Monday, January 17, 2005

Will Canadian Labour Accept Free Trade?

In bourgeois society, capital is independent and has individuality, while the living person is dependent and has no individuality. And the abolition of this state of things is called by the bourgeois, abolition of individuality and freedom! By freedom is meant, under the present bourgeois conditions of production, free trade, free selling and buying. Karl Marx

Canadian Labour Congress President Georgetti
Opens Pandora’s Box

Last week Ken Georgetti, President of the Canadian Labour Congress declared that the labour movement’s twenty-year opposition to Free Trade was a failure. In no uncertain terms Georgetti opened up a Pandora’s box, well ok he backpedaled immediately afterwards, claiming he said no such thing, but it was too late the box was open.

There has been a great outcry and gnashing of teeth heard through out the labour movement, and its coalition partners in the Anti-Free Trade/Anti-Globalization movement, in Canada. While editorial writers and business press pundits applauded the CLC’s newfound pragmatism.

There will be massive repercussions to Brother Georgetti’s announcement on Wednesday September 22, 2004, a day that will go down in “infamy”. On that day the CLC issued a press release entitled: “Georgetti Urges Union Leadership To Embrace New Thinking On Industrial Policy To Ensure Labour Influence Over National Economic Strategies”.

The press release announced the CLC Industrial Strategy Conference and quoted portions of Georgetti’s speech, where he “issued the collective challenge… urging the country's labour leadership to work towards a new industrial policy that, while acknowledging the post-free-trade-agreement world, would promote a more activist role for government in steering marketforces towards jobs-rich economic development.”[i]

Then he went on to say; "The reality today is that much of our domestic economy is part and parcel of a North American economy. And to a much greater extent than was the
case before the FTA and NAFTA. Nor are we immune to the pressures on North
American manufacturing posed by the rapid rise of China and developing Asia to
world dominance in the production of consumer goods. Nor to the recent rise in
the offshoring of services."[ii]

Brother Georgetti crying crocodile tears wrote a hasty letter to his Executive Council, Officers of Affiliated Organizations and Presidents of Labour Councils saying he was misquoted by the National Post on their front page story of September 22.

“The CanWest chain (publishers of the National Post), in a front page story this morning, alleged that, in a speech I was to deliver at the Canadian Labour Congress "Industrial Policy Conference", I said that we were wrong about free trade and were not opposed to the free trade agreements.”

“The story is a deliberate and malicious falsification of what I said.The actual speech that I delivered, which is identical to the copy the National Post had, is posted on the CLC website ( I encourage you to go to the website and read the speech.”

“We are not going to allow the National Post to get away with this misrepresentation of the position of the CLC or its Officers. The CLC has instructed its legal counsel to immediately initiate legal action against National Post and other newspapers in the
CanWest chain, which continues to propagate these lies.”[iii]

Brother Georgetti did not mention the fact that his speech was quoted in the Globe in Mail, nor did he mention their editorial where they too also claimed it was good to see the CLC finally accept what was inevitable, Free Trade was here to stay. Nor did he say he was going to sue the Globe and Mail like he was going to do with the CanWest chain.

So when the Globe and Mail editorial says: “Forward to the fascinating recent exchange between Ken Georgetti, president of the Canadian Labour Congress, and Buzz Hargrove, head of the Canadian Auto Workers. Normally one wouldn't expect as much as a sliver of daylight between two Canadian labour leaders on an issue of substance. But this week Mr. Georgetti broke the mould. He acknowledged that the Earth is round. "Contrary to some of our most pessimistic predictions," reads a new CLC policy paper, "[the free-trade era] has not been an economic disaster."[iv]

Zounds, for Brother Hargrove, this was heresy indeed. Both the original Canada-US free-trade agreement and the North American free-trade agreement must be ripped up, he loudly insisted. Mr. Georgetti, apparently stung by the implication that he has caved in to the capitalist running dogs, quickly moderated his moderation. "We don't accept it," Mr. Georgetti said of free trade. “We just want to find ways to work with it.”[v]

Obviously Brother Georgetti doth protest too much against CanWest, blaming the messenger so to speak. Clearly the Globe and Mail editorial writers are also misinformed according to Brother Georgetti’s slander suit letter to the labour movement.

Murray Dobbin, outspoken critic of free trade, in his column in the Friday, Sept 24 Globe and Mail, made the case that the CLC was wrong to embrace free trade, as the source of Canada’s recent economic boom[vi]. Was he taken by the “lies” of CanWest, could he have misread the meaning in what Georgetti said? Could the Globe and Mail be mistaken in the quotes they used from Georgetti’s speech? Could the Globe editorial, which sounded very much like the one published by the Vancouver Province, a CanWest paper, have been wrong about the CLC changing its position on the FTA, NAFTA (and what of the upcoming FTAA?).

Nope neither the National Post or the Vancouver Province, CanWest papers, nor the Globe and Mail nor Murray Dobbin got it wrong, Brother Georgetti acknowledged it’s a post free trade world. And you always have to careful about ‘new thinking’, which always smacks of neo-conservative rhetoric.

But what else did Brother Georgetti say in his speech that could possibly be interpreted, or as he now says ‘misinterpreted’, as saying opposition to Free Trade is a thing of the past? Well lets take him up on his challenge and read from his speaking notes.

“All that said, I think we, in the labour movement, need to re-think the role and nature of industrial strategies. I say this because the present economic context is different in some very important ways from the late 1980s.

That is when we last advanced a comprehensive industrial policy agenda as an alternative to the Free Trade Agreement.

In many, many ways, our critique of the FTA was correct.

More than 300,000 workers lost their jobs in the brutal re-structuring of the early 1990s. And many industrial communities were devastated. We will neither forgive nor forget the fact that the promised labour adjustment programs were never put in place.

But, at the same time, we must recognize that the lost jobs have been slowly recovered. And we must also recognize that omelettes are not easily unscrambled. Corporations have restructured their production chains so that goods now cross and re-cross the border in hugely complicated ways.

A larger share of our manufacturing production is now exported to the US than is consumed here at home.

In the services sector, we are now seeing the same type of continental integration between the two countries.

The reality today is that much of our domestic economy is part and parcel of a North American economy. And to a much greater extent than was the case before the FTA and NAFTA.

