On redundancies

Scott Sinclair offers a useful summary of the latest sop to the anti-regulation lobby in the form of the new Canadian Free Trade Agreement (PDF). And as usual, there's a fundamental problem with any deal which deems public policy to be presumptively invalid to the extent it affects actual or potential corporate profits.

But I'd think it's particularly worth watching what will happen among the provinces who have already agreed to worse deals.

Unlike the New West Partnership Trade Agreement (formerly known as the TILMA), the CFTA does back up the usual spin about harmonizing rather than gutting regulations with processes which might actually encourage provinces to reconcile conflicting rules. And as noted by Sinclair, it avoids the trap of turning trade challenges into corporate windfalls.

With the CFTA in place, it would thus seem that all of the even arguably valid purposes behind the NWPTA have now been addressed at a national level - without some of the most glaring flaws.

So with that in mind, we should ask: is there any purpose to keeping the NWPTA around other than to give corporations multiple ways to attack policymaking at the provincial level? And if not, then isn't it about time to terminate the NWPTA?

Parliament in Review: November 24, 2011

The main topic of debate in the House of Commons on Thursday, November 24 was again copyright - and once more, the Cons couldn't be bothered to try to defend their own legislation.

The Big Issue

But that left plenty of time for opposition speakers to raise the level of debate while pointing out that the Cons' choices figure to cause serious problems for creators and consumers alike. Marc-Andre Morin, Denis Blanchette, Helene Laverdiere and Francois Lapointe all noted that media conglomerates look to be the sole beneficiaries of a regime built around the supremacy of digital locks. Mylene Freeman noted that the new legislation would take us from a grey area as to consumer rights, to a black-and-white system where many seemingly ordinary activities would be criminalized. Mike Sullivan revisited the history of copyright, and particularly how the licensing-for-airplay model developed. Isabelle Morin expressed disbelief that the sentences the Cons want to impose for copyright violations are far more severe than those applicable to serious crimes. Charlie Angus discussed the dangers of locking down content, then noted that the Cons' attack on royalties amounts to taking away the capacity of many artists to earn a living. And Jonathan Tremblay raised the point that increased public reliance on electronic storage of information makes it all the more problematic for media giants to be able to control access.

Meanwhile, a couple of Cons did get involved in asking questions of NDP MPs. MP Joyce Bateman asked an eminently reasonable question about the plus side of providing for mandatory licensing for the perceptually disabled. But particularly considering their obstinate refusal to consider a levy-based model in general, one has to wonder whether the Cons would have met exactly the same response from an opposition party by alleging that the result is a "braille tax" (particularly since Mike Lake raised the "iPod tax" talking point yet again). And Brad Trost responded to Pat Martin's musing about allowing income averaging for artists in particular by locking onto the concept as a general means of cutting government revenue.

Trade-Offs

The other government bill discussed was C-14, dealing with the Agreement on Internal Trade. Lake deigned to speak to the content of the bill, but somehow dismissed Guy Caron's valid questions about the effect of the AIT as irrelevant to a bill designed to alter it. Caron then discussed the difference between desirable harmonization of standards and unacceptable intrusion on a province's ability to legislate in the interest of its citizens, while Dennis Bevington noted that northern regions are particularly vulnerable to having easy work skimmed off by outside bidders (leaving no local capacity to do needed work).

In Brief

Chris Charlton introduced one private member's bill to allow CPP claimants to receive arrears for more than the current limit of 11 months, and another to make public information about Stelco's acquisition by US Steel. Charlie Angus highlighted the information commissioner's warnings about the Cons' interference in access to what should be public information. Nycole Turmel raised a proposal for health-care discussions with the provinces which the Cons obviously decided to ignore, while Libby Davies wondered why no progress has been made on prescription drugs as promised when the last 10-year agreement was signed. Jack Harris pointed out that the lone source the Cons have pointed to in support of their train wreck of an omnibus crime bill had in fact criticized their heavy-headed approach. Alexandre Boulerice compared the patronage appointment of Jean-Pierre Blackburn to the history of Alfonso Gagliano and other Lib outrages. Yvon Godin questioned Con MP Bernard Valcourt's position that any worker without a grade 12 education should be ineligible for EI benefits. Joe Comartin called for the answer to the traditional Thursday scheduling question to be less politicized - to no avail based on Peter Van Loan's spin-heavy response. Leon Benoit introduced a motion on CCSVI treatment for MS, with Anne Minh-Thu Quach taking care to ensure any further action is based on evidence before indicating the NDP's agreement. Rathika Sitsabaiesan asked what the Cons are doing to try to rein in student debt, and was informed by Kellie Leitch that the plan is...to raise the amount of debt permitted under the federal student loan program. And John McKay questioned whether the Cons cared in the slightest about the rule of law when it came to the execution of Moammar Gadhafi - with Deepak Obhrai's response raising more questions than it answered.

