Thread: Is Canada a Vanishing Country?

www.canadiandemocraticmovement.ca

The "Big Idea",
The "Grand Bargain",
Our Next Prime Minister And
The Vanishing Country

Mel Hurtig

The 72nd Annual Couchiching Conference

What I'm going to try to do today, if time permits, is summarize some of the key points in my last book, The Vanishing Country, which McClelland and Stewart published in November, then talk about the important developments that have occurred since the manuscript went into the publisher, and, finally, tell you what I think is going to happen re Canadian sovereignty and continental integration when Paul Martin becomes Prime Minister.

(Numbers that appear in brackets refer to page numbers in The Vanishing Country.)

In what follows I'm going to give you a fair amount of information that you almost certainly will not have had before. Just why this is the case is something quite important and something we should talk about, if there's time, later on.

The subtitle of my book is Is it too late to save Canada? I personally don't think it is too late, but even some great Canadian nationalists such as Peter C. Newman and David Suzuki have said to me that in their opinion it is already too late, we have already become so integrated into the U.S. as a result of the FTA and NAFTA, that we've now passed the point of no return.

Perhaps you may wish to consider my comments today in the context of three national public opinion polls that reflect not what Canadians want to happen, but what they think will happen.

Just about the time that I began writing The Vanishing Country over three years ago, a public opinion poll appeared that showed that a startling one in four Canadians believed Canada would not survive the next 20 - 25 years.

Halfway through my work on the manuscript, in answer to a similar question, 30 percent said they did not believe Canada would survive as an independent country.

Then, just as The Vanishing Country was published, a new poll showed 36% of Canadians said they thought that union with the United States was inevitable.

I don't know about you, but I would be very hard pressed to think of any other developed country that would have numbers about the survival of their country remotely close to those that I have just cited.

So, just why would so many Canadians respond this way, especially when we know from other polls that Canadians love their country, are proud of Canada, consider themselves to be very fortunate to live here, believe that we have a much better quality of life than in most other countries, including the United States, and they certainly don't want to see our country disappear and don't want to become Americans? Perhaps some of the things I describe in my book may be the answer, the increasing foreign ownership and control of Canada, the ongoing and accelerating integration with the United States, and the increasing pressure from our business and political elites for even greater integration and more harmonization with U.S. policies, standards and values.

Let's begin by looking at some of the ways in which Canada has changed since the Free Trade Agreement came into effect in 1989, followed by NAFTA in 1994.

First, there have been huge increases in foreign ownership and foreign control, mostly American.

Second, Americanization in the form of privatization, harmonization and deregulation has proceeded across the country.

Another important change has been the Americanization of our business and industry trade organizations and corporate boards of directors in key areas of the economy.

And, in recent years, there has been a profound change in the media, led by the far-right National Post, the Asper newspapers and the cautious timidity of the CBC, largely because of their reduced budgets, and their fear of further future reductions.

There are many other important changes, but here I will mention only one more, perhaps the most important of all though, and that is the attitude re Canadian sovereignty of governments in this country, particularly in Ottawa, in Ontario and in Alberta (130/131)

Let's turn to the questions of foreign ownership and foreign control.

Back in 1985, when Brian Mulroney was pitching the FTA and repeating ad nauseam that "We've been hostile to foreign capital in the past, but from now on we're going to be open for business" the profits non-Canadians made in the mineral fuels sector of the economy amounted to 68% of all profits, in mining it was also 68%, in food processing and packaging it was 53%, in tobacco it was 99.9%, in rubber products 84%, in the machinery industry 63%, in transportation equipment 94%, in electrical products 67%, non-metallic minerals 71%, and in chemicals and chemical products 87%.

How's that for being "hostile to foreign capital"

I'm sure that most of you understand that now, as a result of the two agreements, in any consideration of trade policy, foreign direct investment, foreign ownership and foreign control must also be considered.

I'm sure that most of all of you also know that Canada has much more foreign ownership than any other developed country in the world, by far!

No doubt you are aware that there are those who want and are currently lobbying for, even more of the same. Recently we've been inundated with appeals to government that we must open up for more foreign ownership in telecommunications, airlines, book publishing and bookselling, banking, newspapers, the petroleum industry, etc. and etc.. The euphemism commonly employed is "The free flow of capital" which essentially means selling the rest of the country that is not already foreign owned

I wonder if any of you have ever stopped to consider, for even a moment, at what point foreign ownership in Canada would be too much? Would it be 30%? 40%? 50%? 60%? Or as much as 70%? Or More?

I would very much welcome your response to this question. Perhaps you might also want to ask Bill Graham the same question, when you see him on Sunday, and Michael Wilson this afternoon, and Paul Martin as well, if you get the opportunity.

During the last eighteen years, since Brian Mulroney abolished the Foreign Investment Review Agency, and replaced it with Industry Canada's rubber stamp Investment Review Division, 10,441 corporations in Canada have been taken over, mostly by U.S. firms.

Not one single takeover has been refused. (13, 15)

Some 35 different sectors of the Canadian economy are already majority foreign-owned, including most manufacturing and most of the petroleum industry.

Of the 100 biggest private companies in Canada, beginning with General Motors and ending with Rolls Royce, 67 are foreign-owned.

In 1997 there were 41 large Canadian petroleum companies. Today there are six. Of the 35 that no longer exist, U.S. companies bought up 21.

Now for years, we've constantly heard from our corporate and political leaders, and our numerous continentalist newspaper editors and columnists, how we Canadians must have foreign capital to finance badly needed new business development in our country.

But, remarkably, of all the $503.1 billion of foreign direct investment monitored by the Investment Review Division since it opened for business in 1985, a startling 96.7% has been for takeovers of companies in Canada, and a pathetic, a paltry 3.3% has been for new business investment.

Now exactly where do you think that all the hundreds of billions of dollars for the thousands of takeovers came from?

Amazingly, no one in Ottawa can answer that question. Not David Dodge, not Paul Martin or John Manley, not Industry Canada's Investment Review Division, not even the excellent but underfunded Statistics Canada, which used to keep track of such information.

