Under banner of ‘expanding free trade’: Destruction of workers’ rights and livelihood in shipbuilding

(October 3, 2007) – AMID Canadian Prime Minister Stephen Harper’s turns on the stage of the G-8 proceedings held in Heiligendamm, Germany from June 6-8, International Trade minister David Emerson and then Foreign Minister Peter MacKay, in Ottawa and Halifax respectively, teamed up on June 7 and 8 to tout the signing of a “free trade” pact with the member states of the “European Free Trade Area,” also known as EFTA.

The two ministers played out a “bon cop, bad cop” scenario.

Foreign Minister MacKay concentrated on promoting the government’s decision, parallel with the EFTA signing, to renew the structured financing facility program.

“Government recognizes that there are serious challenges today facing the national shipbuilding industry; that is why, after careful consideration, our government has decided to renew multifaceted approaches to shipbuilding,” he said at an news conference.

“We will enhance the structured financing facility or the SFF. The SFF helps buyers to purchase ships built in Canada by buying down the interest rate of the loan that they use to finance the purchase. It has enabled shipyards to capture new business in the past, and our government believes by investing an additional $50 million over the next three years starting in 2007-08, this will be a significant boost to our shipbuilding industry.”

Under the EFTA agreement, meanwhile, according to International Trade minister David Emerson, a key shipbuilding tariff of up to 25 per cent on foreign-built vessels coming into Canada, will be phased out: “The agreement provides for a generous phase-out of our tariff over a 15-year period, with a grace period of three years before any cuts begin.”

Both these positions triggered opposition immediately from the principal shipyard workers’ union, while even certain shipbuilding interests blew hot and cold on the announcement of the phaseout of the shipbuilding tariff.

Les Holloway, the Canadian Auto Workers’ union national representative for the Marine Workers’ Federation, attacked the government for evading solutions to any of the problems built into its current policy by promising a three-year adjustment period for tariff’s phaseout. “That’s the single biggest problem with [this] announcement. [The government] is saying there [are] three years for adjustment, then start the phase-out over an extended period, but what is the government doing to allow industry to adjust? The industry can’t deal with issues it has no control of… They talk in this smoke-and-mirrors kind of thing. Now that we have this free trade agreement and have this phase-in period of time, now you can adjust. If we couldn’t adjust with what we’ve had over the last decade, we will still have an inability to adjust because there are flaws in the programs they have in place.”

The Irving shipyard group shuttered its drydock at Saint John, NB some years ago after completing a $9-billion contract constructing a fleet of 12 frigates for the Canadian navy, but maintains an operation in Halifax. It tempered its greeting of the announcement with a remark that “it will not compensate for the tough blow of duty free entry of subsidized ships and the impact on Canadian shipbuilding and marine operators.”

The CAW leader dismissed the structured financing facility’s “renewal,” condemning the government’s “feeble approach of wanting to make it look like their government is doing something when it is not.” The $50 million was a small amount, not consistent with other programs, he pointed out: “We have an accelerated capital cost allowance and if you build a vessel in Canada you can get the write-down of that vessel over four years. Well, if you use the SFF, you can’t use the accelerated program. We have been saying combine the two.”

The EFTA grouping incorporates Iceland, Norway, Switzerland and Liechtenstein. Powerful blocs of finance capital headquartered in these countries – the fisheries, shipbuilding and offshore oil sectors of Norway, the renovated fisheries sector of Iceland and the near-Swiss level of banking secrecy on offer in Liechtenstein – play definite roles in the Canadian economy generally and the offshore industry sectors of Atlantic Canada in particular.

These interests harbour ambitions to dominate sectors in which the role of Canadian and/or U.S.-based finance has been in decay. Already in just the past year, for example, the joint Norwegian-Icelandic banking institutions Landsbanki and Glitnir each opened shop in downtown Halifax, the former one block west and the latter one block east of the corridor occupied by the commercial towers of the longer-established Canadian chartered banks’ Atlantic regional headquarters. Meanwhile, in response to deep alarm in Norway over the expansion of Russian offshore oil exploration and production in the vicinity of their common border in the Barents Sea, major shipbuilders there have been trawling the world including Atlantic Canada, in search of oil spill cleanup technologies to incorporate into fleets of spill-collecting vessels now on their yards’ drawing-boards.