Some people see the performance of our industrial economy under free trade as proof positive that the ‘leave it all to the market’ approach works. And there have been some successes... at least if we look at the raw numbers on production and jobs. But those statistics mask the serious decline in the quality of industrial jobs.

Throughout the 1990s, we relied far too much on a low Canadian dollar to compete with the US and to create new jobs. While the immediate impact of the higher dollar has been less that many of us feared, many sectors nonetheless now face a very uncertain future.

We see a troubled steel industry, an auto industry starved of the major new investments we need in assembly plants, and a clothing industry facing a major adjustment challenge.

This might sound like an unduly negative assessment. But I am not saying anything that has not been documented – in report after report – on the problems of industrial Canada.

I want to compliment the Canadian Manufacturers and Exporters Association, in particular, for recognizing the need for both a critical assessment of our recent performance, and the need to collectively face up to the challenges of the near future.

We will hear from their chief economist, Jayson Myers, at lunch. I hope his remarks will kick-off a spirited and constructive exchange of views. We may well have our differences, but we both share the goal of building a stronger industrial base here in Canada.

The labour movement can only be an active actor in shaping the economy if we have our own ideas and our own strategies. Once again, I can only stress the importance of this conference... and the necessity for each of you to contribute your experiences and viewpoints.

Our common task today and tomorrow is to debate issues, to revisit old ideas, and to develop new thinking.

Let me just briefly identify five key issues which I think deserve discussion, and which I'm sure will be addressed by some of our panellists...(sic)

First, what are the links between the trade deals and industrial policy?

There is little doubt that the trade deals deprived us of some tools of industrial policy which were used in the 1970s and 1980s. These tools include: the ability to require higher levels of resource processing; to control domestic energy prices; and to set conditions for Canadian content on foreign takeovers.

But the trade deals still empower governments to provide support to industry for research, training, and regional development. Many countries have been much more aggressive in pushing the trade pact envelope.

We in Canada should and must find creative ways to achieve our economic goals in different ways than in the past.

We also need to discuss the extent to which we should be thinking about industrial strategies in a North American rather than purely Canadian context. Particularly with regard to those sectors that have become so closely integrated in the era of the FTA and NAFTA.

Does it, for example, make sense today to talk about sectoral trade deals?

Second, where does energy fit in?

The trade deals have more or less locked us into a North American energy future. As prices rise, energy exports will likely become an even more important driver of the Canadian economy.

We are already witnessing the expansion of the tar sands, offshore exploration and development, new pipeline construction, and so on.

By contrast, taking Kyoto implementation and global warming seriously could underpin green industrial strategies... strategies focussed on new jobs in energy conservation and renewable energy. Can we do both? Or, do we have to choose?”[vii]

Brother Georgetti not only challenges the CLC traditional opposition to Free Trade he now also poses the fact that perhaps the labour movement needs to adjust its thinking about Kyoto as well!

Well that’s not such a shocker either. What Brother Georgetti is really saying, is that the labour movement should accept the reality of Free Trade agreements and ameliorate them. Which is not much different than what his American counterparts have been saying in their own way, or the way the ICFTU and ILO have responded to the issue of the WTO.

But first let us here from someone familiar with the original debate on Free Trade,
Dr. Karl Marx. And what is the good doctor’s diagnosis of the problem?

“Moreover, the protectionist system is nothing but a means of
establishing large-scale industry in any given country, that is to say,
of making it dependent upon the world market, and from the moment that
dependence upon the world market is established, there is already more
or less dependence upon free trade. Besides this, the protective system
helps to develop free trade competition within a country. Hence we see
that in countries where the bourgeoisie is beginning to make itself felt
as a class, in Germany for example, it makes great efforts to obtain
protective duties. They serve the bourgeoisie as weapons against
feudalism and absolute government, as a means for the concentration of
its own powers and for the realization of free trade within the same

But, in general, the protective system of our day is conservative, while
the free trade system is destructive. It breaks up old nationalities
and pushes the antagonism of the proletariat and the bourgeoisie to the
extreme point. In a word, the free trade system hastens the social
revolution. It is in this revolutionary sense alone, gentlemen, that I
vote in favor of free trade.”[viii]

Hmm, Marx certainly does not view Free Trade as being reformable, and sees it as forcing a revolution by increasing the growth of the proletariat in relation to the growth of capital. In fact he sees that it is an outgrowth of capitalism after a period of protectionism, in other words it is the flip side of the coin. “But, in general, the protective system of our day is conservative, while the free trade system is destructive.”

And perhaps that is what Brother Georgetti means when he says: “But, at the same time, we must recognize that the lost jobs have been slowly recovered. And we must also recognize that omelettes are not easily unscrambled. Corporations have restructured their production chains so that goods now cross and re-cross the border in hugely complicated ways.”[ix]

Maybe he is a Marxist while his old social coalition allies in the protectionist/nationalist Anti-Free Trade movement like the Maude Barlow and her Council of Canadians, Mel Hurtig, Tony Clarke, the NGO’s and the anti-globalization movement, and yes even Murray Dobbin, are being the real conservatives.

Nah, Brother Georgetti has not embraced dialectical materialism anymore than he views the working class as being a social revolutionary force. He is simply being a pragmatic trade unionist in the tradition of Samuel Gompers. He may agree that the free trade system is destructive, and that it “breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point.” But create a social revolution, never!

Remember this is the head of the Labour congress, the greatest collection of private and public sector ‘business’ unions in Canada. While supportive of the NDP, one and all, social revolution, well that’s going a bit far. Brother Georgetti like his NDP counterparts are merely being pragmatic social democrats.

And let’s not quibble about who is or is not a business union. Whether it is CUPE and CAW (already Brother Buzz Hargrove is wrapping himself in the flag of protectionism and seeking dance partners in the Anti-Free Trade movement) or Steel and the Building Trades, social unions, public sector unions, or private sector, they are all the same. They exist to ameliorate the hardships of capitalism, to get a better deal for ‘their’ workers, to make capitalism share a portion of its profits with the proletariat. But challenge capitalism, never.

Nor is the CLC new found coziness with the Canadian Manufacturers and Exporters Association anything less then the usual politics of tripartism and recognition of the need for a new social contract.