So, the Montreal Canadians and Teleglobe, as but two prominent examples, are bought up by Americans, and the money comes mostly from our good old patriotic banks and from other Canadian financial institutions.

Some 65%, based on historical figures, of all the financing for the increased foreign ownership and control of our country, has come not from imported capital, but from our own Canadian sources of capital.

I guarantee you that no other developed country would allow such an absurd thing as being bought up with their own money to happen.

Okay, what's wrong with so much foreign ownership?

Why do virtually all other developed countries shun a high degree of foreign control?

There are many reasons, the corporate hollowing out process that follows, the excessive foreign non-arms length import of foreign parts, components and services, (395), the failure to do R & D, (patents 339), the terribly costly transfer pricing, (Ford, Safeway, Coca-Cola, the big international drug companies (38-39)).

A past president of the Canadian Institute of Chartered Accountants tells me that the fastest growing area of accountancy in Canada is transfer pricing, in other words, developing strategies to transfer profits out of Canada before they are taxable in this country.

And guess who it is that has to make up for the lost tax revenue?

Hollowing out? The office vacancy rate in Calgary is sharply up during the past two years after a record number of takeovers in the oil and gas sector.

Meanwhile, in Vancouver, the headquarters of almost 1/3 of the province's largest firms have disappeared as companies such as Westcoast Energy and MacMillan Bloedel were taken over by foreign firms, and their senior management and much of their office functions were transferred down to head office in the U.S.

In The Vanishing Country I wrote:

A major problem with excessive foreign ownership is the loss of jobs that results when foreign corporations buy parts and components and services offshore or from the U.S. when similar-quality goods and services are available in Canada at competitive prices.

Foreign firms operating in Canada, on average, import three times as many parts, components, and services as similar-sized Canadian companies. In 1993, an OECD study showed that the ratio of foreign parts and components in manufacturing in the U.S. was 13 per cent. In Japan it was seven per cent. In Canada it was over 50 per cent, and it is probably much higher today. This exceptionally high foreign content is one of the key reasons why Canada's unemployment rate has persistently been so much higher that it should have been.

But, what about all the nonsense we've been hearing from Tom d'Aquino and friends about Canadians buying up the United States? (52-54)

Despite what you may have heard, despite the Japanese at one time buying up Pebble Beach and the Rockefeller Center ("my God, I think they got the Statue of Liberty") despite the Germans buying Chrysler, Doubleday and Random House, there is NOT ONE SINGLE INDUSTRY IN THE UNITED STATES that is majority foreign-owned.

Not one!

Only a tiny 6.4% of U.S. industry is foreign-owned, and of that, only 8% is Canadian, and most of that is a result of our Canadian banks funneling billions of dollars into the U.S.

As for all the huge amounts of Canadian direct investment abroad, once again, no one, repeat no one in Ottawa has the faintest idea just how much of all the so-called "Canadian" investment is, in fact, really Canadian. When Statistics Canada was still keeping track, which they are no longer doing due to budget cuts, as much as 30% to 40% wasn't Canadian at all, but rather it was large foreign companies based in Canada sending dollars out of the country, often for nefarious tax purposes. Witness, for example, the recent Enron multi-million dollar "slapshot" case complained about by our auditor general Sheila Fraser.

And, while Canada's banks poured billions of dollars out of the country, mostly to buy up U.S. banks, brokerages and trust companies, between 1998 and 2002, they closed 1,100 branches in Canada, as many worthy small and medium-size Canadian businesses were finding it difficult or impossible to raise the working capital that they required.

Re all the nonsense from the likes of Terence Corcoran, Sherry Cooper, Drew Fagan, The Conference Board, and of course, Mr. d'Aquino, that foreign investment in Canada has been drying up, and that Canada has not been a good place to invest, in every single year, from 1994 to 2000, foreign direct investment in Canada broke all previous records, and in 2000, the latest year from which official takeover dollar figures are available, as a percentage of GDP, it was greater than in all G-7 countries.

Moreover, the figure for 2000 was an all-time record four and one-half times larger than in any previous year!

And, in 2000, there was another brand new record number of takeovers of Canadian companies, once again mostly by Americans.

So, what has all of this got to do with trade?

I doubt that today, over 14 years after the FTA came into effect and almost 10 years after NAFTA, I doubt that one in a hundred Canadians know that as a result of the investment clauses in both the FTA and NAFTA, Americans can continue to buy up Canada, whether we like it or not, despite the fact that the polls consistently show that we don't like it at all!

Those who think that there should be some limit on the degree of foreign ownership in Canada must then consider exactly what is to be done with the unprecedented investment clauses in the agreements and consider whether they want even more of the same in the currently-being-negotiated FTAA and the GATS, because that's almost certainly what we're going to get.

While it might be argued that proper government guidelines can assure domestic benefit from foreign investment, unfortunately, both the FTA and NAFTA prohibit regulations designed to encourage a long list of requirements that would guarantee a better performance by foreign corporations operating in Canada. Gone are the days when federal, provincial, or local governments could mandate performance standards affecting job creation, R & D, technology transfers, domestic content, or mandate local, regional, or domestic purchasing or hiring requirements.

Now let's look at some comments by some of the staunchest supporters of the FTA, and see how they have reacted to the renewed rapid growth of foreign ownership in Canada.

Let's start with the late Mr. Justice "Bud" Estey:

I supported free trade a decade ago. Now I am starting to suspect that Canada may have contracted out our independence to those trade agreements. The problem is that we are letting corporations with no loyalty to this country strip it of its finite resources. (36)

Comments by Peter Lougheed astounded Canadians late in 1999:

I know people will fall from their chairs to hear me say this, but maybe right now we need to return to the Foreign Investment Review Agency. We need to be more interventionist. The passive approach isn't working. If (the present trend) continues, we are going to look at our country in about three years and say: What have we got left? (35)

That was well over three years ago. Since then, there have been two new annual records in foreign takeovers.

Even "leap of faith" Donald Macdonald now admits that he is very concerned about the growth of foreign ownership in Canada, but he says he doesn't know what to do about it.

Let me end this discussion of foreign ownership by quoting one of our more observant and astute experts on the subject:

I've yet to see a takeover that has created a single job - except of course for lawyers and accountants.

