Loonie Tories Blaming The Victims

Like their Green Policy the Conservative Government likes to blame the victims. In this case Finance Minister Jim (Halloween Surprise) Flaherty takes a shot at Canadian consumers and retailers. He wants retailers to reduce their prices based on the strength of the Canadian dollar.

The Canadian government plans to try to persuade retailers to cut prices more quickly as the Canadian dollar rises "Cross-border shopping quite frankly is not good for retailers in Canada, nor is good for tax revenues for the governments in Canada," Flaherty said.

And instead of intervening in the market he asks us as consumers to do his job for him.

He is posturing of course, and like his asking banks to reduce ATM fee's he is blustering and blathering knowing that it is all for naught expect to appear to be doing something.

Now if he really wants to do something he would get together with Foreign Affairs, call in the U.S. Ambassador and put pressure on American exporters to drop their prices. But of course considering that this government is willing to sell out Canadian industry, the softwood lumber agreement comes to mind, for better political relations with their Republican cousins in the White House, well that would be a bit much to expect wouldn't it.

Diane Brisebois, Retail Council of Canada president, said the true culprit behind high prices is not the retailers but the suppliers of big recognizable national brands. She said she hopes she can set Mr. Flaherty - and Canadians - straight about why prices in Canada are generally higher than those in the United States. Suppliers of national or global brands charge Canadian retailers 20 to 50 per cent more than they charge a U.S. retailer for the same item, she said.

SEE:

Canadian Banks and The Great Depression

Forward To The Past

America's Debt Economy

Tax Cuts For The Rich Burden You and Me

Greenspans Legacy

Blaming The Victim

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Softwood Sell Out

Say it ain't so...

In its rush to smooth relations with the U.S. government, Canada's newly elected Conservative government sold out the country's forestry industry when it signed the softwood-lumber agreement, even though legal victory in the long-festering dispute was only months away, a leading softwood lawyer contends in a blistering new commentary.

"The [Canadian] government didn't care about lumber," said Elliot Feldman, a Washington, D.C., lawyer who represented Ontario's forest industries before the softwood agreement was made last April. "The government cared about its foreign-policy agenda with the United States and wanted to clear this out of the way. That's all that mattered."

In his paper, to be published in a coming issue of the Journal of International Trade Law and Regulation, he details how Canada abandoned a round of litigation whose "end was more than in sight. It was imminent."

Had Canada stuck with the various cases underway, it would have seen, at worst, all but 2.11% of the U.S. duty stricken by August, 2006, and the already-collected duties -- a total of about US$5.5-billion, including interest -- returned by November, 2006, he argued.

Instead, he said, the Canadian government agreed to allow the U.S. industry to hold on to $1-billion of the duties -- $4.4-billion was repatriated -- and create a regime in which Canadian lumber exporters now face a punishing export tax and quotas that have further crippled profits already hamstrung by 15-year-low lumber prices and the soaring loonie.

And that one billion allegedly went into Republican election coffers via the White House.

The bribe failed and the U.S. government is again taking Canada to the international court of arbitration over the new agreement. Using that one billion to pay for it.

One of the provinces named in the suit is Alberta, Harpers home base. And in fact Alberta producers have not benefited from the softwood deal. The irony would be delicious if it wasn't pathetic.

Beaten down by poor markets, low prices, dollar parity, continuing disputes with the U.S. over softwood lumber and the mountain pine beetle, Morton said the forestry sector is in "the perfect storm" of economic woe.

How bad is the softwood deal for the rest of Canada's producers? It too is part of a perfect storm.

One of Canada's biggest lumber exporters, Tembec Inc. (TSX: TBC), has temporarily pulled all its lumber from sale in North America because of falling prices and the surging Canadian dollar. In addition, Canadian lumber faces an export tax when it crosses the border into the United States, a measure imposed a year ago by the Canadian government to settle a longstanding softwood lumber dispute with the United States.

