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Brexit, Trumpism, and the challenge to globalism

By: | August 1, 2016

The focus on xenophobia as the source of Britain’s exit from the EU and the appeal of Donald Trump conveniently ignores the link many Brits and Americans see between our prevailing globalist ideology and extensive job losses and underemployment.

Marilyn Reid
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Roughly one third of Canada’s trade with the European Union (EU) is with Great Britain, a country whose citizens have just voted to exit the EU. In light of this development, one might expect our federal government to choose to re-evaluate whether the anticipated job losses linked to minimum processing requirements (MPRs) and other concessions made in the Comprehensive Economic and Trade Agreement (CETA) are now worth the price.

Instead, Canada, along with the unelected European Commission, is pushing for the preliminary or provisional ratification of CETA as quickly as possible.

From a business perspective, imagine a corporation has negotiated a 20 year contract at a fixed price, and at the last moment they discover that the other party can only deliver two thirds of the promised market access. Would the company respond by rushing through the deal?

It’s an absurd question, yet that’s exactly what has just happened. I think it tells us very clearly that, while the face of our national government may look more caring and sincere than the previous one, the bias towards the agenda of Big Business remains unchanged. International trade was the top lobbying topic for Canada in 2015.

What does Brexit mean?   

Brexit is seismic. It’s a huge revolt against a three-decade economic model that has rendered sovereignty and local autonomy subservient to the external authority of international agreements.   

According to a June 24 Ashcroft exit poll, 49 percent of Brexit-leave voters said the biggest single reason for wanting to leave the EU was “the principle that decisions about the UK should be taken in the UK.”

Another third said leaving “offered the best chance for the UK to regain control over immigration and its own borders.”

How significant is the migration issue? According to an article by Paul Mason in Le Monde Diplomatique, “forty-three per cent of the workforce in British basic plants like canning, bottling and packing are now migrants. Up the value chain, in the manufacturing sector, it is 33%.” Mason adds that “the persistent abuse of hiring entire workforces from eastern Europe, without trying to recruit locally, was ignored.”

Britain has had no limit on the number of EU workers it will accept, so unbridled migration became a symbol—not surprisingly—for reduced job opportunities, stagnant wages and growing inequality. It’s  not a coincidence that recent demonstrations of xenophobia have come from the most economically distressed areas of the country.

Free trade vs. American jobs

Look closely at what’s happening in the United States and you’ll see the issues are the same. While the press continues to focus on Donald Trump’s outrageous behaviour, the real story behind Trumpism is almost deliberately ignored.

Trump identified what Americans are most upset about — jobs, or the lack of them. He linked the failure of America to sustain jobs in manufacturing and hi-tech to free trade. The statistics support his argument. According to the Economic Policy Institute, “More than five million manufacturing jobs were lost between 1997 and 2014, and most of those job losses were due to growing trade deficits with countries that have negotiated trade and investment deals with the United States.”

 While Trump’s anti-immigrant messaging is deplorable and should be condemned, he is not wrong in linking American job losses to free trade and globalist principles.

Trade agreements lower or eliminate import tariffs. This has enabled American corporations to relocate production offshore and still sell their products to Americans at no disadvantage. The trajectory of the job loss that has accompanied outsourcing has been incredible. 

First the assembly line jobs were lost. Then skilled manufacturing jobs were outsourced, followed by hi-tech jobs. Then it was services that could be traded online. How far can this trend actually go? Fast food restaurants may apparently now be experimenting with outsourcing their drive-through windows.

And it’s not just outsourcing that has so upset American workers. As in Britain, the insourcing of labour has become problematic. Central American migratory workers, particularly in seasonal jobs like agriculture, have long been part of the American employment landscape. But something has profoundly changed since we embraced globalism and free trade.   

In spite of significant unemployment or underemployment among American university grads, big American corporations like Microsoft have managed to persuade Congress that there is a shortage of workers and that they need more temporary foreign workers to fill the “skill gap”. The university-educated workers brought in on H-1B work visas have no bargaining rights and are paid at least $20,000 less than U.S. workers. Worse still, American workers have been laid off to make room for them, though often not before the outgoing workers have trained their replacements.

While Trump’s anti-immigrant messaging is deplorable and should be condemned, he is not wrong in linking American job losses to free trade and globalist principles.

As such, it is both simplistic and insulting to all those Republicans supporting Trump to label them as inherently xenophobic. This ignores the root cause of their frustration: the relentless disappearance of good American jobs over the last 30 years of the neoliberal experiment with globalism. Like the Brits, a lot of Americans want their government to end that experiment. Trump promises that if he is elected he will do this, starting with the renegotiation of, or withdrawl from, the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

Globalism’s impact in Canada

We like to believe that nice, polite Canadians would never be guilty of the xenophobia seen recently in Great Britain and the United States — but we could surprise ourselves. Jobs are often at the heart of hostility to foreigners. Canada has a growing productivity problem that just happens to coincide with the rise of globalism and free trade agreements.

 The Trudeau Government is still pursuing trade agreements with undue haste and in spite of substantial evidence that these deals will hurt Canadian workers and the Canadian economy.

For example, despite signing a multitude of trade agreements over the last 15 years, Canada’s export performance has been the second-worst among OECD countries. In fact, our imports from trade agreement partners grew twice as fast as our exports to them. To look at it another way, exports to countries with which Canada does not presently have a free trade agreement (FTA) grew six times as fast as to those with which we do have an FTA.

As for the pending Trans Pacific Partnership (TPP), according to a 2015 United Nations Conference on Trade and Development report (page 24) our value-added exports are estimated to decrease by 26 percent as a result of this agreement. Canada is expected to incur the largest job losses of any participating TPP country.

Meanwhile, federal Minister of International Trade Chrystia Freeland has called CETA a “gold standard of trade agreements”. And it may very well be, for the corporations. Trade justice groups believe CETA represents a sellout to international corporations at the cost of jobs, of local businesses, and of local autonomy. The treaty is being pushed through without any public consultation process.

Both the TPP and CETA include clauses that will allow citizens of partner countries who hold a post-secondary degree to apply for contractual positions in Canada. Has government evaluated whether these clauses represent a way of getting around reforms made to the temporary worker program after the RBC fiasco? We know from that experience that big Canadian corporations can be as enthusiastic as their American and British counterparts in replacing local labour with temporary foreign workers who will work for less money. Big corporations are the driving force behind the TPP and CETA.

Is the Trudeau Government as enraptured with corporate ideology as Harper was?

Although expressed very differently, both Brexit and Trumpism represent sizeable public rejection of the neoliberal globalist model that has dominated government thinking for the past 30 years. Behind that rejection is the growing belief that globalism has not only failed to deliver employment opportunities — it is relentlessly taking them away.

Those in the trade justice movement hoped that Brexit and Trumpism would set off alarm bells in Ottawa. This has not happened.

In fact, the Trudeau Government is still pursuing trade agreements with undue haste and in spite of substantial evidence that these deals will hurt Canadian workers and the Canadian economy. Worse still, the TPP is projected to increase unemployment and inequality worldwide.

Apparently, ideology will continue to trump evidence-based decision-making in Canadian leadership circles.

Marilyn Reid writes from Conception Bay South. She is a member of Citizens against CETA and the Council of Canadians.

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