Free-trade deal — or assault on governments?

By MURRAY CAMPBELL
The Globe and Mail
Tuesday, November 7, 2006

Dalton McGuinty wants to join the club started by Gordon Campbell and Ralph Klein, but if he’s smart he will look closely at the membership rules first.

The Ontario Premier has been waxing enthusiastic about the free-trade agreement signed this year by British Columbia and Alberta. “I think it’s a step in the right direction for us to move toward ultimately a state where there is free trade actually within this country,” he said recently.

The object of Mr. McGuinty’s affection is the B.C.-Alberta Trade, Investment and Labour Mobility Agreement, which proposes to eliminate trade barriers between the two provinces by creating roughly identical rules and regulations. The Premier says the deal, which will be phased in over two years starting next April, has been well received by Albertans and British Columbians.

The reality, however, is that very few of them know the first thing about it because it was negotiated secretly and presented as a fait accompli.

Its proponents are certainly keen. “The agreement is really breaking down all of the economic barriers between the two provinces to create one economy,” said B.C. Economic Development Minister Colin Hansen.

But a growing number of critics have concluded that the trade deal known as TILMA is an assault on the governments because it gives commercial interests the apparently unfettered right to sue to remove any regulation that might impair trade. The critics believe that it goes further than Canada’s international trade agreements in compromising the ability of governments to respond to domestic concerns.

The first “general rule” of the deal is that there should be “no obstacles” to freer trade and it obligates the provinces to ensure that none of their measures impair trade, investment or labour mobility. It offers business the right to sue governments for up to $5-million “on any matter” involving the interpretation or application of the deal.

There seems to be no qualification of this, which would potentially mean, for example, that B.C. might have to relax its land-use regulations in the Lower Mainland to conform to Alberta’s less-rigid regime for development. Such a decision would be made by an unelected tribunal rather than politicians.

“It sets up a whole lot of legal jeopardy for governments with no obvious benefit,” Vancouver analyst Ellen Gould argues. The deal gives companies an ability to sue government far beyond what exists in domestic law, she added, predicting an assault on a range of government regulations in such areas as health care and education. “It’s just a licence to kill for businesses.”

The critics’ fears that the deal will usher in an era of massive deregulation were intensified when Alberta Intergovernmental Relations Minister Gary Mar told a chamber of commerce in June that the dispute process is “everything Canadian business asked for.”

Certainly, businesses have convinced themselves that interprovincial trade is a snake pit of obstacles. But saying it’s so doesn’t make it so and many economists have concluded that significant barriers have been eliminated in the past decade and that labour mobility is well on its way to being ensured. Todd Hirsch, chief economist of the Canada West Foundation and a supporter of TILMA, says the devil is in the “exceptions, special rules and caveats” but concedes that “no one has a really good handle on it.”

Marc Lee, an economist with the Canadian Centre for Policy Alternatives in Vancouver, believes that existing trade barriers are minuscule and that TILMA represents “phenomenal overkill relative to the amount of issues there are.”

Ontario is just beginning its analysis of the deal and a spokesman for Economic Development Minister Sandra Pupatello said “we haven’t got into the machinations of it.”

Here’s a few things to ponder when they do get into it:

Would Ontario’s Greenbelt regulations survive the dispute process? They certainly add to the cost of doing business.

What about worker health and safety regulations or anti-pollution measures? Ontario could argue that they are legitimate but the ultimate word would belong to a tribunal and not to the legislature. Why would a premier sign a deal that requires him to consult other provinces before acting?

Is that the free trade that Mr. McGuinty envisions?