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NAFTA Poisioning

With the liberalization of trade regulations, and the neo-con agenda of de-regulation, reducing public services, the privatization and contracting out of inspection services leads to consumer poisoning.

And it ain't just China that's to blame.

NAFTA2 aka the SPP is also to blame.

The Canadian Food Inspection Agency is warning the public not to consume Los Angeles Salad Company Genuine Sweet Baby Carrots because the product may be contaminated with Shigella.

The item is labelled as product of Mexico and is sold in 672 gram plastic bags and sell by dates up to and including August 13th, this year.

The agency says the product was sold in Costco stores in British Columbia, Alberta, Ontario, Quebec and Newfoundland.

This is not the news story the three amigos and their corporate buddies wanted to hear this morning.

The Canadian Press reported Sunday night that the leaders will issue a statement regarding procedures aimed at keeping borders open should another 9/11-type emergency occur, yet political activists say there's apparent secrecy on other issues up for discussion.

They say business leaders have been invited to meetings with the "Three Amigos" in Montebello, while protesters have been shut out. Their signs and shouts will only be available to leaders via video link.

"We want Canadians, Americans and Mexicans to know that this is a big-business driven process, for them and by them, to deregulate all sorts of regulations across the board -- environment, health, safety worker standards," said Maude Barlow, chair of the Council of Canadians, the main group behind a protest in Ottawa on Sunday.

Last time it was organic American spinach, then organic carrots. And under the SPP agreement being discussed today America wants Canada to reduce its food safety regulations.

Regulatory harmonization, or regulatory co-operation as it is euphemistically called, is another top priority for business. Leaders have asked their officials to complete a "regulatory framework agreement" in time for the Montebello meeting. This will set the guidelines for many SPP initiatives. It is unlikely that we will see the full framework agreement, and even less so that we will see how it is applied in specific circumstances. Critics believe the government is preparing to weaken Canadian health, safety and environmental regulations and standards in the name of trade.

Let’s take the example of food safety. The SPP’s business council (the NACC) called for the harmonization of Canadian and U.S. lists of toxic substances, which are preventing some U.S. products from being sold in Canada. We also know that an SPP committee is working to resolve differences in pesticide maximum-residue limits. But will we ever know the outcome of these negotiations?

In this case, we do know now, thanks to an astute Ottawa Citizen reporter, who discovered that the Canadian government is in fact planning under the SPP to relax its requirements on pesticide residues on fruits and vegetables entering from the U.S. Some 40 per cent of the pesticides Canada regulates have stricter limits than U.S. regulations. The U.S. sees them as trade barriers and wants the list of priority pesticides to be relaxed. With the Bush administration aggressively dismantling its own regulatory systems, this harmonization concession amounts to Canada importing U.S. deregulation. Will this be the norm or the exception?

SEE:


The Truth About the Farm Crisis

Alberta State Capitalism

Fish Contamination

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Softwood Redux

Harper said this would never happen again when he forced Canada's Lumber industry to accept his billion dollar bribe to the Americans with his Softwood Lumber Accord.

The U.S. asked an independent panel to resolve a dispute over a softwood lumber accord with Canada, saying the country is ignoring a cap on exports to the U.S. and that Canadian firms are still getting unfair subsidies.

Just like Harpers new formula for Provincial transfer payments were to end the years of bickering over equalization.

Didn't happen.

This is a government that likes to say it doesn't just talk it takes action..... forgetting Newtons Third Law.



SEE:

How The MacDonald Commission Changed Canada

Job Loss It's The Environmentalists Fault

There Is No Free Market

Behind the Eight Ball

US Housing Market Crash

Between a Bloc and A Hard Place

Softwood Republican Slush Fund

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How The MacDonald Commission Changed Canada

With the Conservative governments announcement of further bi-lateral free trade agreements, we should return to the roots of this policy. One that was developed by the Liberals over twenty years ago. Credit where credit is due, the Liberals set the agenda for the development of Free Trade which the Conservatives under Mulroney and Harper have merely inherited. Proving once again the axiom, Liberal, Tory same old story.

