Research Analyst, The Public Policy Research Initiative

Freeing up trade by lowering or removing barriers such as tariffs and quantitative restrictions usually gets support from economists and observers of international relations who see economic cooperation as conducive to broader harmony among countries. Aside from countering the political appeal of protectionism, advocates for free trade face a choice that has become especially acute in recent years: whether multilateral or bilateral arrangements are the best approach. Since the 1980s, Canada has made bilateral and regional arrangements its principal focus. Despite the practical appeal of this approach, however, evidence that bilateral arrangements can undermine multilateralism suggests that Canada should switch its focus, making completion and development of the World Trade Organization’s Doha Round its first priority.

Good trade policy is crucial for any country, due to its potential to boost the country’s economic and social development. The protectionist approach of mercantilism, founded on the premise that a country must run a trade surplus, with burgeoning exports but restricted imports, has historically held little appeal for consumers. As cross-border flows of intermediate goods and services have grown, however, its drawbacks are becoming more obvious to producers as well. The best method of boosting a country’s economy through trade is to facilitate the free flow of goods and services to the greatest possible extent, recognizing that cross-border trade today involves vast quantities of intermediate goods (Dymond & Hart, 2008). Reducing restrictions is preferable to adding concessions, and the most effective way to hasten the flow of intermediate goods is to abolish cross-border tariffs.

Since World War Two, Canada, the United States, and many other countries have actively embraced the concept of freer international trade. Their principal focus, however, has shifted over time. In the early post-war years, the multilateral negotiations under the General Agreement on Tariffs and Trade were the main event. More recently, bilateral and regional arrangements have dominated. The World Trade Organization estimates that nearly 400 regional trade agreements will be active in 2010, the vast majority of which are Free Trade Agreements (FTA) (World Trade Organisation, 2009). The question that arises is which method of free trade states should pursue. The argument for bilateral trade agreements is one of practicality. Multilateral trade is an appealing ideal, but nearly 200 countries will never be able to successfully negotiate a deal that will please everyone; the situation has parallels with the December 2009 Copenhagen conference on climate change. The Doha Round has therefore entered a state of paralysis, with participants unable to successfully work around special interests, while bilateral trade treaties continue to be negotiated across the globe.

With the Doha Round stymied, and potentially doomed to fail, Canada has rushed to establish FTAs on a smaller scale. Canada’s FTA with the European Free Trade Association came into force in July 2009 and was followed a month later by an FTA with Peru. The impetus for this can be clearly seen in the number of FTAs the United States has signed in recent years, which pose a potential threat to Canada’s importance as a trading partner. Canada has historically feared a hub-and-spoke system of bilateral agreements with the United States at the centre and Canada as one of many spokes; this was a driving factor in the Canadian push for a trilateral free trade agreement with Mexico after the U.S. and Canada had already ratified a bilateral deal, instead of the bilateral negotiations underway between Canada’s continental neighbours. Canada’s trading position is not diverse and strong enough to avoid some degree of isolation if the U.S. establishes many bilateral arrangements with other countries (Robson, 2007).

In the past two decades Canada and the U.S. have each pursued numerous bilateral deals. Some of the American ones have jeopardized Canada’s importance to the U.S. economy – such as the 2004 FTA with Australia. Thus, it is important for Canada to encourage multilateral negotiations, particularly including the United States, rather than standing by while its most important trading partner negotiates bilateral agreements with other countries.

In addition to the potentially isolating effects of bilateral agreements for any country that is not privy to them, such agreements can impede broader, multilateral negotiations. In his 2006 study for the American Economic Review, Nuno Limão found American preferential trade agreements in the 1980s and 1990s to have been detrimental to the United States’ efforts at multilateral trade. The study provides empirical evidence that the United States, when reducing tariffs in accordance with multilateral agreements, tends to make smaller reductions for goods that are already included in its bilateral preferential agreements (Limão, 2006).Thus, some countries are already paying lower tariffs for these goods when they export them to the U.S., but the other countries involved in the multilateral negotiations will not receive the same level of reduction. This finding also holds true for Canada. In a 2007 study, Matthew Adler found similar results for Canadian tariff reductions, concluding Canada’s reductions in the Uruguay Round on goods encompassed by NAFTA would have been greater without the trilateral arrangement (Adler, 2008).