Brian Mulroney, Where I Stand, 1983

Is it too late to save Canada? No, I don't think it is. But, some very important things are going to have to happen soon if we're going to ensure that our grandchildren grow up to be Canadians.

First, Canada cannot possibly survive if we continue to sell off the ownership and control of our corporations, our resources, our land, our hi-tech companies, our manufacturing, retail and wholesale firms, and other areas of our economy.

But, instead, what we hear from the likes of our trade minister, Mr. Pettigrew, is that one of our primary goals must be "to increase the flow of two-way investment."

In other words, let's have our banks and other financial institutions continue to pour Canadian savings out of the country, while at the same time continuing to finance foreigners, buying up the ownership and control of our country.

I must tell you I have the gravest doubts about Mr. Pettigrew's ability to properly handle his portfolio in the national interest.

In your prospectus for this conference, you say that "we're asking some provocative questions" such as "What is the impact of the economics of continental integration on sovereignty? On our standard of living?"

Very good questions.

I wonder how many of you have ever seen an economic analysis of the free trade years.

We've all heard a great deal about the increased exports, but one important study shows that 85% of increased exports were not due to the FTA or NAFTA, but to the low value of the C$ and to the expanding U.S. economy. A 2001 Industry Canada study showed that only 9% of increased exports could be linked to the FTA or NAFTA.

During the long debate about the FTA in the last half of the 1980s, the Mulroney government and their BCNI friends promised Canadians improved productivity and competitiveness yielding greater prosperity, more factories from many different countries locating in Canada to serve the U.S. market, better wages, and a long list of other promises that were certain to materialize because of our newly-gained "guaranteed access".

To say that the Americans got pretty well everything they wanted by the time the FTA was signed in 1988 would be an understatement.

Forgive me for repeating the telling words of U.S. Trade Representative Clayton Yeutter, who said:

"The Canadians don't understand what they signed. In twenty years, they will be sucked into the U.S. economy."

Even now, many years after the agreement came into effect, most Canadians don't realize that the Mulroney government agreed to some extraordinary terms.

The Chrtien government then accepted Mulroney-negotiated NAFTA terms that were even worse, and some that can only be described as astonishing. This was, of course, the very same group of Liberals who so earnestly and enthusiastically promised in the 1993 federal election that they would negotiate away all the objectionable and damaging FTA and NAFTA provisions.

In energy and in resources, Canada's ability to control its own supplies and prices has been drastically reduced. Canadian oil and natural gas prices are now set in the U.S. If the U.S. faces a severe shortage and their market dictates huge price increases, too bad, Canadians will face the same high prices. Canadian oil and gas can no longer be sold at lower prices in Canada than the prices we charge Americans.

Perhaps even worse, even if we begin to run short, we will still have to continue sharing our diminishing supplies with the U.S., even if we face a severe supply crisis.

Bear in mind that our established proven reserves of natural gas are down to only 8.3 years, and we haven't replaced our diminishing reserves for over 20 years.

So, let's see now. If Alberta begins to run out of natural gas, Ontario will run short, Quebec will be out of luck, Saskatchewan and Manitoba will have to face freezing prairie winters, but, incredibly, we will still have to supply Americans with 2/3 of our production from across Canada.

How's that for employing the fundamental free trade theory of comparative advantage?

But, what about the Mackenzie delta reserves? Much of these will go directly to Fort McMurray to help produce tar sands oil for export to the U.S.

Mexico, by the way, absolutely refused to sign similar mandatory resource-sharing clauses when they signed on to NAFTA. So much for the abilities of our cabinet ministers and trade negotiators.

Now let's do a quick review about what we've heard and read about "the great success" of the two trade agreements, and about our great dependency on our exports to the U.S., and our resulting vulnerability.

Brian Mulroney has told us that "Free trade has been the best thing ever for Canada."

Diane Francis of The Financial Post says "free trade is demonstrably the best public policy ever adopted in Canada."

William Dymond, testifying before the Senate Foreign Affairs Committee, said "The results have surpassed the expectations of government and business. I will not bore you with the details or the numbers."

Mr. Dymond was one of Mr. Mulroney's key free trade agreement negotiators.

When I read those words of testimony, I wondered if Dymond actually had the numbers, or, if he did indeed have the numbers but didn't want to reveal them, or if, like so many other Mulroney supporters, he just took for granted the great success of the trade deals, or perhaps, like so many of our political, business, and economic journalists, he simply wasn't interested in doing the research necessary to evaluate the agreements' economic impact.

No to be outdone, the terrible twins of continental integration, Michael Walker of the Fraser Institute and the CCCE's d'Aquino, use almost identical words, "Free trade brings immense benefits to Canada" and "Free trade created immense benefits for Canadians", including what Mr. Mulroney has described as "a bounty of jobs."

For Richard Gwyn, our free trade deals with the U.S. have been critical to our economic success and "this is almost universally recognized." And, "nationalism is largely pass here." Moreover, in a truly amazing statement, "Whether our ways are better or worse than those of our neighbours and 'cousins' is neither here nor there."

Good grief!

Sylvia Ostry and Gilbert Winham in their recent June Globe page-op tell us, note this, that the agreements "buoyed the Canadian economy through the 1990's."

Okay, let's look at "the great success" of the two trade agreements that buoyed our economy in the 1990s, remembering that the FTA came into effect in 1989.

First, the growth rate of Canada's gross domestic product during the 1990s was lower than during any decade since the great depression!

In the period 1990-2000, compared to all other countries, Canada placed an embarrassing 80th in GDP growth.

During nine of the past 13 decades, Canada's GDP growth was greater than that in the U.S.

BUT, since the FTA came into effect, the U.S. outperformed Canada in eight of 14 years.

During the decade before the FTA, in GDP growth, Canada outperformed the G-7 average, the OECD average, and the average of the European Union. During the 1990s, it fell behind all of them.

Following are the words of Joe Martin, adjunct professor at the Rotman School of Management in Toronto:

"From 1939 to 1989, Canada made extraordinary progress compared with the United States. In 1939, our GDP per capita was less than 70% that of the United States. By 1989, it was 90%, and then the wheels came off....our snails-pace growth resulted in our sinking to 80% of the United States by 1999, a precipitous decline in only 10 years."