As Murray Dobbin points out in his article “did free trade and structural adjustment bring the promised flood of new foreign investment? Industry Canada says no. Over the whole period of free trade over 95% of foreign investment in Canada has been devoted to buying up Canadian companies - activity that more often means layoffs, not new jobs.
Ironically, this structural adjustment of the country has been done for the benefit of a surprisingly small part of the economy. Less than 25 per cent of what we produce in goods and services is exported, yet we have severely compromised the domestic economy in order to be trade-competitive with the US.”[x]

In the spirit of his new found belief in Continentalism Brother Georgetti, sounding more like CNN’s Lou Dobbs than Dobbin, says: “Nor are we immune to the pressures on North American manufacturing posed by the rapid rise of China and developing Asia to world dominance in the production of consumer goods. Nor to the recent rise in the offshoring of services."[xi]

The FTA and NAFTA have created a continental protectionist-trading block that benefits a single common signatory; the United States. The FTA, a bilateral agreement, the NAFTA a trilateral agreement that includes Mexico, and finally the FTAA, a trilateral agreement between the continental trading block of NAFTA, with Latin America and Caribbean countries. It is protectionism none the less. The key protectionist market is still the US and in all these agreements they play the main role. In fact no matter how many countries are involved the agreements in effect are a series of bilateral agreements with the US to curtail their protectionism.

It has not protected Canada or Mexico from being punished by the United States when it has seen fit to impose trade barriers around its own steel industry, or with punishing Canada through penalties around exporting cheap soft wood lumber, or Mexico with penalties over its exporting cheap tomatoes.

That Brother Georgetti should believe that the Canadian Labour Movement should reconsider its opposition to NAFTA does not mean he wants to leave the trade agreement as it is. No like his international counterparts, in ICFTU and the ILO he wants the labour movement to use side agreements, and reform these acts.

And he does it from a protectionist position, no different than Dobbin’s or Barlow’s, except his is a Continental perspective while they remain staunch nationalists. Like them he too wants to work with the Canadian Manufacturers and Exporters to protect Canadian Capitalism, which is whom the majority of the unionized industrial workers in Canada work for.

In a sense it is also provincial perspective of Southern Ontario writ large on the National body politic when Brother Georgetti calls for a New Industrial Policy with labour at the table, a new tripartism between labour, capital and the state. In other words as the good Doctor said, “Hence we see that in countries where the bourgeoisie is …beginning to make itself felt as a class, it makes great efforts to obtain protective duties. They serve the bourgeoisie as weapons…, as a means for the concentration of its own powers and for the realization of free trade within the same country. “[xii]

Mel Hurtig, Maude Barlow, Murray Dobbin and Buzz Hargrove all want to defend a nationalistic mixed capitalist economy, within a social democratic state. Brother Georgetti and Brother Hargrove in reality want the same thing, a made in Southern Ontario industrial policy which means, that it has to be a Continental strategy, as it was with the now defunct Auto-Pact. Brother Georgetti is just a bit more honest about, then Brother Hargrove.

And what fear does Brother Georgetti have about US economic policy? Well the attacks on outsourcing impact Canada. We are key to the outsourcing of telephony and IT. We are equal to India in number of jobs outsourced from the US to Canadian call centres according to a UN study issued the same day as the CLC began its conference.

These are the new service industries that have replaced those lost manufacturing jobs.

Recently New Brunswick, which is identified as the most aggressive province in outsourcing, paid $825 million to a US company to create a call centre with 500 jobs.
Now unlike India and the United States these jobs are being unionized. So business unions in Canada in the Service Sector may soon be agreeing with Georgetti about the need to enforce the FTA and NAFTA to save these jobs from the incessant protectionism of the United States.

When NAFTA opened up the market between Canada, the United States and Mexico, industrial jobs moved to Mexico, and to Canada. In fact Canada developed a larger industrial manufacturing base with higher productivity than its American or Mexican counterparts, according to figures provided by Sam Gidden and Leo Panitch, in their recent critique of globalization in Studies in Political Economy: A Socialist Review[xiii]. How could that be? Well while we lost some industrial jobs in some sectors particularly around the Southern Ontario US beltway. Many auto related. But we have also gained industrial development in secondary and tertiary production.

The growth of Stronach’s Magna parts company, which is non-union, is one example. The impact not of Free Trade, but of just in time production methods, is the reason for Magna’s success. The whole auto sector as well as other North American industries restructured in the nineties, laying off workers and middle management in the thousands and selling off its secondary and tertiary manufacturing arms while buying up financial and loan businesses. GM made more off its financial sector, credit card and loans, last year than it did selling cars and trucks.

Canada has benefited by having secondary and tertiary manufacturing developing in southern Ontario and Quebec. Hence Gidden and Panitch’s assertion that industrial production has grown faster in Canada then in the United States or Mexico. What infuriates Brother Hargrove is that most of this is non-union.

But a case in point of how Canada benefits from this new industrial production transfer, is the case of a car seat manufacturer in the United States. Located in the Lower East Side of LA, this company was one of the few industrial employers in that impoverished neighborhood that was the source of the LA riots. After the riots everyone claimed that the Lower East Side need economic inputs and job creation. Well the car seat manufacturer ignored this and moved these much-needed jobs north to Quebec. Why? One is the exchange rate between the Canadian dollar and the U.S. dollar, lowering our real economic costs of production, it was given tax incentives from the Quebec and Canadian government, and finally the clincher, Canada’s Medicare system saved the company millions.

Why did production jobs move to Mexico, well they didn’t really, production shifted across North America, when the new trade agreements opened up the Continental market of Canada, the US and Mexico, all sorts of readjustments were made. Some production shifted to Mexico, Volkswagen and other car manufacturers opened new plants in Mexico. Japanese car manufacturers opened up new production in Canada, and German manufacturers began moving production to the United States, where worker productivity was higher and cheaper than German workers! This later move eventually resulted in Daimler-Mercedes Benz buying out Chrysler.

Outsourcing and privatization are the key to this restructuring of capitalism in the global context. Globalization is capitalism moving to tendencies to monopoly in the G20 countries, excess importance being put on finance capital, and the move to create a mass working class base in the developing world where outsourcing of production can be shipped too. This shift is clearly towards Asia, China in particular.