Advocates of freer trade would justifiably argue that Canada is better off engaging in bilateral negotiations than no negotiations at all. As long as there is potential for substantial multilateral negotiations, bilateral and regional talks pose important risks. Canada has only so many trade negotiators and only so much attention its leaders can give trade negotiations, so focusing on bilateral and regional arrangements inevitably means neglecting the multilateral alternative. As emphasized by Adler, moreover, for Canada as for the United States, FTAs may impede the viability of prospective future multilateral agreements (2008).The practicality argument is compelling; with globalization and increasingly integrated cross-border production, facilitating trade, even on a bilateral basis, has clear economic benefits. However, successful multilateral trade deals are the best means of ensuring substantial trading benefits for all countries involved.

References

1. Dymond, Bill and Michael Hart. (2008, March). Navigating New Trade Routes: The Rise of Value Chains, and the Challenges for Canadian Trade Policy. C.D. Howe Institute Border Papers Series, No. 259. Retrieved December 15, 2009 from http://www.cdhowe.org/pdf/commentary_259.pdf.

2. World Trade Organization. (2009). Regional Trade Agreements. Retrieved December 20, 2009 from http://www.wto.org/english/tratop_e/region_e/region_e.htm.

3. Robson, William. (2007, August 16). Stuck on a Spoke: Proliferating Bilateral Trade Deals are a Dangerous Game for Canada. C.D. Howe Institute e-brief. Retrieved December 15, 2009 from http://www.cdhowe.org/pdf/ebrief_47.pdf.

4. Limão, Nuno. (2006, June). Preferential Trade Agreements as Stumbling Blocks for Multilateral Trade Liberalization: Evidence for the United States. The American Economic Review, 96 (3). 897.

5. Adler, Matthew. (2008, October 15). Stumbling Forward on Trade: The Doha Round, Free Trade Agreements, and Canada. C.D. Howe Institute e-brief. Retrieved December 15, 2009 from http://www.cdhowe.org/pdf/ebrief_65.pdf.

Research Analyst, The Public Policy Research Initiative

On December 3rd, 1997, Canada became the first nation to sign the Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-personnel Mines and on their Destruction, also known as the Ottawa Treaty. Analyzing the efforts required in gaining the signatures of more than 150 nations to the Ottawa Treaty and the global impact it has had over the past decade is an insightful historical exercise, as well as a reflection on Canada’s international leadership potential. Fundamentally, the Ottawa Treaty demonstrated three important aspects of global relations to the world: that international norms can be changed in a relatively short period of time, that Canada can succeed in exercising its global influence, and that the signature of the United States is not necessary to effect global change through diplomacy (Cottrell, 2009).

Prior to 1997, the usage of land mines was militarily acceptable as a defensive strategy, in order to lessen the actual hand-to-hand combat (Cottrell, 2009). Shifting the norm from the belief in the military necessity of landmines, to proving that landmines are the cause of an international humanitarian crisis was no easy task. Nevertheless, this process was significantly aided by the International Committee of the Red Cross’ 1996 report “Anti-personnel Landmines – Friend or Foe?”, which quoted leading military professionals in concluding that anti-personnel landmines have “little or no effect on the outcome of hostilities”. Nongovernmental organizations played an influential role in bringing attention to and advocating on behalf of the urgent need to ban anti-personnel land mines. A collection of six NGOs formed the International Campaign to Ban Landmines in 1992, which not only advocates the eradication of landmines, but also produces a yearly report assessing the progress of the world’s nations in becoming landmine-free.  Their 2009 report claims that the global stigmatization of landmines has been one of the most significant achievements of the Ottawa Treaty (International Campaign to Ban Landmines).

When the world’s nations met in October 1996, there were divisions between those who believed that an outright ban on anti-personnel landmines was the only effective solution, and those who were content with the status quo by regulating their usage (Cottrell, 2009). Convinced of the urgency of the matter, Canadian Foreign Minister Lloyd Axworthy proclaimed Canada’s commitment to create a treaty that would implement a complete ban on anti-personnel landmines, despite critics arguing that pushing for a total ban too quickly could weaken consensus (Cottrell). Banning anti-personnel landmines was a challenge that the world ultimately accepted, and its success has been called the “Ottawa Process” by some academics. This process involved circumventing traditional arms control efforts such as UN forums or review processes, and allowing Canada to lead the push in the formation of a new global norm using the “fast-track” approach of multilateral conferences (Cottrell).