New column day

Here, on how the TILMA's regressive trade rules are spreading across Canada in other forms.

For further reading...

- I've posted several times before about just some of the problems with the TILMA and the arguments made in favour of it, while also comparing it with the AIT as it stood a couple of years ago and highlighting how it's been replicated in the NWPTA.

- And for more recent commentary, I'll link again to posts by Erin (X2) and Alison.

Sunday Morning Links

Assorted content for your weekend reading.

- Erin alerts us to the possibility that one of the most appalling aspects of the TILMA might soon be law across Canada with virtually no discussion if we don't make an issue of it:

The most important objection to TILMA is that it allows business to sue provincial and local governments for up to $5 million over laws, regulations and policies that allegedly have negative side-effects on economic activity or investment that happens to cross a provincial border. These challenges are adjudicated behind closed doors by commercial tribunals, rather than through the normal court system.

This sweeping “solution” is rather extreme compared to the supposed “problem” of interprovincial trade barriers. Very few such barriers have been identified and governments have a good track record of resolving them on a case-by-case basis. The Royal Commission on the Economic Union and Development Prospects for Canada estimated that interprovincial barriers cost under 0.05% of GDP in the 1980s and most have since been removed.

After failing to convince any other provinces or territories to join TILMA, its supporters have been implementing it through the back door. In July 2008, Premiers added financial penalties of up to $5 million to the Agreement on Internal Trade, which covers all provinces and territories.
...
Last month’s decision was to allow business to directly sue governments over public policy. According to the press release:

Ministers agreed to undertake a more effective enforcement mechanism under the Agreement on Internal Trade for disputes brought by “persons” (individuals, businesses and other organizations) against a government. . . . The changes agreed to today include monetary penalties . . . These are largely based on the new process applicable to disputes between governments which was put in place in 2009 [i.e. the fines of up to $5 million announced in July 2008].

...
The good news is that these changes are still just general proposals. The Committee of Ministers on Internal Trade plans to actually amend the Agreement on Internal Trade at its June 2012 meeting. So, we have a year to stop it.

- And Gary Mason notes that the other major free trade agreement under discussion is getting less scrutiny than it deserves:

(T)here has been little discussion in Canada about the proposed Comprehensive Economic and Trade Agreement (CETA), which is perplexing given the far-reaching implications for this country of any pact with the EU. We’re talking about a trade deal that in many ways is as big as the North American free-trade agreement and, in several instances, poses potential problems for Canadians as serious and disturbing as any in the 1994 accord with the Americans.

For starters, the deal could add nearly $3-billion a year in costs to Canadian drug plans – including $250-million in B.C. and $1.2-billion in Ontario. This is because it would delay our access to cheaper generic drugs by several years.

Among the CETA perks that Europeans are eyeing is the right to bid on government work in Canada – in other words, those contracts tendered by provincial and local governments in Canada that now mostly go to local companies. CETA would end that preferential practice.

Think about that for a moment. And then consider the many local governments across the country that use procurement as a tool to promote economic development. A reported 60 per cent of municipalities in B.C. have economic-development strategies that include local procurement and hiring.
...
It all seems odd. During the NAFTA talks, Canada had an on-going national debate about the merits of that trade deal. And yet, for a trade pact that some argue is even bigger in scale, there is a deafening silence across the land. Canadians have virtually no idea of what is being negotiated on their behalf. They should. The stakes are enormous.

- Speaking of wasting money on prescription drugs, Alan Cassels points out that it's the part of our health-care system with no public-sector involvement - privately-insured prescription drug coverage - that's seen the worst cost increases:

When you put the private drug plans under the microscope, instead of seeing efficiency and cost effectiveness in prescribing -- compared to public drug plans -- you often find the opposite. A few years ago my colleague Dr. Joel Lexchin and I published an analysis of the top 10 most expensive drugs paid for by private drug plans in Canada and we found that the plans were spending about 25 per cent more than they needed to, compared to a basket of equally effective, but less expensive medications.
...
In fact, according to a recent study in the Canadian Medical Association Journal if drugs in the same class as Diovan (drugs known as ARBs) had been restricted by drug plans in favour of drugs like Ramipril (a class of drugs known as ACE-Inhibitors) then the Canadian health system would have saved more than $77 million in 2006 without any adverse effects on cardiovascular health.

Your private plan automatically covers drugs like Celebrex, Januvia and Diovan, no questions asked. Me? I'm glad that public drug plans appropriately keep coverage of those drugs limited to only those people who need them.
...
It's clear what is going on here: employees who get private, and unrestricted drug coverage are facing escalating costs. According to the Canadian Institute of Health Information, private plans are growing at about twice the rate of public drug plans. Private drug plans are often managed by insurers who get paid as a percentage of the cost of the scripts they process, so there is no incentive to seek 'value-for-money' arrangements. In the end, employers absorb those rising costs while denying the workers raises.