The noted Canadian economist Pierre Fortin put it this way:

"During the 1990s, Canada's aggregate economic performance has been the worst since the great depression, and very nearly the worst among all industrial countries."

For those of you who might suggest that Canada has improved substantially in the new millennium, extending our comparisons into 2000 and 2001, Canada still ranked only 65th in GDP growth rate.

According to Andrew Sharpe of the excellent Centre for the Study of Living Standards, in the year before the free trade agreement came into effect Canada's GDP-per-capita was 87.5 per cent of the American level, but in 2001, after 13 years of free trade, it had fallen all the way down to 77.9%.

Now let's zero in on the important questions of employment and unemployment during the first decade of free trade, remembering the oft-repeated promises of Jobs! Jobs! Jobs!

First, the growth of employment in the 1990s was lower than in any decade since the great depression!

In the decade before the FTA, employment in Canada increased by over 2.3 million jobs. During the 1990s, employment increased by only 1.5 million jobs, a huge decline.

Perhaps the most startling figures of all are the facts that in the 1980s, full-time jobs accounted for almost 60% of all new jobs created in Canada. In the 1990s, they made up a pathetic 18% of new job creation.

In the 13 years before the FTA, we created over 3 million full-time payroll jobs, well over twice as many as in the free trade years, and that was when our population was much smaller, and so were our exports much, much smaller!

Now let's look at unemployment. Canada's unemployment rate during the 1990s was the highest of any decade since the great depression, averaging an annual rate of 9.5%!

A further important point needs to be made about jobs in Canada since the FTA came into effect. In 2001, in terms of the percentage of the employed that had only part-time jobs, 20 of 30 OECD developed countries had a smaller percentage than Canada. Canada's part-time labour force measured a higher percentage than the averages of the G-7, the E.U. and the OECD.

Today, 18 OECD countries have a higher percentage of employed youth, and almost all have a smaller percentage of low-wage workers than Canada.

Economist Pierre Fortin says:

"There's no question that Canada's poor employment record has been the major event of the 1990s."

Now let's consider how average Canadians made out during the first decade of free trade.

The answer, in a word, is awful.

In June of 2001, Brian Mulroney said:

The massive growth in exports to the United States "gives you an idea of how our well-being...is tied to free trade with the U.S."

It certainly does, quite clearly, but certainly not at all in the way Mr. Mulroney had in mind.

If the FTA and NAFTA weren't supposed to improve the well-being of average Canadians, what was the objective supposed to be

But in the 1990s personal income increases in Canada were less than one-third of what they were in the 1980s, the 1970s and the 1960s as well.

During the 1990s, workers' wage increases in Canada fell far below the level of the previous five decades, and were well below the average of the E.U. and OECD countries.

Now let's return to the growing gap in productivity and competitiveness, the two areas where Mulroney el al waxed so lyrically about the huge inevitable benefits during the free trade debates.

According to Industry Canada, the trend is

Quite unexpected and worrisome, especially in view of the dramatic increase in Canada's outward orientation, partly due to the FTA/NAFTA, and the implementation of a number of structural reforms.

Industry Canada continues (374),

There has been almost no growth in labour productivity in export sectors.

In another paper, prepared by three employees of the Micro-Economic Analysis Division of Industry Canada, we learn that,

Despite the growing economic linkages, Canada's productivity and real economic performance lagged far behind the U.S. in the 1990s and the Canada-U.S. productivity and real income level gaps widened significantly, exactly opposite of the expectations.

When I asked Industry Canada why they thought this had happened, the answer was that it was "Mainly because Canadian firms were not investing in R & D and new machinery and equipment and as a result there was poorer innovation."

Could they, by any chance, be referring to the 150 big corporations who make up the Canadian Council of Chief Executives? (374)

During the 1990s, in a list of 26 OECD countries, Canada was 20th in the growth of productivity.

As Andrew Sharpe puts it:

Ultimately, it's the private sector that has to take responsibility for private sector productivity...There is no conclusive evidence that taxes, social policies, unionization and regulation accounted for a significant portion of the growing Canada-U.S. productivity gap.

So, again, why the gap? Pretty easy to explain. Big business in Canada has been pouring money out of the country since the FTA came into effect, instead of investing money in the needed technology, machinery, equipment, R & D and innovation necessary to keep Canadian workers competitively productive.

As far as the oft-lamented taxes, Sharpe points out that high tax countries such as Belgium, Norway, Germany, France and the Netherlands, all have higher levels of output per hour than the U.S.

The growing Canada-U.S. productivity gap is particularly serious in the manufacturing sector. In the early to mid 1990s, the gap was 17%. By 2001, it had jumped to 33%.

A reminder, manufacturing in Canada is over 50% foreign controlled.

No doubt some of you will want to respond that last year; Canada's economic performance was quite good. And so it was.

*But, while 2002 was a good year, 2001 was the worst year since the recession of the early 1990s.

*And, at the end of last year, there were 208,000 more unemployed than there were before the FTA. Moreover, the Canadian unemployment rate was significantly higher than the OECD average.

*And then we all know that this year our economic performance will be poor, likely coming in at a GDP increase of just under 2%. In fact, since the end of 2000; i.e., for the last 2 years, Canada's GDP growth rate has averaged under 2%.

One of the reasons we have so much poverty in Canada, compared to most other developed nations is that we also have so many poorly-paid workers who struggle to support their families with incomes well below the poverty line.

It's also interesting to note that in the "boom" year of 2002, our unemployment rate was higher than it was in 1999, 2000, and 2001, and we've already had a loss of some 89,000 manufacturing jobs since last November.

Contrary to what you've often been told, a very long list of countries will have a higher GDP growth rate than Canada this year, countries such as Australia, Russia, China, Indonesia, Hungary, Turkey, Peru, Columbia, Chile, Argentina, Thailand, New Zealand, South Korea, the Philippines, Malaysia to name but a few.

Now let's turn to look at what is happening re public opinion in Canada today. It's remarkably insightful and contradictory.