Why the G20? Because this is a broader definition of the industrialized countries that are making the new continental trading blocks. Recently the president of Intel, the US monopoly chip maker, told Brazilians that the company would not be moving its production to that country because wages and benefits were too high! Instead Intel was moving into China, where wages and benefits are still low. Like the German car manufacturers moving to North America after NAFTA, now the manufacturers are looking to Asia and China.

But we have also lost other industries, milling, meat packing, for example are now direct branch plants of their American parents. Where we once had many secondary agricultural industries, we have lost them, only to have them replaced by American conglomerates. Which makes sense since we are predominately exporting to the U.S. market. And again these conglomerates such as Cargill and IBP Packers, or ADM, which was, sold Robin Hood Mills, are reshaping agriculture into agribusiness. Just as Monsanto is with control of both herbicide and genetically modified canola. The market is rapidly industrializing and the family farm across North America is doomed.

Maple Leaf is one of the few packinghouse chains left in Canada, and it has a virtual monopoly. Like other McCain businesses, which has the monopoly on potato production in the Maritimes, McCain and Maple Leaf prove that privatization and competition in the market lead inevitably to monopoly not greater competition. But hey everyone knows that since that is why it is called Monopoly capitalism.

Take Air Canada, which has been deregulated by the Federal Government, in the era of NAFTA. Was it the trade agreement, and the ideology of open skies, that led to the mess that is Canada’s airline industry? No. Air Canada’s need to be the single player in the market that drove them to absorb Canadian Airlines, and several other small carriers.

And then after overextending themselves in a limited market, becoming the sole monopoly, they declared bankruptcy in order to gain enough capital from pension funds, wage freezes rollbacks and layoffs, that the company could attract capital to maintain its monopoly. And who had the capital to buy the airline? A Hong Kong business man.

Telus is another case in point. Formerly Alberta Government Telephones, now privatized Telus first gobbled up Edmonton Telephone, a city phone company that was on the cutting edge of technological innovation in telephony especially fiber optics. Then Telus gobbled up BC Tel. It split the countries long distance market between itself and BCE (Bell Canada). Next it moved into mobile cell phone market, and has proceeded to dominate that market as well, buying up its competitors, leaving it and BCE and Rogers cable as the players in the cell phone market. As it out laid cash for these purchases it did not translate that into profits. And low and behold too rapid an expansion of the business left it asset wealthy and cash shy, like Air Canada. And the result was, wait for, layoffs, rollbacks and wage freezes.

Canada and Quebec have benefited from the protectionism of our markets for the past fifty
years. It has created a bourgeoisie in both states. And both states have used government to aid business development. Whether it is a private company benefiting from subsidies or a former crown corporation now privatized, or a IT firm with a contract for service, privatization and outsourcing have been the engines of capitalist expansion rather than the free trade agreements per se.

Now we are benefiting from the privatization of crown corporations and the expansion of secondary and tertiary manufacturing, as well as a growth in the technology and service sectors. In the nineties the Canadian government and provincial governments restructured as did the private sector. Greater emphasis is placed on contracting out and outsourcing. This has a greater impact on the economy than the trade deals did themselves. See Labour in the Global Economy,[xiv] where we assert that privatization is the problem not globalization.

Bombadier is a case in point, as is CN rail. Bombadier a private company a major employer in Quebec has for the past decade benefited from Federal Government largesse and grown into an international competitor. CN was privatized and again its first act to become profitable was to layoff thousands of workers. CN has used this capital to then expand and buy up American railroad holdings. Again picking up pension plan and benefit monies as well as wages, as it again laid off thousands of workers. The former federal bureaucrat who was made president of CN, Paul Tellier was so successful in his transformation of CN into a private monopoly, that Bombadier hired him to restructure their company. Which he promptly did with, you guessed it, more layoffs.

Without the restructuring there would have been no free trade.

As Dr. Marx points out: “Moreover, the protectionist system is nothing but a means of establishing large-scale industry in any given country, that is to say,
of making it dependent upon the world market, and from the moment that
dependence upon the world market is established, there is already more
or less dependence upon free trade. Besides this, the protective system
helps to develop free trade competition within a country.”[xv]

The Nationalists who oppose Free Trade are calling for a made in Canada capitalism, whose time has come and gone. Now the integration of the market on the Continent is underway it is resulting in internal conflicts that the FTA and NAFTA were supposed to pave over. In particular US protectionism and jingoism.

Canada suffers illegal protectionist taxation by the US on our soft wood lumber exports, and a closed border to our live cattle in order to bolster the flagging American meat packing companies. Mexico faces protectionist tariffs against its tomato exports and increased jingoism against ‘illegal aliens’ read Mexicans, entering the US.

CNN’s Lou Dobbs has been an outspoken jingoist against so called open borders and the illegal alien invasion of the US. Not since the 1920’s have we seen such anti-alien hysteria.

The simple fact of the matter is that whether it is outsourcing production, or undocumented workers, the market wants cheap labour. And what the market wants the market gets. Thousands of workers are employed in sweatshops in the United States, thousands are employed as nannies, gardeners, and service workers for the ruling class.

If there wasn’t low paid work then these workers would not stay. The contradiction is that there is. And if low paid work, read indentured servitude, is required to increase profits companies will employ it wherever they can, and if they can open up the labour markets under free trade agreements so much the better. Capital moves, labour is held back from moving, and capital goes to newly industrializing nations, creating a new proletariat.

CNN’s Lou Dobbs begins to sound a lot like Brother Georgetti and Brother Hargrove when it comes to the issue of outsourcing. Of course he too focuses on India and China, and not Canada. Common cause has been made with American labour that China is the problem of outsourced American jobs. During the WTO protests in Seattle, the Teamsters may have made peace with the Turtles (the environmental movement) but the still retained their good old racist jingoism by focusing their protests not against the WTO but the American trade agreement with China. Them foreigners (who are not white people) are taking our jobs.

Just like Brother Georgetti, American labour and its ruling class have made China the global boogieman of expanding capitalism. And then enter the Democrats, presidential candidate John Kerry and the Democrats have been quick to embrace protectionism against outsourcing and in the case of Canada against beef exports to the US.

And while the free trade agreements may have eased some of this, the reality is that starting in the nineties the whole movement of capitalism was towards outsourcing and privatization. Government restructuring and corporate restructuring went hand in hand the result being that computer technologies and IT were seen as logical for outsourcing, and the services that go with greater computerized communications and telephony.

