Tories plan blitz for European deal
Studies contradictory on what Canada can expect to gain
The Conservative government is launching a cross-country blitz to sell the new trade deal with Europe, though some say its claims on how much Canadians will benefit are “dishonest.”
The government says Canada’s economy will grow by as much as $12 billion once the massive free trade deal comes into effect, creating up to 80,000 jobs and increasing the average Canadian household’s income by $1,000.
Those are big numbers, and the government is planning to tout them throughout the country over the next week as it seeks to shore up public support for the deal. But while some say the benefits will be even greater, others say the government’s claims are little more than “propaganda,” and that the deal will actually eliminate between 30,000 and 150,000 jobs.
The government’s numbers are drawn from a joint Canada-EU study published in 2008 with the help of a computer model. One of the contributors, University of Toronto trade expert Walid Hejazi, says even though the study is five years old and a number of factors have changed, the fundamentals are sound and the estimates “are justifiable, academically.” In fact, Hejazi believes the real benefits to Canada will be even bigger than originally predicted.
“The one thing that’s not in the model is all of the innovation and the effects that come from increased competition,” Hejazi said. “So what we believe is, as a result of more open markets and enhanced competition, there will be a drive for Canadian companies to be far more innovative, to undertake a lot more R & D. And therefore we believe those numbers are an underestimate of what the true effects will be.”
But a study commissioned by the EU and published in 2011 found that the actual gains in terms of economic activity would be a quarter to half what was predicted in 2008, or about $3 billion to $6 billion in growth. The authors of the 2011 study said the two reports were not “directly comparable,” though they did write that their study was “far more comprehensive” than the one conducted three years earlier. At the same time, the original report upon which the government’s numbers are based was written before the economic crisis and before any actual negotiations had started.
The model also predicted an end to barriers on agricultural products, which didn’t happen, while the dollar is stronger now than in 2008, which is bad for exporters.
Yet economist Jim Stanford of Unifor, the country’s largest trade union, says those issues pale in comparison to the inherent flaws that are built into what he described as the “fantasyland computer model.” The model requires an assumption that there will not be any jobs lost by the deal, Stanford said, and that economic gains will be divided equally among all Canadians, both of which are unrealistic.
“You’re almost describing a utopian socialism,” he said. “Everyone has a job and everyone shares. And those are the assumptions that are required to get that $12 billion number.” The 80,000 new jobs and $1,000 in new income per household? Those are simply drawn from the flawed $12 billion figure to help sell the deal to Canadians, said Stanford.
Stanford’s own study, which he published in 2010, predicted job losses of between 30,000 and 150,000 because of increased competition from European firms, though he said he hasn’t updated it to take into account current circumstances.
NDP trade critic Don Davies suggested Monday the government’s numbers “are out of date” and “a little bit exaggerated.” Canada, meanwhile, will relax rules on foreign investment for the U.S., Mexico and 12 other countries as a result of its free trade pact with the European Union.