One particularly notable consequence incorporated into the structure of the accord with EFTA concerns the future fate of shipbuilding and shipyard workers’ jobs in Canada. The elaborate optics of the entire announcement charade – two Cabinet ministers, different points of emphasis, one positive, one negative – serve to disguise the overriding reality: its announcement during this year’s G-8 meetings.

Preparing for Fascism and War in the Name of Defending Arctic Sovereignty

The essence of the SFF portion of this announcement is, in fact, an entire program for fascism and war.

As part of preparing to announce the SFF changes, the government attempted to capture the workers’ support with talk about long-planned renewal of certain portions of the Canadian Coast Guard fleet being enabled at last under these changes. These plans envision spending more than $3 billion in procurement of ships. This would include $324 million for the procurement, operation and maintenance of six new coast guard vessels as well as the previously announced $2.9 billion joint support ship procurement. This is the program that has been touted by the Harper government in earlier announcements as part of preparing for further opening of the Canadian far North as an anticipated consequence of global warming melting the approaches to the Arctic and Beaufort Seas. In fact, in the more immediate reality, because of its coastal patrol capability, such a fleet would “also” render signal service to the plans of the United States to invade and occupy various countries on the western half of the Indian Ocean littoral, from East Africa (the coast of Somalia) to the mouth of the Red Sea (the coast of Sudan), along the coast of the Arab peninsula (the coasts of Yemen and Oman), by the mouth of the Persian Gulf (the coasts of Iran, the Arab Emirates and Saudi Arabia), to Pakistan.

The workers in any event, are not buying the government’s immediate promises. The CAW’s Holloway was constrained to point out that there is more to the issue than just building government ships. He said when he met with Mr. MacKay a few months ago, the main issue was ensuring the industry could meet domestic commercial shipbuilding needs so the industry could sustain itself between procurement contracts. “Just to say we are going to do all that work in Canadian shipyards is not enough,” he said. “The Americans have done it; other nations have done it. They have done something to ensure they can do their commercial domestic work, so that allows them to be there when they are called upon to do procurement work.”

Historical analysis demonstrates that:

1. the rich and their system in Canada can pursue their aim only by eliminating any space for a modern Canadian nation-building project; and that

2. the first line of their attack in this regard has always been on the workers’ rights and livelihood.

During the Second World War, Canada expanded a small merchant marine into a major support arm of naval defences on the country’s Atlantic littoral – inside the Gulf of St. Lawrence and along the coasts of Nova Scotia and the still-British colony of Newfoundland. Undergirding this expansion was the development of a powerful national shipbuilding industry, with major yards linked together from the Pacific to the St. Lawrence to the Atlantic.

At the end of the war, as part of a program initiated by the Canadian Industry minister C.D. Howe – a U.S. citizen and financier – to incorporate many pieces of Canadian industry built during the war into privately-owned sectors of U.S. corporate industry, the government sold off the merchant shipping fleet. As Canadian shipbuilding activity was being restored to take advantage of opportunities opened up by the postwar reconstruction of capitalist economies in western Europe under the United States’ “Marshall Plan” loans, the Liberal government imported the U.S. gangster Hal Banks and his so-called “Seamen’s International Union” (SIU).

Canadian shipyards and marine workers’ ranks had become organized during WWII under the Canadian Seamen’s Union (CSU) and the mission of the SIU was to drown this organization in blood. The CSU, and its successor organizations after the SIU period, raised the demand for a Canadian merchant marine, as a component part and parcel of a modern Canadian nation-building project.

Paul Martin Senior was Labour minister in the Liberal government that imported Hal Banks, and Canada Shipping Lines, the company that his son (and last Liberal prime minister) Paul Martin Junior headed up for decades, would be a major beneficiary of the Cabinet-organized suppression of this just and necessary demand.