- Finally, the Chronicle-Herald slams the Cons' destruction of Canada's census:

(When) you fix problems where none existed, you often create a bigger mess than the illusory one you think you’ve solved.

That, unfortunately, is where last year’s boneheaded decision by the governing federal Conservatives to scrap the long-form census has left the country.
...
The problem with voluntary surveys, experts explained, was that certain groups, including the poor, the rich, aboriginals and immigrants, tended to avoid filling out such questionnaires when they were not mandatory. As a result, important decisions regarding taxpayers’ money would, in future, have to be made while relying on somewhat skewed data.

The Conservatives, as we know, stubbornly refused to listen.

Now come reports that, as expected, many people asked to fill out the new National Household Survey by Statistics Canada this summer have either chosen not to do so or only partly completed the questionnaire.

This, say experts, will make the resulting data, though still usable, less reliable than information collected for many years using the old long-form census.

The impact of this disastrous decision will unfold slowly but last for many years.

Meanwhile, Statistics Canada is only now examining other alternatives for getting the needed data. That, however, should have been the first step.

A measured agreement

A couple of weeks back, Dalton McGuinty and Jean Charest announced a plan to negotiate some regulatory harmonization which received comment here and elsewhere. The apparent consensus then was that the deal had the potential to turn into either a TILMA-style disaster, or a relatively reasonable means of addressing the ever-overblown issue of internal trade barriers.

Today, the Financial Post's Patrick Grady offers up the anti-government view on the talks. And from his reaction, it looks somewhat more likely that the McGuinty/Charest deal will fall into the latter category - if much to the chagrin of pro-corporate ideologues across the country.

Here's Grady's attempt to criticize the Ontario/Quebec announcement:

The TILMA between British Columbia and Alberta, the new gold standard for trade deals, addressed the two key generally recognized defects of the AIT, namely its lack of coverage and its ineffective dispute-settlement mechanism. The TILMA, unlike the AIT, includes all measures that restrict or impair the movement of goods, services and labour between the two provinces unless they are specifically excluded, and not just those specifically included. The TILMA also introduced a binding dispute-settlement mechanism, with easier access for private parties and significant monetary penalties (up to $5-million). Spurred by the TILMA, the Committee on Internal Trade is now also considering introducing monetary penalties to make the AIT dispute-settlement mechanism more effective. What exactly is Ontario and Quebec proposing to do to address these deficiencies in the AIT as it affects trade between them?...

(I)n contrast with the TILMA, which tackles regulatory barriers head on, the Ontario and Quebec governments only talk of eliminating "unnecessary" barriers and express their belief that "eliminating such barriers and restrictions can and must occur simultaneously with maintaining and enhancing governments' policies for labour, environmental and consumer protection standards, health, education, culture and regional economic development." This isn't exactly a ringing endorsement of the need to eliminate regulatory barriers and really isn't any more ambitious than the existing AIT.

Now, it speaks volumes about Grady's dedication to the anti-regulation cause that he's willing to criticize the Charest/McGuinty deal both for recognizing that there's a difference between necessary and unnecessary regulations, and for highlighting the continued need for provincial governments to be able to govern. And the fact that Grady simultaneously describes the TILMA as his "gold standard" should offer a strong hint that the TILMA itself does nothing of the sort.

Fortunately, it seems fairly likely from Grady's commentary that Canada's most populous provinces have indeed decided that an attack on the very concept of provincial regulation isn't in the cards. And if they end up sticking to that position, then the Harper Cons will be hard-pressed to try to force the TILMA onto the two provinces most crucial to their drive for a majority.

Costly trade

The Cons are apparently perfectly willing to match Stephane Dion in the corporate pandering department, matching the Libs' call for tax cuts while promising yet another attack on mythical "internal trade barriers". But there's a strong possibility that the Cons are miscalculating in trying to force the latter issue at the national level:

Mr. Flaherty (said) on Monday (that) taxes are still too high, and the federal government is committed to lowering them.

Ottawa also wants to knock down trade barriers within Canada so provinces can trade more freely with each other, he said.

Now, it certainly isn't news that the Cons are eager to see the TILMA imposed nationally. But any inclusion of the issue in the throne speech nonetheless figures to raise the stakes considerably.

Remember that just this summer, the provinces agreed to include a dispute-resolution mechanism in the existing Agreement on Internal Trade. And it seems a reasonable assessment that the actual agreement on a relatively limited expansion of corporate privileges hinted at a lack of consensus on anything more.

Presumably, the Cons wouldn't be bringing up the issue if they were satisfied with that outcome. Which strongly suggests that Flaherty's path will be to attempt to impose the TILMA on a national scale - whether by direct legislation, or by pressuring the provinces into accepting it.