“Canada ranked a close second to India, attracting 56 new call centres in 2002 and 2003, the report found. India had 60 and Britain was third with 43. Indeed, more than half of all new call centres went to developed countries.

The UN also reported that Canada was among a group of just four countries that controlled 70 per cent of the estimated $32-billion (U.S.) yearly market for offshored services in 2001. The others were Ireland, India and Israel.”[xvi]

Why developed countries? Because as the captains of industry are so oft to say; ‘we need and educated work force.’ And you need infrastructure provided in industrialized countries. China and India are industrialized countries. Certainly they have a mass peasantry, but over the past fifty years a tremendous expansion of industrial development has occurred. As it has all over the pacific region and now in Africa as well as the Middle East and Latin America.

This is the new world market. Cellphone manufacturing in Finland, France, and the US.Car factories in England, France, Italy, Canada, the United States, Germany, Mexico, Brazil, Russia Korea, China, Japan. Large scale agribusiness like Cargill and Archer Daniels Midland (ADM), Monsanto, displacing family farms in Indonesia, Malaysia, India, Canada, the United States, England, Brazil, Africa, etc.

Outsourcing is the key to increasing capital profitability, in order to stave off the falling rate of profit.

So while American commentators like Lou Dobbs or politicians like Kerry denounce the loss of American jobs to outsourcing, their Canadian nationalist counterparts are saying the same thing. And their only solution is of course increased protectionism, close the borders. As much an impossibility today as it was in 1848.

The war in Iraq is another case of privatization, there were more mercenaries used than in any other conflict. Food services to troops, housekeeping services, engineering services were also all provided by private contractors. The war in Iraq was a Cato Institute wet dream of contracted out services. It was the first privatized war, a contracted out conflict, the new face of 21st Century warfare.

The labour movements focus in Canada and the United States has always been on how they can reform the trade agreements, as well as mobilizing popular support opposing them. One sector of movement was joining its coalition partners opposing Free Trade while another was at the table bargaining for sectoral agreements on labour, the environment, social services, etc. Brother Georgetti has not abandoned dealing with Free Trade agreements, he has merely abandoned his coalition partners and their nationalistic/sovereignty agenda.

Under the ideology of privatization and outsourcing labour must abandon their nationalistic jingoism, regardless of their national identity. And this is much harder. Since in Canada and Europe the labour movement is social democratic, it can only visualize a reformed capitalism. In the words of Ed Broadbent, patriarch of the New Democratic Party; “We are social democrats we believe in a mixed economy.” For Ed, and Brother Georgetti and indeed the entire labour movement in Canada, socialism is NOT on the agenda. A national social democratic state is the best possible world for these pragmatists.

In America, the labour movement is fiercely nationalistic, to the point of jingoism. The chants of USA, USA, USA, and We’re Number 1, can be heard in their opposition to free trade. And the Teamsters have been the epitome of jingoists, attacking Mexican truck drivers or China with a barely disguised racism.

And true to its national identity the labour movement in each country can only see the impact of a restructured capitalism as an effect on its own members. It does not even speak for the working class of its nation so divided is the house of labour, in every country, from the class which gave it birth.

Unlike the newly formed unions in the developing countries like Korea, Indonesia, etc. the labour movement in the industrialized countries of Europe, North, Central and South America, are corporations. Like their business counterparts these corporations have well heeled executives, servicing representatives, communications and marketing departments, benefits and claims specialists in effect the entire organizational structure of a corporate bureaucracy.

In the case of Canada we have a branch plant economy which also has branch plant unions such as the Steelworkers, UFCW, SEIU, Teamsters, building trades, etc. These unions in Canada reflect the national character of social democracy and tripartiteism making them more suitable than their American parent bodies for a Continental perspective.

In fact they look like positively socialist compared to their American counterparts. And in the Canadian labour movement, CUPW, CAW, CUPE, NUPGE, CEP, and other non branch plant industrial or social unions look positively communist as do their Quebec counterparts the CSN, FTQ, CSQ.

Brother Georgetti is not alone in his views of the need for a Continental policy of tripartiteism. Brother Gerard of the Steelworkers the first Canadian elected president of both the US and Canadian International is a long time supporter of tripartite schemes with employers and government.

Unions in social democratic states in Europe have spent many years in tripartite social contracts with governments and business. In Canada the last industrial policy developed by the CLC was a tripartite agreement under Joe Morris in the 1970’s but that ended in acrimony when the Trudeau government brought in wage and price controls.

The eighties and nineties have been an unprecedented attack on workers in the industrialized countries. And these attacks continue today, mainly through wage concessions, restructuring full time work to part time work, demanding greater flexibility in working schedules, rolling back wages and attacking benefits, gutting pension plans as a source of quick cash for mergers and acquisitions, moving jobs offshore.

At the same time as these jobs moved offshore, they developed new economic zones of industrialization. This saw the boom in newly industrialized countries, such as the Philippines, Mexico, Brazil, Korea, Indonesia, Vietnam, Malaysia, etc. and with production comes the transformation of farmers and peasants into wage slaves, chained to the machines of Nike, Adidas, Ford, GM, etc. Once a working class develops it becomes self conscious, surprise surprise, just as the good Doctor prescribed, the working class begins to develop organizations, to defend itself against the worst excesses of capitalism in other words unions.

In order to defeat working class self-organization capitalism developed the Free Trade Zones, areas of sweatshops and low waged production, under military rule, with a concentration camp type atmosphere of a captured group of workers. Not unlike the early days of capitalism with its company towns of the late 19th and early 20th Century, or the relief camps of the dirty thirties in Canada, or the gulags in Russia. Still this has not stopped workers from organizing. And free trade zones are not just limited to the newly industrializing countries or the Third World, we have these zones in Canada in the Maritimes, and in the United States where they are called new economic zones, usually capitals attempt to revive urban ghettos.

Once production expands and becomes a major industry it employees a wider group of workers, it expands its area of dominance and hegemony, and can no longer exist within its ‘zone’. Once that happens the workers again organize such is their need and strength, and understanding that these are now permanent jobs, permanent existence. Gone is the village, gone is the peasant farm, gone are the days of planting and fishing, here is existence from dawn to midnight in the air-conditioned, fluorescent lit, concrete factories in Nicaragua, Ecuador, Haiti, Indonesia, etc. And yet these workers, such as those in Nicaragua have organized themselves, when they can, when they are not murdered by the military goons of capital.