Most significantly, the Ottawa Treaty proves that Canada does not have to wait until the major superpowers of the world lead an initiative; in fact, Canada is capable of causing great positive change without American approval. More than a decade later, the Ottawa Treaty is continuing to make notable positive impacts without the signatures of the United States, China, India, Iran, Israel, Pakistan or Russia. With the support of NGO’s monitoring the world’s progress, the Ottawa Treaty has something that the Kyoto Protocol can only wish for: relative compliance. The Landmine Monitor Report of 2009 states that 86 signatory nations to the Ottawa Treaty have completed the destruction of their anti-personnel landmine stockpiles and that the relative compliance of most nations is impressive. Despite the incredible progress that has been made, much more remains to be achieved in order for a landmine-free world.

On a related note, even though the global landmine crisis has drifted out of the national media’s focus, the fact remains that landmines and Improvised Explosive Devices (or IEDs) are responsible for more than half of the deaths of the 138 Canadian Forces personnel lost in Afghanistan. While acknowledging that this is a military operation and the Ottawa Treaty only refers to anti-personnel landmines that harm civilians, such a statistic with regard to Canada’s current controversial role in Afghanistan draws Canadians’ attention to the global land mine issue. Canadians must not forget that while landmines may not be exploding in their backyards, landmines are taking the lives of Canadians and thousands of others around the world.

Canada’s leadership is needed more than ever in order to continue challenging the world to reach new goals for demining the planet. To continue to build global cooperation, Canada needs to keep funding these demining activities and research. Canada is seen as a world leader in this respect, donating C$45.9 million in 2008 to the International Campaign to Ban Landmines to conduct research, demining activities and providing recommendations. However, this is a seven percent decrease in funding from the previous year (International Campaign to Ban Landmines, 2009). Thus, Canada’s leadership role in this area needs to be reasserted and continued. An excellent example of how this can be done is through student leadership challenges. Mines Action Canada’s 2005 nation-wide competition to create feasible demining technologies was won by three University of Toronto Faculty of Engineering students. This type of initiative combines research with promoting awareness and needs to be supported at university campuses across the country. As well, after signing the Ottawa Treaty, Canada followed through by acting on its commitment with the creation of the Canadian Centre for Mine Action Technologies in Alberta, where engineers are employed to develop landmine neutralization equipment for humanitarian demining (Dudley, 2005). The more people think, discuss and share ideas concerning this global issue, the closer research and development comes to innovative breakthroughs.

Canada should continue to support and expand demining operations because it is a positive, international leadership role for the nation, as well as a vital humanitarian cause. More courage is needed of today’s politicians to be unafraid to issue global challenges for multilateral agreements that could have an immense impact on the world. The Ottawa Treaty exemplifies how Canada has taken an international leadership position in order to bring about global change. While land mines and IEDs remain a pressing global issue, there is much hope for international cooperation that can demonstrate how diplomatic multilateral agreements can succeed.

References

1. Cottrell, M. Patrick. (2009). Legitimacy and Institutional Replacement: The Convention on Certain ConventionalWeapons and the Emergence of the Mine Ban Treaty. International Organization, 63 (2), 217-248.

2. Dudley, Peter. (2005, October 29). Living with Landmines. The Pioneer. Retrieved November 19, 2009, from http://www.canadianfilm.com/research/living_landmines.htm

3. International Campaign to Ban Landmines. (2009). Landmine Monitor Report 2009: Towards a Mind-Free World. New York: Human Rights Watch.

4. International Committee of the Red Cross. (1997). Anti-personnel Landmines – Friend or Foe? A Study of the Military Use and Effectiveness of Anti-Personnel mines. Geneva: ICRC.