In the contemporary context in which the EFTA pact has unfolded, this attack on workers’ rights and livelihood continues to broaden and deepen. As TML has been documenting for the last several months, ports capitalists in Canada and the U.S. have been milking the post-9/11 situation to whip up “ports security” scares as the cover for:

1. carrying on intermonopoly fights with wealthy offshore rivals such as Dubai Ports World over control of lucrative container port gateways on both the Pacific and Atlantic coasts of the North American continent; and for

2. stripping the principal trade unions of this sector – the International Longshoremen’s and Warehousemen’s Union (ILWU) on the West coast and the International Longshoremen’s Association (ILA) on the East Coast – of control of the “hiring hall.”

With its rewriting of existing arrangements for certain Canadian shipbuilding subsidies in favour of the currently most-powerful monopolies of the international shipping cartel, this EFTA accord now proposes to marginalize all further struggles by workers for rights and livelihood throughout this sector, excluding even the newest and smallest yards. Its retention of the government’s “Structural Financing Facility” for certain shipbuilding projects, while simultaneously removing subsidized protections for smaller projects, puts a financial gun to the head of many of these newer shipyards. Their operations developed to supply niche markets whose profit level up to now hardly registered on the radar of the giants in world shipbuilding.

There is another aspect of the Harper government’s position within the U.S. sphere of influence that was further exposed by the manner in which the Department of International Trade proceeded to publicize the EFTA announcement. Using this occasion of a broad policy speech on the government’s international trade perspective, David Emerson also welcomed the launch of free trade agreement negotiations with Peru and Colombia, two members of the Andean Community, and with the Dominican Republic, noting that officials would be meeting for the first rounds of formal talks in the following weeks.

“The government has signalled its intention to re-engage with Latin America and the Caribbean,” said the Minister.

“Strengthening commercial ties with key partners is an important element of our strategy for the Americas.” Lest there be any doubt as to whose coasts a future fleet expansion constructed in Canadian shipyards is actually intended to “guard,” both Peru and Colombia have Pacific coastlines land frontiers bordering Ecuador. The Correa government in Quito has been profoundly challenging many U.S. positions there. Several months ago his Defence minister, Larriva, appears to have been assassinated in a suspicious helicopter “accident” on the fringes of the U.S.-run base at Manta which the Quito government is now intending to close. (Among Ecuadorians and progressive forces elsewhere, this event recalled to mind the murder of former Ecuadorian president Jaime Roldos in the 1980s.) Additionally, Colombia has a Caribbean coastline and land frontier with Venezuela, where the U.S. government has been attempting to overthrow and/or assassinate Hugo Chávez for defying the will of U.S. oil monopolies. The Dominican Republic shares the island of Hispaniola with Haiti. That is where Canadian forces have become mired in protecting reactionary elites from justice at the hands of the Haitian people, whose former President Aristide was kidnapped by combined U.S., French and Canadian armed forces and whose current president, Rene Préval, is blocked from all sides by the country’s foreign creditors. For the working class, all these latest developments pose even more sharply the question: how can the workers control their living and working conditions and security in retirement without the political power to change the direction of the economy?

*  *  *

Reference: Feds to Ease out Tariff, but Shipbuilder Worries Norway’s Subsidized Ships Will Be Sold Duty-Free in Canada

Tom Peters, Chronicle-Herald/Mail-Star (Halifax), June 8, 2007

The Canadian shipbuilding industry’s feared loss of a protective tariff has come to pass and now the industry will have three years to adjust to new market conditions.

International Trade Minister David Emerson announced Thursday that Canada has reached a free trade deal with the European Free Trade Association, which consists of Iceland, Norway, Switzerland and Liechtenstein. Within that agreement, which is subject to government approvals, the minister says the tariff, up to 25 per cent on foreign-built vessels coming into Canada, will be phased out.

“The agreement provides for a generous phase-out of our tariff over a 15-year period, with a grace period of three years before any cuts begin,” he said. “This will give the industry a significant period of time to adjust to the new market conditions.”