On the one hand, the overwhelming majority of Canadians want our country to go in one direction, while a wealthy, well-organized, well-financed and influential plutocracy want the country to go in an entirely different direction.

Let's look at who these people are, and at their agenda.

A major theme in The Vanishing Country is the remarkable and growing contrast between the wishes of the vast majority of Canadians and the small but powerful plutocracy that has largely set the Canadian political and economic agenda in recent years.

The plutocracy now is telling us that "the big idea" and "the grand bargain" require "urgent action" and policies that are "inevitable" and will be "irreversible".

Who are these people, the people that we used to call "continentalists" back in the 1960s and 70s

*First and foremost, its big business, the CCCE, representing the 150 largest companies in Canada, many of them foreign-owned and controlled.

*Second, it's Brian Mulroney and his old gang, Peter White, Derek Burney, Paul Tellier, Allan Gotlieb, Stanley Hart, Bill Dymond, to name a few.

*Third, it's our big five Canadian banks.

*Fourth, it's the institutes and some of the foundations.


*The C.D. Howe Institute (Jack Mintz "Even my Board of Directors doesn't know where we get all our money from") (45)

*The Fraser Institute, that has been widely regarded as a bunch of far-right-wing Neanderthals, but now, with our far-right-wing media, has every word reported as gospel.

*The right wing, continentalist Institute for Research in Public Policy, led by Hugh Segal, the Conservative who wants new joint North-American political bodies, "Common social and economic goals" "free movement of capital" all in a new "comprehensive treaty of North America. "

*Then there's the Donner Foundation, led by "Grand Bargain" Allan Gotlieb, the foundation that gives large six-figure donations to the Fraser Institute.

In sum, Americanizers, powerful, influential and quite out of synch with what public opinion polls in Canada report year after year after year.

But, definitely, not out of synch with most of our political leaders, and the ownership of much of our media, who report the institute "studies" as if they were balanced and objective documents and prominently report some of their wonky public opinion poll results, sometimes without bothering to report the actual questions.

What do all of these Americanizing organizations have in common? Quite a few things:

*First, they are, for the most part, largely financed by the very same far right-wing people

*Second, they adamantly refuse to disclose who gives them how many dollars; i.e., where they get their money from.

*Some, like the influential Donner, don't even publish an annual report.

*Much of the money these groups receive comes from secret sources in the United States.

*Great sums of money come from far-right-wing and fundamentalist organizations in the U.S.

Let's go back to the media. We obviously don't have to dwell on the American Post which calls itself The National Post, but let's look at the mandated Asper editorials that must appear in the 14 key former Southam newspapers. What do the Aspers want? Try this brief list:

A flat tax, the export of water, 2-tier health care as but a few examples. And, of course the local editorial boards and columnists of these key newspapers across the country must not contradict the head office editorials.

Today, you've already heard, and will be hearing, important Statistics Canada data re the economic results of the FTA and NAFTA, results that you have never read in newspapers or magazines, or heard on radio or TV. It seems to me that this in itself, speaks volumes about what has happened to our media in Canada.

No doubt you've seen the polls that show most Canadians are now in favour of free trade. But how would Canadians possibly know otherwise? Certainly not from our media. Certainly not from our politicians.

A common characteristic of many of our Americanizers is that they don't think there's much difference between Canada and the United States.

For the likes of Jack Granatstein "No doubt Canadian values are very close to American values."

For Bill Dymond, now of Carleton University, "We're basically the same societies."

What then is the agenda of all or most of these people, foundations and institutes?

*First, there's dollarization, or the absurd fantasy of a "common dollar".

*Next, let's get rid of, for all intents and purposes, the border. Welcome guns, the N.R.A., snipers, the nutcases like Timothy McVeigh and the anthrax planters. Welcome the KKK and the Kansas group that wants to burn the Canadian flag on Parliament Hill because Canada is a "Goddamn whorehouse fag country". Welcome organized crime and illegal, minimum-wage labour.

*They want a customs union or a common market (Lipsey, Macdonald Royal Commission, Mitchell Sharp 318-321,326)

*They want much more health care privatization and other privatization.

*They want "the free flow of capital", meaning abolishing all foreign ownership restrictions. So, let's sell the rest of the country that isn't already foreign-owned[1].

*They want full military integration, so get ready to send your kids and your grandchildren to the next American Vietnam or Iraq, or will it be Iran or North Korea?

*Along with getting rid of the border, they want us inside the American "perimeter" with the laughable premise that we would thereby not be abandoning sovereignty and we would somehow, being the busboy at the table, have important influence over U.S. policies in defence, security and foreign policy.

In preparing for Couchiching, I reviewed the recent testimony to the House of Commons Foreign Affairs and International Trade Committee and to the Senate Foreign Affairs Committee.

In no particular order, here are some of the main themes, predominantly from the same old, same old who brought us the FTA and NAFTA.

*We need to move to "a grand bargain."

*We must be inside "a common perimeter"

*There is virtually no concern about Canada abandoning its borders as a sovereign nation.

*Most witnesses pushed strongly for further and deeper integration with the U.S.

*There was almost zero suggestion that foreign ownership and integration had already proceeded too far.

*Most witnesses were in favour of a common market or a customs union.

*Only one or two witnesses warned of our inability to reverse further integration

*Jack Granatstein said that Canada has no choice but to cooperate fully with the United States.

*Our Minister of Trade, Mr. Pettigrew, wants to eliminate the border as an impediment to investment and business development.

*Leadership in Canada-U.S. relations has shifted to the private sector that wants further integration via a "strategic bargain."

*The main reason we signed on to the FTA was that somehow we thought we would gain exemption from U.S. trade remedy laws.

*Chapter 11 of NAFTA, initiated by the U.S., was not properly understood by the Canadian negotiators, not to mention the media or the public.

*A common theme in the testimony was that tax and regulatory policies make Canada a less attractive place to invest. This despite numerous studies that clearly show Canada's corporate tax rates are highly competitive and other factors such as return on capital, rents, utilities, wages, etc. make Canada a very attractive place to invest. (July, 2003 Economist)

*The C.D. Howe Institute, via the woman who recently authored their customs union paper, naively said we should ask the U.S. to eliminate anti-dumping and countervailing laws and we should provide the U.S. with greater energy security.

