Free-trade deal with South Korea offers warnings about TPP

[Oscar]

Canada’s free-trade deal with South Korea offers warnings about TPP

[ http://www.theglobeandmail.com/report-o ... e28701433/ ]

Jim Stanford Special to The Globe and Mail Published Thursday, Feb. 11, 2016 5:00AM EST

Jim Stanford is an adviser to Unifor, Canada’s largest private-sector union, and Harold Innis Industry Professor of Economics at McMaster University.

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Statistics Canada published year-end trade numbers for 2015 last week, confirming another miserable year for Canada’s engagement with the global economy. Total merchandise exports declined 0.6 per cent. Non-energy exports are showing promising growth, but not enough yet to offset reduced energy exports. Meanwhile, imports swelled 4.5 per cent, creating the biggest trade deficit in Canadian history.

One particularly bitter result involves South Korea, with whom we implemented a free-trade deal last Jan. 1. Far from helping Canada’s lousy export performance, free trade with South Korea seems to be hurting it....

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This disappointing experience represents a clear warning for Canadians in the coming debate over the Trans-Pacific Partnership. Several countries in the TPP (including Japan, Malaysia and Vietnam) use the same strategies of state management, non-tariff protections and export-led growth. Similarly, those countries’ purchases from Canada consist overwhelmingly of unprocessed resources (also like South Korea). There is little reason to expect free trade to have meaningfully different effects with those countries.

If we want to improve our Asia-Pacific trade performance – and we should certainly try – free-trade deals won’t make it happen. Instead, we should emulate measures that Asian countries themselves have used to great effect: industrial planning, subsidized exports and conscious efforts to maximize domestic content in supply chains. Those governments don’t trust their future to “free markets,” and neither should we.