The Canadian industry’s major concern in a deal with the association is Norway, a shipbuilding country with a government-subsidized industry that has its sights set on the Canadian market.

Mary Keith, spokeswoman for Irving Shipbuilding Inc, said the extension announced by Mr. MacKay “is good news.”

“But it will not compensate for the tough blow of duty free entry of subsidized ships and the impact on Canadian shipbuilding and marine operators.”

Les Holloway, the Canadian Auto Workers’ union national representative for the Marine Workers Federation, said Thursday the problem is that Ottawa hasn’t “done anything to our industry to adjust.”

“That’s the single biggest problem with his announcement. He is saying there is three years for adjustment, then start the phase-out over an extended period, but what is the government doing to allow industry to adjust? The industry can’t deal with issues it has no control of.”

Mr. Holloway said the industry has issues that require policies to address and that would allow the industry to adjust.

“They talk in this smoke-and-mirrors kind of thing,” he said. “Now that we have this free trade agreement and have this phase-in period of time, now you can adjust. If we couldn’t adjust with what we’ve had over the last decade, we will still have an inability to adjust because there are flaws in the programs they have in place.”

He added that the industry has discussed these flaws with Ottawa.

Foreign Affairs Minister Peter MacKay announced earlier Thursday in Halifax that the federal government was supporting the country’s shipbuilding industry by renewing the structured financing facility program.

“Government recognizes that there are serious challenges today facing the national shipbuilding industry; that is why, after careful consideration, our government has decided to renew multifaceted approaches to shipbuilding,” he said at an news conference.

“We will enhance the structured financing facility or the SFF. The SFF helps buyers to purchase ships built in Canada by buying down the interest rate of the loan that they use to finance the purchase. It has enabled shipyards to capture new business in the past, and our government believes by investing an additional $50 million over the next three years starting in 2007-08, this will be a significant boost to our shipbuilding industry.”

Mr. Holloway called Mr. MacKay’s announcement “a feeble approach of wanting to make it look like their government is doing something when it is not.”

The $50 million is a small amount, he said, and it is not consistent with other programs.

“We have an accelerated capital cost allowance and if you build a vessel in Canada you can get the write-down of that vessel over four years,” he said. “Well, if you use the SFF, you can’t use the accelerated program. We have been saying combine the two.”

Mr. MacKay reiterated government plans to proceed with the more than $3 billion in procurement of ships, which includes $324 million for the procurement, operation and maintenance of six new coast guard vessels as well as the previously announced $2.9 billion joint support ship procurement.

Mr. Holloway said there is more to the issue than just building government ships. He said when he met with Mr. MacKay a few months ago, the main issue was ensuring the industry could meet domestic commercial shipbuilding needs so the industry could sustain itself between procurement contracts.

“Just to say we are going to do all that work in Canadian shipyards is not enough,” he said. “The Americans have done it; other nations have done it. They have done something to ensure they can do their commercial domestic work, so that allows them to be there when they are called upon to do procurement work.”

Mr. MacKay alluded to “specific announcements we hope to make very soon, which will be more good news for the province and the region.

Ottawa will look for ways “to even out shipbuilding work,” he said.

*  *  *

Reference: New Free Trade Deal Caps Successful Year for Canada in Gobal Commerce

Speech on International Trade Day, David Emerson, Minister of International Trade, Government of Canada, Department of International Trade, Ottawa, June 7, 2007

The Honourable David Emerson, Minister of International Trade and Minister for the Pacific Gateway and the Vancouver-Whistler Olympics, today welcomed the conclusion of free trade negotiations with the European Free Trade Association (EFTA) countries of Iceland, Norway, Switzerland and Liechtenstein. He also announced the launch of free trade negotiations with Colombia and Peru and with the Dominican Republic. The Minister highlighted these and other global commerce achievements in a speech delivered on the occasion of International Trade Day.