And who employs these workers? Canadian companies, American companies, French, German, British, Japanese, companies. Capitalism needs to create these zones of primitive accumulation regardless of nationalism, nation states or national agendas and whether it had Free Trade agreements or not.

“You thousands of workers who are perishing, do not despair! You can die
with an easy conscience. Your class will not perish. It will always be
numerous enough for the capitalist class to decimate it without fear of
annihilating it. Besides, how could capital be usefully applied if it
did not take care always to keep up its exploitable material, i.e., the
workers, to exploit them over and over again?

But, besides, why propound as a problem still to be solved the question:
What influence will the adoption of free trade have upon the condition
of the working class? All the laws formulated by the political
economists from Quesnay to Ricardo have been based upon the hypothesis
that the trammels which still interfere with commercial freedom have
disappeared. These laws are confirmed in proportion as free trade is
adopted. The first of these laws is that competition reduces the price
of every commodity to the minimum cost of production. Thus the minimum
of wages is the natural price of labor. And what is the minimum of
wages? Just so much as is required for production of the articles
indispensable for the maintenance of the worker, for putting him in a
position to sustain himself, however badly, and to propagate his race,
however slightly.

But do not imagine that the worker receives only this minimum wage, and
still less that he always receives it.

No, according to this law, the working class will sometimes be more
fortunate. It will sometimes receive something above the minimum, but
this surplus will merely make up for the deficit which it will have
received below the minimum in times of industrial stagnation. That is
to say that, within a given time which recurs periodically, in the cycle
which industry passes through while undergoing the vicissitudes of
prosperity, overproduction, stagnation and crisis, when reckoning all
that the working class will have had above and below necessaries, we
shall see that, in all, it will have received neither more nor less than
the minimum; i.e., the working class will have maintained itself as a
class after enduring any amount of misery and misfortune, and after
leaving many corpses upon the industrial battlefield. But what of that?
The class will still exist; nay, more, it will have increased.

But this is not all. The progress of industry creates less expensive
means of subsistence. Thus spirits have taken the place of beer, cotton
that of wool and linen, and potatoes that of bread.

Thus, as means are constantly being found for the maintenance of labor
on cheaper and more wretched food, the minimum of wages is constantly
sinking. If these wages began by making the man work to live, they end
by making him live the life of a machine. His existence has not other
value than that of a simple productive force, and the capitalist treats
him accordingly.

This law of commodity labor, of the minimum of wages, will be confirmed
in proportion as the supposition of the economists, free-trade, becomes
an actual fact. Thus, of two things one: either we must reject all
political economy based on the assumption of free trade, or we must
admit that under this free trade the whole severity of the economic laws
will fall upon the workers.” [xvii]

While Brother Georgetti was addressing the CLC on the need for a new tripartite industrial policy, a conference on outsourcing was being held in New York where the Canadian Government, the same government that Brother Georgetti wants to develop a new industrial policy. Well Ottawa has a policy;

“ Ottawa's Export Development Corp. is financing Canadian foreign investments that lead to the outsourcing of jobs when it believes those deals help companies remain competitive in world markets, EDC executive vice-president Eric Siegel. He described a rapidly changing global marketplace in which companies increasingly locate production where it is most cost-effective.

That's what it takes to be competitive in a globalized world," he said. "And EDC has to fit within this model to fulfill its mandate of support for Canadian businesses seeking prosperity in the global marketplace.

He said Canadian firms are no longer making just one-off export sales --- for which the EDC typically provides credit and insurance -- but are also exporting services and making overseas investments as part of the globalization of their supply chains.

Nearly one-third of all world trade is now intra-firm, as companies ship components across national borders for further processing.

Mr. Siegel said the federally owned EDC needs to support those ventures in order to "stay relevant" to the Canadian corporate sector that it serves.

The EDC will even participate in sales made by foreign subsidiaries of Canadian companies, on the grounds that a healthy branch plant benefits the parent company.

"You have to respond to those competitive forces. It's impossible to ignore or to resist them -- inevitably you'll be impacted by them," he said in an interview after his presentation.

"So if we're going to be helpful to Canadian businesses, we have to accept them to some extent."

According to EDC research, the Canadian economy benefits tremendously from overseas investments, even when some jobs are lost at home, because companies win new customers in global markets and return dividends and earnings to the home country.

"So the investment itself may look like an export of jobs abroad, but in fact, it really is producing benefit and jobs at home. But it takes longer for those benefits to obviously accrue," he said.

The EDC executive acknowledged the growing concern that globalization is leading to a "race to the bottom," in companies take advantage of weaker labour and environmental standards to gain a competitive advantage.

EDC also helps finance the expansion of Canadian plants, even when they are owned by foreign companies, where they are clearly aimed for the export market.

In 2002, the federal Crown corporation supported Mexican auto parts maker Nemak's expansion of aluminum auto parts plants it bought from Ford Motor Co. It later financed Nemak's purchase of Canadian machinery and equipment for its Mexican plants.

In his presentation, Mr. Siegel said the EDC is committed to increasing its presence in emerging markets, even though Canada continues send 85 per cent of its exports to the United States. Nearly 20 per cent of EDC business last year -- or $11-billion of a total of $52-billion -- covered deals in such markets.”[xviii]

It is the development curse of capitalism, it must expand or it will collapse on itself. The working class that capitalism needs for its self-perpetuation, and which it has created worldwide over the last fifty years will hasten that collapse. As Dr. Marx puts it:

“The whole line of argument amounts to this: Free trade increases
productive forces. If industry keeps growing, if wealth, if the
productive power, if, in a word, productive capital increases, the
demand for labor,the price of labor, and consequently the rate of wages,
rise also.

The most favorable condition for the worker is the growth of capital.
This must be admitted. If capital remains stationary, industry will not
merely remain stationary but will decline, and in this case the worker
will be the first victim. He goes to the wall before the capitalist.
And in the case where capital keeps growing, in the circumstance which
we have said are the best for the worker, what will be his lot? He will
go to the wall just the same. The growth of productive capital implies
the accumulation and the concentration of capital. The centralization
of capital involves a greater division of labor and a greater use of
machinery. The greater division of labor destroys the especial skill of
the laborer; and by putting in the place of this skilled work labor
which anybody can perform, it increase competition among the workers.

