Will free trade with the EU ben­e­fit all Cana­di­ans?

Trudeau’s broad state­ment put to the test

The Hamilton Spectator - - CANADA & WORLD - JOR­DAN PRESS

OT­TAWA — “At its heart, CETA is a frame­work for trade that works for ev­ery­one.” — Prime Min­is­ter Justin Trudeau.

Some­times, politi­cians can say just enough to let the words mean any­thing to any­one.

Last week, Prime Min­is­ter Justin Trudeau was ex­tolling the virtues of free trade with the Euro­pean Union, an agree­ment known best by its acro­nym CETA. In his speech, Trudeau talked about bet­ter in­comes for work­ers, en­trepreneurs who will have ac­cess to new cus­tomers, con­sumers pay­ing less at the check­out counter, man­u­fac­tur­ers who can ex­pand their global reach, and more pre­dictabil­ity and trans­parency for the “en­gi­neer­ing, ar­chi­tec­ture, and in­for­ma­tion tech­nol­ogy” sec­tors.

In short, he said, “CETA is a frame­work for trade that works for ev­ery­one.” So does it? Spoiler alert: The Cana­dian Press Baloney Me­ter is a dis­pas­sion­ate ex­am­i­na­tion of po­lit­i­cal state­ments cul­mi­nat­ing in a rank­ing of ac­cu­racy on a scale of “no baloney” to “full of baloney” (complete method­ol­ogy be­low).

This one earns a rat­ing of “some baloney” be­cause it rests on your def­i­ni­tion of “ev­ery­one.” Let’s sort through it all. THE FACTS: A 2008 joint study by Canada and the Euro­pean Union sug­gested trade would in­crease by 20 per cent and gen­er­ate $12 bil­lion an­nu­ally in new eco­nomic ac­tiv­ity — a gain of al­most one per cent of gross do­mes­tic prod­uct yearly in Canada. The gov­ern­ment says the rip­ple ef­fects would trans­late into an ex­tra $1,000 for ev­ery Cana­dian fam­ily, and 80,000 new jobs na­tion­wide as tar­iffs are elim­i­nated and the price to ship and pur­chase goods drops.

Sim­i­lar stud­ies have also pegged an eco­nomic boost from CETA, but with lower ef­fects on gross do­mes­tic prod­uct.

A study pub­lished in the In­ter­na­tional Jour­nal of Po­lit­i­cal Econ­omy in Septem­ber es­ti­mates 23,000 job losses in Canada over the next seven years — a blip in the do­mes­tic job mar­ket — and 200,000 job losses in the EU. The wage im­pacts un­der the eco­nomic mod­els used in the pa­per would also be dif­fer­ent than what the gov­ern­ment says: The au­thors pre­dict that av­er­age an­nual earn­ings would de­cline by al­most $2,500 by 2023.

THE EX­PERTS: Re­search shows that over­all, coun­tries that lib­er­al­ize trade see gains in jobs, av­er­age in­comes, and stan­dard of liv­ing, says Ian Lee from the Sprott School of Busi­ness at Carleton Univer­sity. The ben­e­fits ac­crue in the long run, and may not ma­te­ri­al­ize im­me­di­ately, he said. But, Lee said, not ev­ery­body ben­e­fits, point­ing to the Cana­dian tex­tiles in­dus­try that suf­fered job losses af­ter NAFTA was signed.

The ed­i­tor of the In­ter­na­tional Jour­nal of Po­lit­i­cal Econ­omy, Mario Sec­ca­rec­cia, an eco­nomics pro­fes­sor from the Univer­sity of Ot­tawa, said the Septem­ber re­search pa­per sug­gests ben­e­fits will ac­crue dis­pro­por­tion­ately to up­per in­come earners, leav­ing work­ing class peo­ple be­hind.

On the other hand, the nar­row as­sump­tions un­der­ly­ing ear­lier stud­ies may se­verely un­der­es­ti­mate the eco­nomic gains to Canada, said Domenico Lom­bardi, direc­tor of the global econ­omy pro­gram at the Cen­tre for In­ter­na­tional Gover­nance In­no­va­tion.

Lom­bardi said CETA is more than a trade deal. It’s a new-gen­er­a­tion agree­ment that in­cludes provi- sions about har­mo­niz­ing reg­u­la­tions and fos­ter­ing greater co-op­er­a­tion. In that sense, he said, there are ben­e­fits that ac­crue to ev­ery­one, from com­pa­nies down to con­sumers, al­though the ben­e­fits are more dif­fi­cult to quan­tify.

All this leads to a ques­tion, posed by Dan Ci­uriak, for­mer deputy chief econ­o­mist at Global Af­fairs Canada: “Who did the prime min­is­ter have in mind when he said, ‘ev­ery­one’?”

Ci­uriak said CETA has a small, pos­i­tive ef­fect on Canada and the EU over­all un­der the con­ven­tional eco­nomic mod­els, mak­ing it good for all as Trudeau sug­gested. And con­sumers in Canada in the EU are likely to see more choice and lower prices, mean­ing “ev­ery­one” in that sense is bet­ter off un­der CETA, he said.

The ef­fects of the deal will vary by prov­ince and be­tween EU mem­ber na­tions, but there is no in­de­pen­dent study that con­sid­ers the im­pacts of CETA on prov­inces that shows all would be in pos­i­tive territory, said Ci­uriak, who was re­spon­si­ble for eco­nomic anal­y­sis of pro­posed trade agree­ments in his last post­ing at Global Af­fairs Canada. (Global Af­fairs Canada’s web­site in­cludes a sec­tion about pro­vin­cial ben­e­fits.)

There will likely be neg­a­tive ef­fects in other coun­tries not part of the deal as their ex­ports are dis­placed by a new-found pref­er­ence be­tween Canada and the EU, Ci­uriak said.

THE VER­DICT: “Over­all, tak­ing into con­sid­er­a­tion that it is a po­lit­i­cal state­ment, rather than a nu­anced, foot­noted aca­demic as­sess­ment, I would char­ac­ter­ize it pri­mar­ily as beef, not baloney,” Ci­uriak said.

Un­for­tu­nately, beef isn’t on the rat­ing scale — at least not yet.

But given all the above, Trudeau’s com­ment earns a rat­ing of “some baloney” be­cause key in­for­ma­tion is miss­ing.

In its place, is the abil­ity for the any­one to de­scribe “ev­ery­one” in their own way.

METHOD­OL­OGY: The Baloney Me­ter is a project of The Cana­dian Press that ex­am­ines the level of ac­cu­racy in state­ments made by politi­cians. Each claim is re­searched and as­signed a rat­ing based on the fol­low­ing scale:

No baloney — the state­ment is com­pletely ac­cu­rate

A lit­tle baloney — the state­ment is mostly ac­cu­rate but more in­for­ma­tion is re­quired

Some baloney — the state­ment is partly ac­cu­rate but im­por­tant de­tails are miss­ing

A lot of baloney — the state­ment is mostly in­ac­cu­rate but con­tains el­e­ments of truth

Full of baloney — the state­ment is com­pletely in­ac­cu­rate

ST­EFFI LOOS, GETTY IM­AGES

Ger­man Chancellor An­gela Merkel and Cana­dian Prime Min­is­ter Justin Trudeau in Berlin . Trudeau brought a pro-trade pitch to Europe.

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