Tracing the roots of Canada’s contemporary involvement in North American free trade back to the Royal Commission on the Economic Union and Development Prospects for Canada in 1985 – also known as the Macdonald Commission – Gregory J. Inwood offers a critical examination of the commission and how its findings affected Canada’s political and economic landscape, including its present-day reverberations.

In this case the recommendations that led to the reinvention of the Liberal government as a Neo-Liberal government began with the Commission they set up under Donald MacDonald.

Macdonald represented the Toronto-Rosedale riding for 16 years as a federal member of parliament. He served nine years as cabinet minister in portfolios such as national defence, finance and energy, mines and resources. He was high commissioner for Canada to the United Kingdom from 1988 to 1991, and from 1982 to 1985, he chaired the Royal Commission on the Economic Development Prospects for Canada (known as the Macdonald Commission).

What the Liberals didn't do was follow the MacDonald Commission recommendations on UI/EI.

Moreover, instead of following the Commission’s recommendation for increasing federal contributions to UI during recessionary periods, the government eliminated all contributions to the program by 1990. And there is no evidence that the government has seriously considered proposals made by the Commission and others for experience-rating the program’s financing.

The intensity rule and benefit clawback of 1996 were sold as “worker-side experience rating” (see Nakamura and Diewert (2000)), but they proved as politically unpalatable as employer-side experience rating of premiums. Indeed, since the mid-1990s and continuing today, the feds’ most notable attitude toward EI is that the program is a handy, covert source of net funds for other governmental purposes.

Nor did they follow the Commissions recommendations for a Guaranteed Annual Income.

The Universal Income Security Program (UISP) was the Commission’s other major recommendation for reforming income security. In essence, the UISP was a guaranteed income scheme that would have replaced other programs such as the Guaranteed Income Supplement, Family Allowances, the refundable child tax credit, child and marital tax exemptions, federal social housing programs, federal transfers to the provinces for Social Assistance (SA), and the income support functions of UI. UISP payments were to be made on an income-tested basis, with a tax-back rate of 20 percent applied to all income in addition to the normal personal income tax rates. The Report stated, “The UISP seems to Commissioners to be the essential building block for social security programs in the twenty-first century.

Instead they applied a neo-liberal approach of tax credits, which increased the taxable income of those who received government supplements. So in effect the working poor, paid for a benefit they received from the government. The Federal government let the provinces off the hook by paying their share, and allowing them to cut Social Assistance on the promise that the savings would go back into broad based public programs for the working poor.

The reality was a claw back of provincial benefits, real cash in your pocket, for a credit chit from the Feds, your tax dollars at work. The ensuing benefit not being taxed, meant that the working poor moved up the income tax scale. Not unlike the current Conservative Child benefit; their so called universal child care program.

Second, beginning in 1998 the National Child Benefit (NCB) System subsumed the CTB and replaced its earnings-related benefit with a substantial cash supplement for lower income households with children. Under agreements with the federal government, most provincial governments reduced their SA benefit rates for children by amounts equivalent to the NCB supplement. Again, this scheme pursued a Commission goal of reducing the disincentives for welfare beneficiaries to seek or return to work. These changes also reduced the break-even
income levels for welfare beneficiaries, though the provinces have not reduced phase-out rates for their own benefits. The “reinvestment” of provincial savings from reduced SA cash benefits into in-kind benefits for the working poor and welfare beneficiaries promoted the lowering of the welfare wall, but the benefit phase-outs further aggravated disincentives for the working poor.

Despite the visible positives from the NCB initiative, the scheme also mirrored the
hidden deficiencies of the Commission’s UISP scheme. That is, the NCB supplement phase-out sharply raised the effective marginal tax rates faced by many working poor and near-poor families. The NCB scheme did reduce the “welfare wall” but simultaneously erected a higher “success wall” keeping the working poor and near-poor from advancing to higher earnings.

