Free trade and “fair” deal

Today, Canadian Prime Minister Stephen Harper arrives in Panama to sign the Canada-Panama Bilateral Free Trade Agreement after 10 months of negotiations. Whether you are for or against the Agreement, one fact is inescapable: in signing this pact, Canada is recognizing Panama as a key player in the North American market and making it more difficult for the Americans to stall in passing their own FTA with Panama.

Both former Canadian Ambassador to Panama Jose Herran-Lima and our present Ambassador Patricia Langan-Torell have worked diligently to make this Agreement possible. And, all this was done in typically Canadian fashion: behind the scenes, without fanfare, without acrimony and threats from Ottawa legislators or the Chambers of Commerce, and without wasting time.

What will the Canada-Panama FTA change? I don’t think anybody knows for sure. If you Google “NAFTA is a failure” you will see 74,800 ‘hits’ taking that point of view; Google “NAFTA is a success” and you will find 101,000 entries listing websites, studies, and comments supporting free trade and the North American Free Trade Agreement between Canada, the United States and Mexico (1994).

As a freshman Member of Canada’s Parliament in the early ‘90s, I remember listening to a parade of lawyers, professors, business association delegates, lobbyists, union leaders, and just common folk who argued eloquently before the House of Commons Committee on NAFTA that their position was the right one.

We were given Apocalypse scenarios hinging on our refusing to vote for ‘free trade’ or our voting in favor of it.

We were told that more jobs would be created and illegal Mexican immigration into North America would slow to a trickle. We were also told that products would become cheaper and millions of jobs would be created.

It didn’t happen. Only a few products were cheaper and they usually carried a “Made in China” label.

In fact, several years back, cars built and sold in Canada, when the Canadian “loonie” (dollar) was on par with the greenback, actually cost 20 to 30 percent more in Canada, after NAFTA was enacted.

When Canadians shopped in the States for cheaper new cars (remember, most Canadians live about an hour’s drive from the border), American and Canadian automakers threatened to cancel their warranties and deny them service in Canada. Free trade, but not fair trade, EH?

Will jobs be created? It depends upon who you ask. Unions say no, business says yes. The truth lies somewhere in-between. The most likely outcome: the loss of some manufacturing, agricultural, and fishing sector jobs, but a pickup in service sector employment. Unions say we will all become hamburger flippers, business leaders say banking and investment will flourish.

What does this all mean to the average Panamanian? It means more competition driving down some prices and wages. It means that some Panamanian agricultural workers and fishers will have to learn new trades. And, it means more dependence on government social programs as a safety net to catch fired workers who become ‘collateral damage’.

On a positive side, it should mean Panamanians will be seen as equal partners, able to get their visas to visit Canada issued by the Canadian Embassy in Panama, rather than having to go through the Canadian Embassy in Guatemala.

Business will exploit loopholes in the Agreement (lawyers LOVE free trade pacts) and Panama President Martinelli will have to do more ‘jawboning’ of key industries to pass production savings along to consumers as he has done recently with the cement and sand producers.

So, is the Agreement worthwhile? I think so. Two-way merchandise trade between Canada and Panama reached $149 million last year.

Ensuring free and open trade is vital to international efforts to halt the global recession pummeling both countries. The Canadian-Panama Bilateral Free Trade Agreement sets up a framework for the orderly marketing of goods using competition as its anchor. That’s a laudable goal.

Just don’t expect it to be ‘fair’.

Phil Edmonston

President, Canadian Association of Panama