By Marray Dobbin and cross-posted from Counterpunch.org
There is a glaring disconnect in the world between economic growth, and trade and investment agreements. At the same time that Canada and other countries are pushing hard for huge multi-national deals – the TPP, CETA and the US-EU deal, the TTIP – all the evidence suggests that global trade is on a long-term downward trend. Nothing in the near or middle term future suggests that it will recover to anything like its China-driven peak. Financial Times analyst Martin Wolf recently argued bluntly that globalization no longer drives the world economy. He points out that “…ratios of world trade to output have been flat since 2008, making this the longest period of such stagnation since the second world war. According to Global Trade Alert, even the volume of world trade stagnated between January 2015 and March 2016…” In addition, says Wolf, ”The stock of cross-border financial assets peaked at 57 per cent of global output in 2007, falling to 36 per cent by 2015. “ Foreign direct investment has also declined.
So if global trade isn’t going to pull the world economy out of its persistent doldrums, why are countries putting so much political energy into signing these agreements? They do little or nothing to enhance growth in global trade – trade is driven by global demand – also flat. Amongst the countries primed to sign these agreements trade is already virtually tariff free. Even the government’s Global Affair’s department recent analysis estimates the Pacific Rim deal, the TPP, would increase GDP by a minuscule .127 per cent ($4.3 billion in a two trillion dollar economy) – but not until 2040! In short, we will gain virtually nothing.
If these deals don’t enhance trade or growth what do they do? Investment agreements like CETA, TTIP and the TPP are all aimed at making international investment by multinationals as risk free as possible. Corporations always try to externalize costs – but these deals and their ISDS clauses allow then to externalize risk – and it’s taxpayers who take the risk. In a global economy that has virtually no prospect of recovering in the foreseeable future, one road to continued profitability lies in treaties that protect a company’s “projected future profits” against any government action in the public interest…