5. Mines Action Canada. (2005, March 17). Students from University of Toronto win $5000 in Canada-wide competition dedicated to alleviating suffering caused by landmines. Press Release. Ottawa: Mines Action Canada. Retrieved November 19, 2009, from http://www.minesactioncanada.org/index.cfm?fuse=learn.news-details&id=128

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Research Analyst, The Public Policy Research Initiative

The Canadian government’s approach to climate change has neither been pragmatic nor opportunistic.  In fact, despite ratifying the Kyoto Protocol, Canada has not taken any considerable action on the issue of climate change.  The current environmental policy regarding climate change is ambiguous at best; the goals are weak and unclear.  In order to take action against climate change, the government must acknowledge that climate change poses a legitimate risk to all Canadians. Furthermore, the government must also recognize the risks that climate change poses to the economy, the environment, and to intergovernmental relations.  Currently, the Canadian government is failing to follow its obligations under the Kyoto Protocol, and the Harper government’s new “Turning the Corner” plan sets weak targets for combating Greenhouse Gas Emissions (GHGs).  The plan only aims to reduce 1990 levels by 3% in 2020, while Kyoto would have obliged Canada to reduce 1990 levels by 6% for 2012.  The Canadian government’s policy appears to be reactive, waiting to align with the policies of the Obama administration.  Canada should be a leader and establish policies at home that will be an example for other countries.

Stephen Harper’s government believes that attempting to reach the targets set out in the Kyoto Protocol would cause irreparable damage to the Canadian economy.  Canada’s reluctance to take action has been excused by Harper as a cost issue, believing that even if Canada were to reduce emissions, the costs would be astronomical because there are still other nations who are not attempting to decrease their emissions (Cobb, 2009).  While this is a legitimate concern, it does not excuse Canada’s total lack of leadership on the issue of climate change, especially as the Copenhagen Summit begins.  Former World Bank Chief Economist Nicholas Stern estimated that the overall costs associated with climate change will be the equivalent to losing at least 5% of global GDP each year, and if a wider range of risks and impacts were taken into account, this number could reach 20% of global GDP or more.  More importantly, the cost of immediate action to reduce GHGs, and avoid the worst impacts of climate change, could be limited to only 1% of global GDP each year (Stern, 2006).

The Canadian government’s best efforts at preventing climate change involve intensity-based targets for Greenhouse Gas emissions (GHGs), and a cap-and-trade system that would exclude Alberta’s tar sands. The first issue with this is that intensity-based reductions cannot be integrated into carbon markets because carbon markets are set up to buy and sell true reductions.  Intensity-based targets are not necessarily true reductions because if production increases over a certain amount, then emissions will increase as well.  Using these intensity-based targets will prevent Canada from joining the EU emission trading system, or any international carbon market.  Nationally, intensity-based targets are equally questionable.  Using intensity-based targets would require companies to disclose production data, but in ongoing discussions (since 2004), industry representatives have argued that production data is confidential, and therefore, they would not be willing to release the data (Marshall, 2007).  Environment Minister Jim Prentice said a U.S. cap-and-trade system could coexist with a Canadian intensity-based system (Ljunggren, 2008).  However, many academics and environmentalists believe that Canada will simply be forced to go along with whatever policy the US administration adopts as their economies are so heavily intertwined.  The Harper government has adopted a wait-and-see approach to implementing any serious system that would regulate GHGs and carbon pricing, hoping that the Obama administration will do most of the work for them (Hampson, 2009).  If the US government goes ahead with the American Clean Energy and Security Act, introducing a cap-and-trade system amongst other things, Canada will follow their guidelines, targets, and their industry exclusions.  Canada is a signatory on the Kyoto Protocol, and the US is not, so only Canada will suffer the shame of breaking an internationally binding agreement.  Canada could easily set up its own cap-and-trade system, setting guidelines within the framework of the Kyoto Protocol that would work with the US system, regardless of US emissions targets.