The unpopularity of the TILMA itself offers reason enough to think of that as a problematic strategy. But there's an even more significant danger in trying to impose the TILMA from the federal level.

Remember that the main force against any additional national agreement has been Quebec's refusal to cede any sovereignty to national pressure and corporate interests. For Harper to force on Quebec what it's already rejected for itself - and thereby limit the province's scope of legislative action - would reek of unwarranted intrusion into provincial jurisdiction, offering Gilles Duceppe just the kind of issue that could reverse the Bloc's recent slide.

And even if one assumed the Cons are willing to take the minority side of an issue where the opposition parties will then split the majority position, it's far from clear that TILMA would offer that opportunity. With the Libs obviously seeking to reclaim their title as the party of corporate Canada (and generally unwilling to fight the Cons' priorities), they'd be at least as likely as not to simply play along with the Cons' plan. Which would eliminate any benefit in the big-business buyoff department, which making the Cons extremely vulnerable to the NDP and the Bloc.

Of course, it's possible that any talk of internal trade barriers in the throne speech will be limited to more of the relatively noncommittal language which the Cons have already spouted through most of their time in office - making the declaration merely meaningless rather than reckless. But if the Cons do plan to try to impose government barriers on unwilling provinces, they have little to gain and much to lose in doing so.

On trade-offs

For all the effort by Jim Flaherty, Gordon Campbell and others to paint a cross-country expansion of the TILMA as the only acceptable outcome to deal with the grave threat to Canada's future prosperity posed by hay-stacking regulations, Ian Urquhart writes that Canadian premiers have agreed instead to add an enforcement mechanism to the Agreement on Internal Trade. And while that outcome may not be ideal, it's worth pointing out a couple of the key differences that make the AIT significantly less toxic than the TILMA.

First, unlike the TILMA, the AIT doesn't presumptively apply its blanket rules to every action by every level of government. Instead, its general requirements (which on their face are relatively similar to those contained in the TILMA) by default apply only to the issues specifically listed in the agreement. From Article 400 of the AIT:

The general rules established under this Chapter apply only to matters covered by Part IV, except as otherwise provided in this Agreement.

In turn, the Chapters in Part IV (dealing with procurement, investment, labour mobility, consumer standards, issues related to specific industries, and environmental matters) set additional reasonable limits on the application of the AIT's general rules. For example, under Article 600, the "no obstacles" rule does not apply to investment - meaning that while provincial governments are required to work together to harmonize investment standards and notify other provinces of changes which may affect investment, they aren't required to favour investors' interests over those of their own province in formulating policy.

And that leads into nicely into an even more important difference. Unlike the TILMA, the AIT explictly recognizes that other public policy concerns need to be balanced alongside trade and investment, and indeed favours effective government action where appropriate. Here's Annex 405.1, which governs the application of the AIT's "legitimate objective" exemption to regulatory standards:

For greater certainty, with respect to the application of Article 404(c), each Party shall, in ensuring that any standard or standards-related measure that it adopts or maintains is not more trade restrictive than necessary to achieve a legitimate objective, take into account the risks that non-fulfilment of that legitimate objective would create and ensure proportionality between the trade restrictiveness of the standard or standards-related measure and those risks.

For other examples, see Article 807 (under which consumer protection standards are to be reconciled to a "high and effective" level of protection), and Article 1505.4 (under which each province "shall ensure that its measures provide for high levels of environmental protection and shall continue to endeavour to improve those levels of protection").

In contrast, the TILMA as drafted goes out of its way to avoid recognizing that "risks" may develop as a result of a province's failure to act for the benefit of its citizens. The TILMA includes only one statement (Article 5.4) which hints at any recognition that other priorities also need to be taken into account. And even that statement utterly fails to suggest that the goals of facilitating trade and investment may validly be considered less important than those other priorities.

In sum, a comparison of the AIT and the TILMA suggests that there was always a readily-available device which could be used to reconcile regulatory differences and promote internal trade. What the TILMA added to the picture was simply a complete lack of balance between trade and other priorities - and it's for the best if that problem will be confined to B.C. and Alberta rather than spreading any further.

Again, the above shouldn't be taken to suggest that the AIT is without its flaws, or that the premiers' agreement is apparently pointed in the best possible direction. Indeed, the decision to tack the TILMA's remedy process onto the AIT will likely result in some unintended consequences. And it's far from clear that the provinces wouldn't have made better use of their time actually identifying and working with regulations which can be reconciled without much dispute, rather than again operating from the premise that they need umbrella agreements to get the process going.

But at the very least, the premiers' agreement (combined with TILMA's sudden halt at the Saskatchewan/Alberta border) makes it likely that any further talk about internal trade will be based on the AIT's much less dangerous framework, rather than the TILMA's skewed priorities. And that's undoubtedly a far better outcome than the one which the Cons and others seem eager to impose.