This competition becomes fiercer as the division of labor enables a
single worker to do the work of three. Machinery accomplishes the same
result on a much larger scale. The growth of productive capital, which
forces the industrial capitalists to work with constantly increasing
means, ruins the small industrialist and throws them into the
proletariat. Then, the rate of interest falling in proportion as
capital accumulates, the small rentiers, who can no longer live on their
dividends, are forced to go into industry and thus swell the number of

Finally, the more productive capital increases, the more it is compelled
to produce for a market whose requirements it does not know, the more
production precedes consumption, the more supply tries to force demand,
and consumption crises increase in frequency and in intensity. But
every crisis in turn hastens the centralization of capital and adds to
the proletariat.

Thus, as productive capital grows, competition among the workers grows
in a far greater proportion. The reward of labor diminishes for all,
and the burden of labor increases for some.”[xix]

So which Canadian capitalist enterprise should the working class and its labour movement align with? Which one is not outsourcing, contracting out, privatizing, moving offshore, restructuring, laying off, freezing wages, or otherwise brutalizing the working class for profit?

The opposition in the streets to the Free Trade agreement did not translate into political action at the polls, the place the labour movement is so fond of placing its trust in. In the 1988 election the Liberals stole the NDP anti-free trade rhetoric and won a minority government, soon to be replaced by the pro-free trade Mulroney Tories. After which we had the Liberals promise to abrogate free trade and eliminate the GST if reelected. And as we all know that promise was the same as “the check is in the mail”. Even in this last election where the left in the form of the NDP and the BQ in Quebec did not even mention the Free Trade agreements.

The Anti Free Trade movement has moved on to become the Anti-WTO, Anti FTAA the Anti-globalization movement and its subsequent World Social Forum. And their solution to American Imperialism and rampant capitalism, is social democracy and national sovereignty in each country. Again the pandering to national identities in a world economy. Maude Barlow of the Council of Canadians feels right at home with the Tobin Tax advocates of the ATTAC from France, and every one loves Lulu of Brazil. Well they did until he too was forced by capitalism to roll back pension and social benefits, and provide a workable corporate state for capital.

Fifty years ago NGO’s were created and developed a corresponding ideology of development and underdevelopment, the third world, north and south divides, the peasant agrarian economies and the industrialized economies. That was then this is now. What is being called globalization, free trade, is the expansion of capitalism around the world, now finally into the last of the Stalinist regimes; China.

Capital moves but labour is restricted to its ghettos in the nation state. The attack on immigrant workers and economic refugees is nationalistic jingoism that has failed to be addressed by the labour movement. Workers without frontiers is the movement that labour should be embracing, certainly the capitalists are with importing of workers from the newly industrialized countries to work in their packinghouses and factories in North America and Europe.

Indentured servitude of farm workers, nannies and others in Canada is slavery by any other name, and needs to be confronted as such. A recent report from the United States claimed that as many as 10,000 people work in that country in conditions of indentured servitude, or modern slavery. This is separate from the thousands of undocumented workers who serve the American sweatshop economy.

“Gentlemen! Do not allow yourselves to be deluded by the abstract word
_freedom_. Whose freedom? It is not the freedom of one individual in
relation to another, but the freedom of capital to crush the worker.

Why should you desire to go on sanctioning free competition with this
idea of freedom, when this freedom is only the product of a state of
things based upon free competition?

We have shown what sort of brotherhood free trade begets between the
different classes of one and the same nation. The brotherhood which
free trade would establish between the nations of the Earth would hardly
be more fraternal. To call cosmopolitan exploitation universal
brotherhood is an idea that could only be engendered in the brain of the
bourgeoisie. All the destructive phenomena which unlimited competition
gives rise to within one country are reproduced in more gigantic
proportions on the world market. We need not dwell any longer upon free
trade sophisms on this subject, which are worth just as much as the
arguments of our prize-winners Messrs. Hope, Morse, and Greg.

For instance, we are told that free trade would create an international
division of labor, and thereby give to each country the production which
is most in harmony with its natural advantage.

You believe, perhaps, gentlemen, that the production of coffee and sugar
is the natural destiny of the West Indies.

Two centuries ago, nature, which does not trouble herself about
commerce, had planted neither sugar-cane nor coffee trees there.

And it may be that in less than half a century you will find there
neither coffee nor sugar, for the East Indies, by means of cheaper
production, have already successfully combated his alleged natural
destiny of the West Indies. And the West Indies, with their natural
wealth, are already as heavy a burden for England as the weavers of
Dacca, who also were destined from the beginning of time to weave by

One other thing must never be forgotten, namely, that, just as
everything has become a monopoly, there are also nowadays some branches
of industry which dominate all others, and secure to the nations which
most largely cultivate them the command of the world market. Thus in
international commerce cotton alone has much greater commercial than all
the other raw materials used in the manufacture of clothing put
together. It is truly ridiculous to see the free-traders stress the few
specialties in each branch of industry, throwing them into the balance
against the products used in everyday consumption and produced most
cheaply in those countries in which manufacture is most highly

If the free-traders cannot understand how one nation can grow rich at
the expense of another, we need not wonder, since these same gentlemen
also refuse to understand how within one country one class can enrich
itself at the expense of another.”[xx]

If the labour movement wanted to really be radical, rather than another industrial bailout for Southern Ontario, the movement would look at mobilizing its funds and abilities to organize the unorganized on a global basis. And where workers are organized linking worker to worker with them so that a strike in Korea has an impact across the globe, to begin to take up struggles across borders, and not just in information pickets but actual sit down strikes, and occupations.

But don’t expect the corporate unions in North America to do this. The North American labour movement is not a class struggle organization let alone a voice of the working class, as a class for itself.

In Canada the labour movement would rather sick their lawyers on NAFTA, or Provincial anti-labour acts then call for political strikes, or heaven forbid a General Strike. The CLC called its lawyers in their case against CanWest, rather than calling for a one day political protest strike against the offending media organization, which is unionized. The use of lawyers is the weapon of corporations not class struggle organizations.