*For those who somehow believe we should look to the E.U. as an example, more than one witness said that the U.S.-Canada imbalance made such a comparison irrelevant.

Over and over and over again, the central thrust of the testimony was not that our sovereignty was already endangered by too much integration, but rather how and when much greater integration should proceed.

*Several witnesses who spoke in favour of a common market or customs union acknowledged the loss of sovereignty that would result.

*Several acknowledged that future trade policy would be set in Washington, and that it would no longer be possible to maintain trade ties with countries such as Cuba, or any other countries that the U.S. didn't like, in the future.

*The few critics of a common market pointed out that a common market would inevitably lead to a convergence of fiscal and monetary policies.

*Richard Harris, the continentalist B.C. economist, said, in effect, what's all the fuss about? Even without formal deals, integration is already proceeding outside a formal framework, and he welcomed convergence in a long list of policy areas including, for example, environmental and resource issues, tax and competition policies, etc.

*The Commons Committee itself recommended that Canada and the U.S. should recognize each others' regulatory standards, and called Wendy Dobson's "big idea" approach "visionary", even though the committee acknowledged that Canada would have to support military integration, energy and immigration integration, etc. as part of a "strategic bargain."

*For Fraser Institute witness Gordon Gibson, there was no doubt that within ten or twenty years "we will be using the American dollar" so by opting for integration now, we would have "some influence at least over the governing body."

*Some witnesses, though, said that under dollarization, "all decisions about the money supply and interest rates would be made in the United States" and the "Federal Reserve could very well set interest rates at levels that Canadians did not appreciate." A distinguished American witness made it clear, as many of us have never doubted for a moment, "that the United States would never share any monetary authority with another country."

*Only a very few witnesses cautioned that "the vastly disproportionate weight of the U.S. within NAFTA" meant that when decisions are made, they would almost invariably be decisions made in Washington. As one American expert indicated, "Integration requires a degree of equality among its participants; otherwise it can become a euphemism for hegemony. Another factor is the deep and enduring strain of skepticism in the American body politic about any infringement on sovereignty."

Too bad that in Canada, exactly the opposite is true among most of our federal politicians, our senior civil servants, much of our media and almost all big business in our country.

For the CCCE, they're not waiting. They are "already engaged in discussions about North American approaches to the management of our energy needs and resources."

Overall, time and again, greater integration, "NAFTA plus," expanded continental decision-making, harmonization of standards and policies, were dominant themes in both the testimony of the witnesses, and, as might be expected, the committees' reports.

Today the dollarizers are back at it once again, advocating the ridiculous suggestion that we seek "a common currency" with the U.S., despite all the obvious reasons why this would be harmful to Canada, and impossible in any event since the U.S. would never abandon its own currency.

As one economist from Laval put it:

It always makes me laugh to hear the word "common". If we are talking about adopting the American dollar, I do not see how that can be called a common currency. It is the currency of another country.

This said, it's hard to understand the reasoning of the likes of Sherry Cooper[2], professors Richard Harris and Tom Courchene, or Conservative Hugh Segal. Segal asks, after all, "How far can Canadian monetary policy afford to be from American policy" This tells us much more about Mr. Segal than it does about policies relating to the dollar or the economy.

What is now most amazing is that many of the very same people who earlier were urging us to adopt the US. dollar because of the depressed value of the loonie, are now saying that the strengthened C$ is a big threat to the Canadian economy.

Ask the people of Argentina about their terrible experience with dollarization. Today almost 60% of the entire population of this once-prosperous country live in poverty caused, at least to a very large extent, by their inability to control their own monetary policy.

A word about the arrogant warnings from the likes of Paul Cellucci, Condoleezza Rice and the fatuous White House spokesman Tom Riley (among other U.S. officials) who told us we better not decriminalize marijuana (even though 12 U.S. States have already done so) or there will inevitably be a big-time slowdown at the border.

Maybe that might not be such a bid idea. Maybe we would then be able to confiscate many more of the thousands of guns smuggled into Canada illegally from the U.S. every year.[3]

Maybe then the 38 American States whose #1 export market is Canada might better understand just how very important the Canadian market is for them.

A columnist at the Globe and Mail tells us that:

A custom union will emerge in the months ahead (as) the most contentious debate in Ottawa. Virtually no one, at least in the Liberal Party, is talking about it publicly. It is guaranteed to inflame Canadians like nothing since the war in Iraq, or the free trade debate of 1988.

However,

It's utterly unrealistic to expect the United States will cede any sovereignty whatsoever, and that means Canada will effectively (be) yielding all power over external trade, and some degree of foreign policy, to Washington.

Does this bother the head of the CCCE? Not at all. For d'Aquino, the path is clear. "I strongly favour a customs union" he told the Senate Foreign Affairs Committee. "....it happens to be a strong preference of mine." And, "just like we the Canadians were the engineers of the last great step, we have to be the engineers of the next great step."

For the secretly-funded C.D. Howe Institute, (in their Border Papers series) "A customs union would, on balance, enhance Canadian economic welfare" and "with a common trade-remedy regime would eliminate trade-remedy penalties."

And, of course, as would be expected, Brian Mulroney is all in favour.

Now we come to Wendy Dobson's "big idea" and Allan Gotlieb's "grand bargain".

Essentially, the basis for both "the big idea" and "the grand bargain" is for Canada to make a whole package of major concessions to the U.S. in order to get greater access to the U.S. market.

Meanwhile, quite prepared to give in in advance, the Conference Board of Canada tells us that we better watch out, there's no way we can disagree very much with U.S. policies.

How's that for a dandy advance strategic bargaining position?

For Allan Gotlieb, the FTA is "one of the most successful accords entered into by Canada" and has been "highly beneficial." Yet, despite this, we are going to have to make even more concessions in the future. And, in a prize-winning non-sequitur, "We are likely to see, over time, the harmonization by Canada of its laws and regulations with the United States" unless we agree to major concessions.

