 

In addition to this, the TPP extends to sub-national governments – provinces and cities – the requirement that governments and their entities must employ non-discriminatory treatment towards foreign suppliers of goods and services (Chapter 15).  This will remove the right of Canadian governments and their entities to favour local suppliers or to implement local content requirements.  In fact, the use of such mechanisms to foster local development is clearly prohibited in Article 15.4.6 of the TPP.  Not only does this erode the decision-making and regulatory autonomy of Canadian governments, but it will affect the strength of the Canadian economy, including local jobs.

The TPP has been sold by its proponents on the basis of increased trade and investment, a healthier economy, and more jobs as a result; however, this has been shown to be false.  The already referred to 2016 study out of Tufts University predicts job losses (58,000 for Canada) and higher inequality in all participating countries.  The agreement would create a “race to the bottom” globally, thus putting downward pressure on wages and reducing the labour share of income. 

The TPP has been touted as a trailblazer in the area of labour rights.  The agreement identifies the participating countries’ commitments to uphold the rights outlined in the International Labour Organization (ILO) Declaration; however, the ILO provisions are not binding.  As articulated in Chapter 19 of the TPP, states and employers are only required to comply with the labour laws and regulations in their own countries, however bad they are.  The TPP would not result in any real improvements in working conditions or labour rights in the participating countries.

The rights and working conditions for migrant workers in particular, such as the abuse of migrant worker programs by employers, are not addressed in the TPP.  What the TPP does prioritize is easing the temporary entry of business persons into Canada.  For example, according to the specific country requirements outlined in Chapter 12, Canada would be unable to apply its Labour Market Impact Assessment for workers entering the country from TPP economies like Australia and Japan, and there would be an expansion of the “professionals and technicians” category to include more types of occupations. 

The investor-state dispute settlement (ISDS) mechanism is perhaps the clearest embodiment of the ways in which the TPP prioritizes corporate rights while constraining both citizens and governments in their ability to respectively voice and protect the public interest.  According to Chapter 9 (Investment) of the TPP, ISDS reinforces and protects corporate rights to the extent that corporations are able to effectively sue governments for alleged expropriation, discriminatory treatment or loss of potential profits.  However, as renowned economist and Nobel laureate Joseph Stiglitz has argued, ISDS has been deployed in instances of nondiscriminatory rules and/or where corporations are profiting from public harm. 

There are by now literally dozens of studies documenting the egregious effects of ISDS clauses.  These clauses are unnecessary and unacceptable.

The danger of ISDS is evident in Canada’s experience under NAFTA’s Chapter 11 (Investment).  Canada has been brought to arbitration more times than the United States or Mexico.  Some of the laws and regulations that have been challenged include a proposed ban on fracking, Canadian court decisions around drug patents, and the prohibition of building a quarry in an ecologically sensitive area.  These cases clearly illustrate the ways in which this mechanism can prevent Canadian governments from implementing policy, law or regulation in the public interest, particularly around health and social services, labour and the environment.  Under the TPP, Canada will almost certainly be subject to even more ISDS cases.

As demonstrated by the ISDS mechanism, the TPP poses serious obstacles for protecting the environment and addressing climate change.  Chapter 20 (Environment) does outline broad commitments to environmental protection, sustainable development and public participation, as well as protection for specific areas such as the ozone layer; however, these protections are not enforceable and, therefore, they are left to the discretion of participating countries.  Furthermore, it is likely that these protections will be voided by ISDS, as we have seen happen under NAFTA.   

The lack of substantial and binding commitment to environment protection, as well as the ISDS process, will weaken indigenous sovereignty in Canada, particularly for those communities and lands rich in natural resources. 

It is also worth noting that there is no reference to climate change in the entire text of the TPP.  In a world facing the urgency of combating climate change – something that the current Canadian government has vowed to take action on – this omission, along with the ISDS mechanism, is incredibly dangerous.  ISDS is a threat to the environment and to the health and wellbeing of Canadians, and it will erode Canadian sovereignty and democracy.

Much of this is rooted in the fact that the TPP is only marginally about trade.  It is about harmonizing standards and regulations across countries.  It is about strengthening the rights of corporations at the expense of citizens, workers, the public at large, and the environment. 

The TPP will have serious consequences for health care, public and social services, cultural diversity, good government, adequate employment and our standard of living, democratic participation, indigenous sovereignty, and environmental sustainability – all of which are institutions, principles or values that are at the core of Canadian society. 

It is clear that the costs of ratifying the TPP far outweigh any small benefit.

We urge you to stand up for Canadians and against the Trans-Pacific Partnership.

Sincerely,

Warren (Smokey) Thomas
President, Ontario Public Service Employees Union

c: Premier Kathleen Wynne
Ontario MPs
Larry Brown, President, NUPGE