Modern business unions are corporations, in fact so much so that instead of expanding to organize the unorganized, they would rather raid each other, or expand through the corporate restructuring so favored by capitalism; mergers and acquisitions. To reform monopoly capitalism, you need monopoly unions, to defeat it you need a world wide class struggle and new forms of class struggle organizations and movements.

To paraphrase the good Doctor, the Workers of the World have no country. Something that Brother Georgetti and the Anti-Free Trade/Anti-Globalization movements fail to understand.
[i] CLC PRESS RELEASE SEPT. 22, 2004; “Georgetti Urges Union Leadership To Embrace New Thinking On Industrial Policy To Ensure Labour Influence Over National Economic Strategies”.
[ii] CLC press release Sept. 22, 2004; “Georgetti Urges Union Leadership To Embrace New Thinking On Industrial Policy To Ensure Labour Influence Over National Economic Strategies”.
[iii] SEPTEMBER 22, 2004 LETTER TO:
Members of the Executive Council, Ranking Officers of Affiliated Organizations and Presidents of Labour Councils
Re: National Post Story and Free Trade
Kenneth V. Georgetti President. CLC
[iv] THE FREE-TRADE SHUFFLE, Globe & Mail Editorial, September 24, 2004
[v] CLC PRESS RELEASE SEPT. 22, 2004; “Georgetti Urges Union Leadership To Embrace New Thinking On Industrial Policy To Ensure Labour Influence Over National Economic Strategies”.
[vi] FREE TRADE HAS COST US DEARLY, By Murray Dobbin, September 24, Globe and Mail,
also posted on
Publish date: September 22, 2004 Author(s): Canadian Labour Congress
[viii] ON THE QUESTION OF FREE TRADE Public Speech Delivered by Karl Marx
before the Democratic Association of Brussels January 9, 1848
Publish date: September 22, 2004 Author(s): Canadian Labour Congress
[x] FREE TRADE HAS COST US DEARLY, By Murray Dobbin, September 24, Globe and Mail,
also posted on
Publish date: September 22, 2004 Author(s): Canadian Labour Congress
[xii] ON THE QUESTION OF FREE TRADE Public Speech Delivered by Karl Marx
before the Democratic Association of Brussels January 9, 1848
[xiii] Leo Panitch and Sam Gindin, "American Imperialism and EuroCapitalism: The Making of Neoliberal Globalization," pp. 7 - 38. Studies in Political Economy: A Socialist Review Number 71/72, Autumn 2003/Winter 2004 Internalizing Global Capitalism
[xiv] Le Revue Gauche #1 Global Labour in the Age of Empire
Paper presented at the Alberta Social Forum October 2003, and at a Public Meeting of the Council of Canadians, Red Deer Feb 17, 2004 Presented on behalf of the IWW Edmonton GMB
[xv] ON THE QUESTION OF FREE TRADE Public Speech Delivered by Karl Marx
before the Democratic Association of Brussels January 9, 1848
[xvi] OFFSHORING OF JOBS BIG BENEFIT FOR CANADA Only India attracted more, UN report says
By Barrie McKenna With a report from John Saunders Thursday, September 23, 2004 –
Page A1 Globe and Mail
[xvii] ON THE QUESTION OF FREE TRADE Public Speech Delivered by Karl Marx
before the Democratic Association of Brussels January 9, 1848
Will finance foreign investments that help Canadian companies remain competitive
Globe and Mail, Tuesday, September 28, 2004 - Page B8
[xix] ON THE QUESTION OF FREE TRADE Public Speech Delivered by Karl Marx
before the Democratic Association of Brussels January 9, 1848
[xx] ON THE QUESTION OF FREE TRADE Public Speech Delivered by Karl Marx
before the Democratic Association of Brussels January 9, 1848


eugene plawiuk said...

Labour converts on free trade road

Fifteen years after a fight to the finish, the CLC says Mulroney's deal wasn't so bad

Victoria Times Colonist

Thursday, September 23, 2004

When the U.S.-Canada free-trade deal was being negotiated in 1987, Canadian Labour Congress president Shirley Carr warned it would throw 800,000 Canadian workers out on the street and put this country "in the grave."

This week, 16 years later, the current CLC president, Ken Georgetti has acknowledged that the deal "has not been an economic disaster" for Canada, after all. Although some jobs in this country were lost in the restructuring of the 1990s, he said Wednesday, they've recovered slowly, and the manufacturing sector in this country has actually benefited from the new trade arrangement.

It's time, he declared, to stop fighting free trade: "Omelettes are not easily unscrambled."

What heresy is this? Organized labour's was the most powerful voice against free trade when former prime minister Brian Mulroney was its champion. Georgetti himself, at that time president of the B.C. Federation of Labour, predicted it would prove disastrous for this province.

He warned in 1988 that U.S. companies would buy Canadian pulp rather than newsprint, closing down newsprint mills in B.C. It would mean Canada would no longer be able to restrict the export of unprocessed fish on the West Coast, he said. Canada would no longer be able to take advantage of its lower energy costs by giving Canadian firms cheaper rates.

"The government has simply turned over the economic development of Canada to the Americans," Georgetti declared.

Now that the CLC has accepted North American free trade as a fait accompli, and is urging us to move on to other things, where does that leave its political ally, the New Democratic Party?

The NDP, too, no longer speaks as harshly of the deal. Party leader Jack Layton says we should be pursuing "fair trade" rather than free trade. New Democrats still say NAFTA, as it has become, can push down Canadian wages, social programs like medicare, environmental protection, safety and labour standards and the revenue from taxes needed to pay for public services.

They want Canada to take a tougher stand against the Americans in disputes over things like softwood lumber -- something that even Industry Minister David Emerson advocates -- and want the NAFTA dispute-settlement mechanism eliminated in any future agreements under the pact.

The CLC hasn't changed all its spots. Georgetti says that most of the new manufacturing jobs created under free trade are in smaller, non-union plants. This is a bad thing, he says, because non-unionized workers are paid less and have poorer working conditions.

The CLC president says that the productivity of Canadian workers has grown at a rate less than half that of U.S. workers since 1992 but blames this, not on workers, but on companies that haven't invested in new technology.

Other critics of free trade in its early days have bitten their tongues. John Ralston Saul once warned the deal would lead to the destruction of our social programs and lower our living standards. But look where free trade has got him.
© Times Colonist (Victoria) 2004

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