So, what we must do is move towards a complete customs union and fully integrate our defence and security forces and accept a common perimeter. We must propose a "bold" and "comprehensive" grand bargain, a "North American community of laws," a customs union, common "standards in drugs, nutrition and the like" and, remarkably, "abolition of anti-dumping" and other U.S. "trade remedy laws."

There's about as much chance of that happening as there is of an anti-gun, atheist, pro-choice Canadian liberal woman being elected president of the United States.

For Wendy Dobson, the long-time Canadian queen of continentalism, and former head of the C.D. Howe Institute, "time is running out....." "NAFTA has largely outlived its usefulness" and the "big idea" ....the "initiative" must be "spearheaded by the private sector"...."the CCCE could be the catalyst."

So, once again, not government but big business will boldly lead the way.

What's much of the "Big Idea" all about? Why will George W. Bush be coming to Canada after Paul Martin's coronation? Go back to Graham Fraser's report in the Toronto Star earlier this year:

Canada could give up the ability to regulate its energy resources if a sweeping proposal being discussed by Foreign Affairs and International Trade officials is accepted....an accord for a far-reaching continental approach to the North American economy that could eliminate Canadian regulation of its energy resources, including oil, gas and electricity.

Far fetched? No way. Watching DFAIT in action, listening to some of the very large number of influential continentalists in the Liberal caucus, given what I know of Paul Martin, it's not far fetched at all.

According to Paul Cellucci, there should be an unfettered continental energy market. "We know we have the energy" and we need a "regulatory climate that encourages investment....we have work to do."

Note that we know that "we" have the energy.

One witness before the Senate Committee (a Mr. Clark) put it all rather well in a discussion of what would amount to "a big idea" or a "grand bargain."

You may get what you want, but you may not like the terms and conditions...we may have to buy into some controls and some restrictions on our ability to act, which we will find to be infringements on our independence and our sovereignty.

.....how many Senators could Canadians elect and send to the U.S. Senate? With a nice critical mass of 24 or 25 of them, we could probably influence decisions there. Otherwise, you will be fighting an uphill battle all the time.

What was so terribly remarkable about this last comment was not that it was actually made, but rather how docile and virtually mute the senators who heard this extraordinary suggestion were.

As I have been forecasting, it won't be too long down the road before our sellout Americanizers start pushing the idea that we must start electing Canadians to the U.S. House of Representatives and to the U.S. Senate, not that the Americans would ever accept such an idea. Forget the idea of a 51st State. It's not going to happen. What will happen instead is a new northern Puerto Rico, a trust territory, a colony called Canada.

What do you think?

Don't the likes of Mulroney, Gotlieb, Dobson, Sherry Cooper and d'Aquino et al understand the profound negative ramifications of their proposals for a sovereign, independent Canada that is supposed to be capable of establishing its own policies and standards properly reflecting the values of its people?

Well, of course they do understand very well. Simply put, they don't like the kind of country that Canada has become and they want us to become much more like the U.S. They appear to be quite unconcerned that Canada will have much less freedom to establish our own policies that might be different from American policies, in taxation, in labour standards, in food and drug standards, in monetary and fiscal policies, in defence and foreign policy, etc. and etc. and etc.

The entire basis of "the big idea" and "the grand bargain" rests on convincing the Americans that their countervailing and anti-dumping laws must not apply to Canada. This might conceivably happen if Canada became a fully U.S.- administered American colony, say a North American Iraq, but to suggest otherwise is the epitome of foolishness and folly.

A few words about defence and foreign policy.

Ambassador Cellucci and Condoleezza Rice are "disappointed" that Canada didn't go to war against Iraq. Their predecessors were also disappointed that we didn't join them in their catastrophic Vietnam quagmire. Too bad. Back then we were right and they were dead wrong. Today we are right again and they are dead wrong again.

Too bad the likes of the National Post, and the Alliance Party, among others, who warn us of the supposed terrible punishment we will receive, seem to have such poor memories about what happened in the First and Second World Wars, when the Americans sat back while tens of thousands of young Canadian men lost their lives in Europe, and while millions of Jews, Jehovah Witnesses, intellectuals, gays, Roma and millions of mothers with their children were gassed and cremated in Nazi concentration camp ovens, while Washington callously sat back for well over two long years until the U.S. was attacked by the Japanese at Pearl Harbour in December, 1941. Shouldn't we tell Mr. Cellucci and Ms. Rice just how terribly disappointed we Canadians have been with the American record in the past?

This said, if Canada's decision to stay out of the Iraq war produces, in Tom Walkom's well-chosen words, a fawningly, embarrassing obsequious apologetic behaviour on the part of our big business leaders and some of our media and some of our most important federal and provincial politicians, it's difficult to proudly raise our heads re our principled decision that has been so consistently supported by a strong majority of Canadians.

If one almost certain result is climbing on board George W. Bush's reckless Star Wars adventure, as appears will almost certainly be the case, knowing full-well that the Americans without the slightest question (no matter what Bill Graham tells you) intend to embark on the weaponizing of space in total contradiction to Canada's long-established position, one must wonder whether in fact rather than holding our heads high we should be lowering them in shame.

What does it say about our political leadership when our defence minister and finance minister and the man who will soon be Prime Minister, are all in favour of Bush's dangerous, massively destabilizing National Missile Defence plan? And what does it say about our foreign minister, due to speak to you Sunday, who fully understands the implications of the National Missile Defence plan, yet not only fails to condemn it, but will almost certainly support it, so we can supposedly have some influence "at the table."

Bill Graham says that Foreign Affairs "wants to make sure that Canada's voice is raised against the weaponizing of space." But, the suggestion that joining in the NMD plans would somehow give us some influence over the Americans' plans to weaponize space is simply 100% pure nonsense.

What do you think?

Should this vitally important decision, with such profound implications, be the subject of a thorough national public debate?

Let's hear from John McCallum, the man who couldn't distinguish between Vimy and Vichy, and somehow seemed to have little knowledge of Dieppe.

As far as our Minister of Defence is concerned, "I hope not too many meetings will be required to discuss the NMD plans".