What made the MacDonald Commission unique was the near unanimty of the political economists who agreed that Free Trade was the panacea for Canada's stagnating economy. An economy that was no worse off nor better off than any other at the time of global recession. However dissident voices were not to be found amongst the Academics of the day who promoted Free Trade saying There Is No Alternative. And so the Liberals led the push for Free Trade despite John Turners tearful denials in his debate with Mulroney and Broadbent.

Policy makers who want a policy initiative in place may well foster the research to support the initiative. This fostering could come in various forms: commissioning background studies from sources known to favor the initiatives; designing the terms of reference in ways that will yield favorable results; “advertising” favorable results while “burying” unfavorable results; or, reviewing the research with suggestions tilted towards influencing the results or having them presented favorably.

In Canada, the signature recommendation of the Macdonald Royal Commission of 1985, was for a bilateral free trade agreement between Canada and the U.S. That recommendation led to the Canada-U.S. Free Trade Agreement (FTA), negotiated between 1985 and 1987 and implemented January 1, 1989. The research of the Commission was extensive, involving 280 studies done mainly by 300 different academics in 70 volumes.

The importance of academic research to the Commission is also illustrated by the fact that 84 percent of the 1,014 references in the final report are to research studies (67 percent from the academic literature and 17 percent from the background research studies of the Commission which tended to synthesize the academic research). Only 10 percent of the references were to briefs formally presented to the Commission and 6 percent from references to transcripts of the public hearings (calculations from data in Inwood, 2005:181).

The fact that the academic research generally favored free trade while the briefs and public hearings generally involved advocacy positions opposed to free trade, suggests that the research also had a greater impact (Inwood, 1998:18).

The research on trade had a number of important characteristics that likely facilitated its
impact on public policy. It was high quality research done by top researchers in the country and coordinated by a prolific and respected trade economist. The computable general equilibrium models were particularly influential, especially because they captured the indirect productivity enhancing effects of the restructuring that would occur because of the economies of scale for producing for a large market. The research of the Commission generally involved a synthesis of the cumulative stock of existing research, the vast majority of which favored free trade. The near consensus perspective favoring free trade is illustrated by the fact that “only one academic could be found to make the anti-free trade case out of the approximately three hundred hired by the Commission” (Inwood, 1998:35).

This homogeneity of perspectives within economics and the rigor with which they are advanced made economics prominent as a source of policy advice to the Commission (Simeon, 1987). Brooks and Gagnon (1988:109) conclude that this is a more general phenomenon: “There can be little doubt that economists remain pre-eminent among social scientists in their integration with the policy process.”

The research also had champions who made the case for free trade to the Commissioners and to the politicians, and who defended it in the heated public debates that ensued. Trade unions strongly opposed the FTA and organized public forums against it. In countering this, Macdonald (2005:11) acknowledges the important role played by an Industrial Relations academic, John Crispo, for “his robust platform technique which ultimately frightened away the union leaders from contested meetings where initially it was they who had brandished the verbal brass knuckles.”

There were certainly attacks on the research and on the academic case for free trade. However, the attacks tended to be polemic and based on more nationalistic denunciations of free market economics in general. They tended not to provide alternatives based on different methodologies, and the work was generally simply presented at conferences or published in forums of contemporary opinion as opposed to peer-reviewed academic journals (Inwood, 1998:5).

The term neo-liberal was coined in this period to note the shift that mainstream political economists were making in calling for Free Trade, reductions in social benefits, reinventing government, contracting out services and privatization. All these went hand in hand, and while promoted by neo-cons elsewhere in Canada they truly were policies of the New Liberals; neo-liberalism.

Begun by Trudeau and MacDonald they were then carried through in the nineties by Chretien and Martin. The current Conservatives are the beneficiaries of the Liberal restructuring of the state.

While free trade was the signature recommendation of the Macdonald Commission, numerous other recommendations were made backed by labor and social policy research. As Riddell (2005) indicates, many of these
recommendations were implemented into policy, including unemployment insurance reforms; active adjustment assistance policies; income supplements to the working poor; national testing of student achievement; and deemphasizing minimum wages.