Canada’s federal government does not have a cohesive plan of action for climate change, while some provinces have already set their own guidelines and targets to deal with GHGs and low-carbon technology investments.  Canada’s current target under the “Turning the Corner” plan, calls for a 20% reduction on 2006 levels by 2020, this would equate to about 3% reduction on 1990 (Environment Canada, 2008).  The federal plan on climate change should be a model to which all provinces aspire; it should be a beacon of progressiveness.  Currently, however, many provinces are outdoing the federal governments in their policies and targets.  Four provinces have already joined the International Carbon Action Partnership set up by the European Union, and the Western Climate Initiative.  By 2012, Manitoba and Quebec aim to meet their share of Canada’s Kyoto Protocol agreement, while 6 provinces aim for better targets than the federal government’s by 2020 (Marshall, 2007).  The two provinces who continue to lag in their initiatives are Saskatchewan and Alberta.  Harper calls on all nations to fight climate change together, with equal effort and resources, while his lack of governance allows an uneven effort amongst provinces.  Furthermore, Environment Minister Jim Prentice has already hinted at exclusions from cap-and-trade system regulations for Alberta’s Tar Sands (Rennie, 2009).  Prior to the November 2008 election in the United States, Prime Minister Harper called for a North American cap-and-trade system that would exclude the tar sands, while current projections estimate that the production in the tar sands will increase by 300% by 2020 (McCarthy & Clark, 2008).  This exclusion would make a mockery out of the entire (proposed) cap-and-trade system, and would be unfair to other industries and provinces.

Canada can make a comeback but this will only happen if the Harper government creates clear and strict policies that outline Canada’s targets and methods to deal with climate change.  A national system for pricing carbon, using a tax, trade or regulatory system must be put into place.  A conference with premiers may be appropriate to consider the goals and obstacles faced across the nation.  A cap-and-trade system would be ideal for Canada, with aggressive caps aiming towards a national reduction target.  Penalties for failing to comply with targets should be enforced to deter industry for ignoring their GHG limits.  Funding support for green technology and innovation should take a primary role in Canada’s climate change policy.  This will have two positive results: home-grown technology will not need to relocate to other countries, and a low-carbon industry will create more jobs and boost the economy.  The last step is education.  The government must educate businesses, and the public about what they can do to respond to climate change.  Education programs and advertising would ensure that people are informed and can do their bit for the environment; and people would be more accepting of higher prices, and increased taxes, if they know the money is supporting Canada’s initiative against climate change.  Aggressive policies against climate change may cost industry and the public in the short term but it is better for Canada to create policies that fight climate change now, instead of dealing with the higher costs in the long term.

References

1. Cobb, C. (2009, November 29^th). Canada offers ‘minor adjustment’ to fight climate change. Ottawa Citizen,     Canwest News Service. Retrieved December 15^th, 2009 from http://www.canada.com/technology/Canada+offers+minor+adjustments+fight+climate+change/2282866/story.html.

2. Stern, N. (2006, October 30th). Stern review on the economics of climate change. Retrieved December 15^th, 2009 from http://www.hm-treasury.gov.uk/sternreview_index.htm.

3. Marshall, D. (2007, February 26th). Intensity-based targets not the solution to climate change. Retreived December 16^th, 2009 from http://www.davidsuzuki.org/files/climate/Intensity_Targets_Not_The_Solution.pdf.

4. Ljunggren, D. (2008, November 19th).  Canada wants North-American cap-and-trade system.  Reuters, Ottawa. Retrieved December 16^th from http://www.reuters.com/article/idUSTRE4AI70120081119.

5. Hampson, F.O., and W. Zartman. (2009, December 12^th).  How to break the climate impasse.  The Globe and Mail. Retrieved December 15^th, 2009 from http://www.theglobeandmail.com/news/opinions/how-to-break-the-climate-impasse/article1396354/.

6. Environment Canada. (2008, May 21). Turning the corner. Retrieved December 15^th, 2009 from http://www.ec.gc.ca/EnviroZine/default.asp?lang=En&n=9A8BA8EA-1.

7. Rennie, S. (2009, December 16th). Tar sands to get emission break.  The Toronto Star. Retrieved December 17^th, 2009 from http://www.thestar.com/news/sciencetech/environment/copenhagensummit/article/739429–tar-sands-to-get-emissions-break.

8. McCarthy, S., and C. Clark. (2008, November 5^th).  Ottawa swoops in with climate change offer.  The Globe and Mail. Retrieved December 17^th, 2009 from http://www.theglobeandmail.com/news/national/article721236.ece.