With such impending military integration, noted defence historian Desmond Morton sums it up succinctly in a single sentence: "Canadian wars will be American wars in the future."

Given our ongoing and further proposed integration, is our major consideration from now on to be forever constantly looking over both shoulders when we are considering domestic or foreign and defence policy?

People like John Ibbotson of the Globe warn us that "Simply put, if we get too far from the Americans, we get punished."

Such colonial drivel deserves no respect. It is pure rubbish.

So, let's see now. For almost 15 years, we've been harmonizing, integrating and Americanizing and today we still have zilch influence over U.S. policies, in fact exactly the opposite has occurred. Any influence we may once have had has disappeared. Now, somehow, Dobson, d'Aquino and Gotlieb tell us that if we make even more major new concessions and integrate and Americanize even more, we will somehow have greater influence over the White House, the Congress and the Pentagon.

Does anyone, for a moment, believe, for example, that we would be able to convince the Americans that they should support the long list of important international agreements that Canadians support, and in some cases, were instrumental in their inception? Agreements such as

The Land Mines Treaty

The International Criminal Court

The Small Arms Treaty

The Kyoto Protocol

The U.N. Protocol on Developing, Producing or Stockpiling Biological or Toxic Weapons

The Nuclear Test Ban Treaty

The Convention on the Rights of the Child

The International Covenant of Economic, Social and Cultural Rights

The Convention on the Elimination of all Forms of Discrimination Against Women

The proposed international agreement to allow developing countries to purchase low-cost drugs to battle AIDS and other diseases.

Every single one of these is supported by a minimum of 139 countries, some by over 190 countries. But not the United States.

If you know anyone who thinks we might be able to change the Americans' minds re any of these, or deter them from their plans to weaponize space or develop a new generation of nuclear weapons, please have them get in touch with me; I know someone who has some valuable Enron shares they would love to get rid of.

Few Canadians understand that already both the FTA and NAFTA go well beyond WTO obligations and beyond current harmonization policies in the European Union.

But, never mind. Mr. d'Aquino, before the Senate Committee, tells us that what big business now wants is much greater integration with the U.S. even if Canadians don't "want to accept it," including harmonization of standards and policies, military integration, the 'free flow of capital" and the "elimination of duplicate systems of approvals."

But, wait a minute; aren't we already far too integrated? Shouldn't you be having a panel on NAFTA minus, instead of NAFTA plus?

According to economist Rick Harris

Canada is more integrated with the United States economically than any two European countries are.

In their testimony to the Senate committee, the Canadian Chamber of commerce had this to say:

De facto integration is here whether many Canadians realize it or want to accept it, and, we don't need duplicate systems of approval.

So, there you have it and you better understand this, like it or not, as both d'Aquino and the Chamber tell us, this is what you're going to get even if Canadians don't "want to accept it." !

Because, after all, big business is in charge and big business is setting the agenda.

For former Mulroney trade official Michael Hart, in his Senate testimony:

We already have "deepening silent integration" to "a depth that now goes far beyond the free trade agreement...we need to acknowledge that a broad convergence in policy and ideas already exists between the two countries."

For William Dymond "Canadians are engaged in a silent integration with the United States, deepening across virtually every area where the two societies connect."

But, so what? What's the problem? After all, we have "largely shared values." And, already "We have more of a practically functioning customs union than do the Europeans in every way which you look at it."

I sometimes think that big business and some of our other rabid Americanizers won't really be satisfied until the Stars and Stripes flies from the Peace Tower and Conrad Black is appointed Governor General.

Something Dymond said about our "largely shared values" and the "broad convergence....across a wide range of public policy areas" warrants comment. It's very similar to other oft-repeated comments by our dedicated Americanizers. In a sentence, it goes like this. What's all the fuss anyway since we're so much like the Americans anyway and what's the big deal if we harmonize and integrate even more?

I wish there had been time today to do justice to what's wrong with NAFTA, but I know there won't be.

If I had to sum up my analysis of the agreement in only a single sentence, it would be this. It is entirely beyond my comprehension how any Canadians could negotiate and agree to an agreement that is so blatantly harmful to the best interests of our country and its citizens.

NAFTA, that the Liberal government now so strongly supports, broke new ground in several areas including some that were only indirectly related to existing trade agreements, expanding into services, intellectual property rights, trampling on domestic legislation to favour corporate rights, compromising government's ability at all levels to take action in many key areas including health care, education and other areas where the public interest would normally prevail over corporate interests.

As one lonely witness before the Senate committee said:

Do we really want to create a world in which owners of capital based in foreign countries enjoy greater rights than those of our own citizens? Do we really want to create a world in which democratic regulation of economic activity is replaced by an international regulatory regime driven by the needs of big business...where the most important decisions about our economy are taken out of the hands of democratically elected governments?

Well, of course, that's exactly what we have done and incredibly, without question, Ottawa is fully prepared now to do it once again in the FTAA and the GATS.

Briefly, some quotes from The Vanishing Country

*What's new about the trade deals today isn't that they promote trade. What's new is that they promote trade (and investment) - at the expense of everything else.

*In 1998, Sergio Marchi was Canada's Trade Minister. During negotiations for the Multilateral Agreement on Investment (MAI), Marchi told the press


*"I will not sign, on Canada's behalf, an MAI that does not fully support key Canadian values and safeguard vital Canadian interests."

*Moreover, "the MAI must make it clear that any government legislation or regulations in the public interest should not require compensation, even if the rules hurt profits.

*One has to wonder if Mr. Marchi has ever read the NAFTA agreement.

*I cannot imagine any Canadian who understands NAFTA's Chapter 11 having the slightest modicum of confidence in the ability of our trade negotiators, or their political masters.

*One of the worst aspects of the FTA and NAFTA is the inability of future governments to change course should they so desire. For example, if Ontario Hydro is privatized, and if U.S. corporations enter the power business in the province, and if privatization and deregulation turn out to be a terrible disaster for the people of Ontario, not only would the provincial government have to reimburse U.S. investors for their assets if public ownership were to be reintroduced, but the government also would have to pay enormous punitive potential-profit compensation. Essentially, it would be impossible to reintroduce.

Canada, the country just north of America.