“One year ago, I argued that as a trading nation, Canada cannot be complacent when it comes to actively engaging in the new global economy,” said Minister Emerson. “The conclusion of negotiations toward our first free trade agreement in six years caps off a good year for Canada on the trade front. But much work remains and I look forward to further progress in securing Canada’s place as a global trade leader.”

The Minister noted that when implemented, the free trade agreement (FTA) with EFTA, Canada’s first with European countries, will confer a distinct competitive advantage to Canadian business by providing preferential access to an important market. He added that this FTA will provide a strategic platform for Canadians to expand commercial ties throughout Europe.

Minister Emerson also welcomed the launch of FTA negotiations with Peru and Colombia, two members of the Andean Community, and with the Dominican Republic, noting that officials will be meeting for the first rounds of formal talks in the coming weeks.

“The government has signalled its intention to re-engage with Latin America and the Caribbean,” said the Minister.

“Strengthening commercial ties with key partners is an important element of our strategy for the Americas.”

The government will continue to actively engage stakeholders to ensure that their interests and concerns are taken into account during the negotiations.

The government is pursuing new trade and investment arrangements with key partners in Europe, in the Americas and in Asia with the goal of creating the right conditions for Canadian business to compete internationally, as outlined in the government’s Advantage Canada plan.

Canada and EFTA countries will work to complete the necessary steps to implement the agreement as soon as possible.

Minister Emerson also marked International Trade Day by launching, on behalf of Foreign Affairs and International Trade Canada, two annual publications: the Eighth Annual Report on Canada’s State of Trade, which reviews Canada’s performance in international trade and investment in 2006, and Canada’s International Market Access Report 2007.

Every year, International Trade Day brings together the business community, senior government officials, industry stakeholders and academics to discuss issues and priorities in international trade and economics.

Backgrounders are attached on the Canada-EFTA free trade agreement; the initiation of FTA negotiations with the Andean Community countries of Colombia and Peru and with the Dominican Republic; and the Eighth Annual Report on Canada’s State of Trade.

*  *  *

Backgrounder #1: Canada-EFTA Free Trade Agreement

The conclusion of a free trade agreement between Canada and EFTA is in keeping with the Government of Canada’s commitment to create the right conditions for Canadian business to compete internationally, as outlined in Advantage Canada, the government’s plan to enhance our competitiveness and secure our future prosperity. It represents a concrete step in moving Canada’s trade agenda forward.

Benefits for Canada

This is Canada’s first FTA with European countries. Once implemented, the agreement will bring significant benefits to Canadian business by:

– eliminating all EFTA tariffs on Canadian industrial exports, including in key export areas such as forest products, pulp and paper products, manufactured housing, aluminum, cosmetics and motor vehicles;

– providing improved access for specific Canadian agricultural products, including frozen foods and selected beverages, durum wheat, canola oil, honey and various fruits and vegetables;

– eliminating EFTA export subsidies on agriculture and agri-food products covered by the FTA;

– providing increased market access for Canadians to expand commercial ties with EFTA countries;

– putting Canada on an equal footing with competitors who already have FTAs with EFTA, including Mexico, Chile, South Korea and the European Union;

– better positioning Canadian business to compete in Europe and participate in regional value chains; and

– further stimulating international business interest in Canada as a trade and investment partner.

Canada-EFTA Commercial Relations

Canada’s commercial ties with the EFTA countries are already significant. Taken together, the four members of EFTA are Canada’s eighth-largest merchandise export destination.

In 2006, two-way merchandise trade was valued at $10.7 billion (Canadian exports: $3.1 billion; imports: $7.6 billion).

Two-way investment stocks were roughly $22.3 billion in 2005 (Canadian direct investment stock in EFTA countries: $7.4 billion; foreign direct investment into Canada from EFTA countries: $14.8 billion).

In 2004, two-way trade in services was valued at $1.6 billion between Canada and Switzerland and at $573 million between Canada and Norway (2005 numbers are not yet available).

The European Free Trade Association

The European Free Trade Association is an intergovernmental organization, established in 1960, that promotes free trade and economic integration for the benefit of its member states: Iceland, Norway, Switzerland and Liechtenstein.