In his overall assessment, Bradford (1999/2000:158, 159) concludes: “The Macdonald Commission report remains the essential component reference point for the host of era-defining policy innovations, ranging from continental free trade to restrictions on unemployment insurance and retrenchment of the federal role in social assistance, legislated between 1985 and 1997 by successive Conservative and Liberal governments.”

Freer trade was also regarded as a potentially effective way for the federal government to pressure provincial governments to adopt market-oriented reforms given the substantial control they have over policy initiatives in Canada’s system. This was especially the case since there was a backlash against the nationalist and government interventionist policies that prevailed during the 1960s and 1970s, including wage-price controls, energy price fixing, foreign investment restrictions, government procurement policies, and a state trading corporation to
assist smaller Canadian firms to sell to centrally planned economies (Chant, 2005:14). Such policies were often regarded as contributing to the worst recession Canada experienced since the Great Depression of the 1930s.

Interestingly, while he was previously in political office, Macdonald himself presided over many of these interventionist strategies including a national oil policy, a state-owned petroleum company, government investment in oil developments that were avoided by the private sector, price controls on uranium exports, and the wage-price control program. He attributes his conversion to free trade and less government intervention to: “My experience in the private sector after my departure from government made it clear that state-controlled programs
had failed to achieve the rates of growth to which we all aspire” (Macdonald, 2005:9).

This rejection of nationalist-interventionist policies also occurred for Prime Minister Trudeau who had earlier instituted many of the policies in the 1970s. By 1982, he indicated: “Personally, I remain convinced that the primary engine of economic development must be a dynamic private sector and that the marketplace is in most circumstances the best allocator of scarce resources”

The Liberal reinvention of government in this period meant the whole scale contracting out of government services, in particular computer based IT as well as P3 programs and the sell off and lease back of government buildings. Which has resulted in the the various scandals and boondoggles from the Gun Registry to the RCMP pension fund scandal.

That the Conservatives could get former Liberal Industry Minister David Emerson to cross the floor days after his election to occupy his old cabinet seat shows how interchangeable the two parties are when in power. After all Emerson is simply following through on Liberal policy even as a Conservative.




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Gildan Sweat Wear

As I have reported Gildan Active Wear, North America's largest T-Shirt manufacturer , based in Quebec, has spent the last few years moving its operations to Occupied Haiti under the protection of Canadian/American/French and UN forces.

This week ,despite a two year tax break for manufacturers from the Conservative government, Gildan announced it is moving more of its operations to Haiti, Nicaragua and the Honduras. In fact the irony here is that because of NAFTA this move will mean that the largest impact of plant closings will be felt by Mexico.

Approximately 465 employees in Canada and the U.S. and 1,365 employees in Mexico will be affected by the manufacturing restructuring. The Company will make every effort to alleviate the impact of the closures on all of its employees in all of the communities affected. In addition, the Company will work closely with the Fair Labor Association and both North American and Mexican NGO’s to ensure that best practices are followed in managing the closure of its Mexican sewing operations. Gildan recognizes that the employees in the operations which are being closed have contributed significantly to the Company’s growth and success in recent years, and regrets that the relocation of its production capacity to its offshore manufacturing hubs is unavoidable in order to be globally cost-competitive in the intensely competitive North American apparel industry.

The demand of Fair Labour Practices and unionization campaigns for worker justice have made Mexico less attractive than Haiti where such practices are non existent. And the newly emerging Maquiladora's, Free Trade Zones, in the Honduras and Nicaragua are still relatively union free, meaning that the Fair Labour Standards are toothless. And even when there are unions Gildan subcontractors still violate their rights.

Five fired union leaders from the Nicotex factory in Sébaco, Nicaragua, a supplier of Gildan Activewear (t-shirts etc) have been reinstated at the factory following strong union action and an international campaign which followed their sackings in November 2004. NSCAG took part in this campaign.

But the crocodile tears shed by Gildan over it's need to move, are a bit much. As their bottom line shows, they have made mucho dinero over the last four years as they off shored more of their operations.

FISCAL
(in millions of $)
Sales

2006 $773.2
2005 $653.9
2004 $533.4
2003 $431.2
2002 $382.3
2001 $329.1

EBITDA
Earnings before interest, taxes, depreciation and amortization.
2006 $147.3
2005 $117.7
2004 $ 91.8
2003 $ 81.5
2002 $ 66.8
2001 $ 19.9

Net earnings
2006 $ 106.8
2005 $ 86.0
2004 $ 60.2
2003 $53.2
2002 $ 42.4
2001 $ 0.7

They are not being forced by globalization to do this, they are actively doing this in order to increase their bottom line.

And with the U.S. eliminating trade quotas on foreign-made socks as of January 1, 2006, Gildan is spending some $500 billion through 2010 partly to expand sock production facilities in Central America. Of two new Honduran factories, one will be able to make 20-million dozen pair a year making it the world's largest sock-making plant.

Resulting in the latest offshoring announcement from Gildan. One they have been planning for since last year.

``It's an indication that things are going very well for the company offshore,'' Jessy Hayem, an analyst with Desjardins Securities Inc. in Montreal. ``The extent of the savings is very positive news in terms of 2008. The $45 million figure seems very substantial,'' Hayem said.

By March 2008, Gildan will have spent about $400 million since 2002 to shift production to new plants primarily in Honduras and the Dominican Republic, Chief Financial Officer Laurence Sellyn said in a telephone interview.

And the plants they are closing in Canada are their only unionized facilities.

Gildan respects all laws, including those relating to freedom of association in Canada and elsewhere. Our internal Code of Conduct ensures the right to associate and it is furthermore a key element of WRAP and FLA's Codes of Conduct. In Canada, two of our plants are unionized.

The irony is that when Gildan went public it was supported by union dollars.

The Quebec Federation of Labour invested $6 million in Gildan in 1996

And while they give lip service to workers rights the reality is quite different. They fail to protect their workers abroad. Instead they avoid compliance with voluntary labour codes they agree too. When they finally do it is too late for the workers.

Final update report on gildan activewear honduras

To:
WRC Affiliate Colleges and Universities
From:
Scott Nova (WRC), Lynda Yanz (MSN), and Maritza Paredes (EMIH)
Date:
September 27, 2006

Re:
Update on Gildan Activewear (Honduras)
This memo is the second and final update on the verification of Gildan Activewear’s compliance with an agreement reached in January 2005 with the WRC and the Maquila Solidarity Network (MSN) aimed at remedying code of conduct violations related to a mass termination of workers that accompanied the closure of Gildan’s El Progreso facility in Honduras. Central to the agreement was Gildan’s commitment to providing priority hiring opportunities to former El Progreso workers.

The investigation found, in short, that Gildan did not comply with the agreement during a key early stage of implementation, though Gildan’s compliance with the accord improved in later stages and was accompanied by other constructive measures. Generally speaking, we must report that the agreement did not lead to substantial remediation of the wrongful terminations that the agreement was motivated to address. As discussed below, given the difficulties posed by the mass termination and the time that had elapsed between the closure and the agreement’s adoption, it is unlikely that the harm done to the workers involved would have been fully remediated even if the agreement had been fully adhered to.

Just like it is too late for their unionized workers in Canada. Despite the Conservatives corporate tax breaks and the Bloc's moaning and groaning about the harm this does to Quebec's textile industry.

Gildan is a capitalist success story. For Quebec, for Canada, the corporation Head Quarters and finances stay here while it ships production abroad. It is not a success for workers in North America, Mexico or at it's new sweat shops abroad.

While the Conservatives brag about closing loopholes for corporations using offshore tax havens, they have done nothing about Gildan offshoring production.


Also See:

Boom Times For Canadian Capitalism

Haiti Atrocities

Gilden

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