The EFTA members rank among the countries with the highest GDP per capita in the world and are traditionally very open to international trade. Taken together, the EFTA member states constituted the world’s 10th-largest merchandise trader and the fifth-largest trader in commercial services in 2005.

They also represent a sizable market: EFTA’s combined GDP (2005) amounted to $704 billion – a GDP roughly comparable to that of India ($831 billion) or the Republic of Korea ($834 billion).

Three of the EFTA member states (Iceland, Liechtenstein and Norway) have been joined into a single European Economic Area with the European Union since 1994.

*  *  *

Backgrounder #2: Launch of Free Trade Negotiations

1. Canada-Andean Free Trade Agreement Negotiations http://www.international.gc.ca/tna-nac/and-en.asp

The Andean Community countries of Colombia and Peru are established and growing destinations for Canadian business and offer excellent opportunities for Canadian goods and services exporters and investors. The initiation of free trade negotiations with the Andean Community countries of Colombia and Peru will also contribute to the shared goal of deepening development through economic integration within the Americas. Canada will seek to level the playing field for Canadian business vis-à-vis their competitors. In keeping with Canada’s approach to FTA negotiations, Canada will also seek to address the social dimensions of economic integration through the negotiation of provisions on labour and the environment.

Colombia and Peru represent markets of 72 million people with a combined GDP of $182 billion.

Canadian investment in Colombia and Peru was valued at $3.4 billion in 2006.

Two-way merchandise trade between Canada and Colombia totalled $1.1 billion in 2006.

Two-way merchandise trade between Canada and Peru totalled $2.4 billion in 2006.

Canada’s commercial services exports to Colombia and Peru totalled approximately $63 million in 2004 (the latest year for which official data is available).

The successful conclusion of an agreement would expand opportunities for Canadian exporters and investors in a broad range of sectors, including agriculture, mining and financial services.

Canada remains interested in expanding commercial ties with the other Andean Community countries of Bolivia and Ecuador, and is open to the possibility of these countries joining this initiative.

2. Canada-Dominican Republic Free Trade Agreement Negotiations http://www.international.gc.ca/tna-nac/dr-en.asp

An FTA with the Dominican Republic will stimulate the growth of our commercial relationship and help level the playing field for Canadian business vis-à-vis their competitors who are currently benefiting from preferential market access terms. It will also help advance Canada’s foreign policy objectives in the region.

Two-way merchandise trade between Canada and the Dominican Republic is increasing and totalled nearly $277 million in 2006.

Canadian direct investment in the Dominican Republic was valued at $1.8 billion in 2006.

Canada’s commercial services exports to the Dominican Republic totalled approximately $24 million in 2004 (the latest year for which official data is available).

The successful conclusion of an agreement would expand opportunities for Canadian exporters and investors in a broad range of sectors, including agriculture, mining, communications, financial services and tourism.

*  *  *

Backgrounder #3: The Eighth Annual Report on Canada’s State of Trade

The Report on Canada’s State of Trade is an annual report produced by Foreign Affairs and International Trade Canada.

This comprehensive document analyzes key developments in Canada’s international trade and investment performance against the background of domestic economic trends.

This year’s edition includes a special report on “the rise of global value chains,” which illustrates the changing nature of international commerce and the implications for Canada.

Highlights of this year’s publication:

The Canadian economy has been performing very well. GDP growth was 2.7 per cent last year.

Unemployment reached a 30-year low of 6.3 per cent.

Canadian exports of goods and services increased by 1.1 per cent to a record $523.7 billion, while imports increased by 4.2 per cent to $486.5 billion.

Canadian companies have been actively expanding abroad. In 2006, Canadian companies owned $74.4 billion more abroad than foreign companies owned in Canada.

Canadian direct investment abroad reached $523.3 billion in 2006, an increase of 13.8 per cent over 2005.

Inward investment reached $448.9 billion last year, a 10.1 per cent increase over the previous year.

Source: TML Daily, October 3, 2007No. 155

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