Business trumps government in trade agreement under review

The right of elected governments in the Yukon to set economic development, environmental and labour policies would be threatened under a…

The right of elected governments in the Yukon to set economic development, environmental and labour policies would be threatened under a controversial trade agreement under review by YTG, say critics.

The Trade, Investment and Labour Mobility Agreement (TILMA), a bilateral pact signed by Alberta and BC in 2006 and recently rejected by Saskatchewan, is being studied by the territorial government after an invitation to join.

TILMA demands that “no obstacles” block the movement of investment, goods and people between signatory jurisdictions and requires the elimination of local incentives and regulations to create a competitive atmosphere for business.

Removing trade barriers would make it easier for labourers to relocate and businesses to invest outside of their home provinces, says the agreement.

A $5 million maximum fine could be levied by a TILMA panel against provinces, territories or municipalities, school boards and publicly funded universities and colleges, which all fall under the agreement, if found in violation by offering tax incentives or regulating development.

“The Yukon stands to lose in a major way,” said Ellen Gould, Canadian Centre for Policy Alternatives researcher and author of the report, Asking for Trouble: The Trade, Investment and Labour Mobility Agreement.

“TILMA downsizes democracy to a point where even if the entire population of Whitehorse wanted city council to provide some incentive, it could not do it under TILMA,” Gould said in an interview from Vancouver.

The Yukon government’s business incentive program that provides rebates to Yukon companies using local labour and goods or selling manufactured goods to the government could be challenged if the Yukon signed on to TILMA.

“That’s it. TILMA would be the end to any local incentive to businesses in the Yukon,” said Gould.

General contractors and subcontractors with territorial government contracts exceeding $100,000 are eligible for rebates if they hire a minimum 80 per cent Yukon labourers and are also eligible for rebates when hiring Yukon apprentices and youth for contracts of any size.

The business incentive program and similar incentives that ensure jobs for Yukoners and revenue for local businesses would violate the TILMA agreement.

If the city of Whitehorse wanted to build a theatre downtown to help with revitalization efforts, any zoning stating that would violate TILMA if a company wanted to build it on the edge of city limits, said NDP leader Todd Hardy.

“TILMA is the removal of the democratic right of governments to enact legislation for the benefit of citizens,” said Hardy.

 “It’s like using a sledgehammer to drive in a finishing nail.”

The Yukon government is only studying TILMA and has not entered into negotiations with BC and Alberta, said Premier Dennis Fentie on Friday.

“Our primary concern is the shortage of skilled labour and tradespeople in the Yukon and Western Canada,” said Fentie. “We must look at every possible way to address that so we don’t impede the growth we’re experiencing.

“We intend to continue to ensure the Yukon is benefiting from all possible initiatives that make sense for us.”

The effects of TILMA are already being felt in BC. A ‘chill effect’ is taking place behind the scenes in the province only four months into the agreement, said Gould.

A plan to ban junk food in schools has been held up by a government unsure of how businesses such as vending machine companies would react to a legislated ban now that BC signed on to TILMA.

“Governments are worried about taking on liability for no obvious benefit,” said Gould.

The elimination of trade barriers between provinces that are restricting investment are costing provinces billions of dollars, say proponents, including the BC and Alberta governments and the Conference Board of Canada.

“There are precious few examples of actual trade barriers,” said Gould. “We’ve been challenging advocates of the agreement (TILMA proponents) to come up with one, but they’ve failed to do so.”

The lack of real trade barriers is one reason why Saskatchewan declined to sign on to TILMA.

Saskatchewan government officials were also unsure of how TILMA would affect the several significant provincial Crown corporations, which all in some way restrict private investment.

“The biggest issue was the unanswered question of how much ability the government would have to be involved in their own economy under TILMA,” said Mark Claxton, Saskatchewan government relations spokesperson.

Saskatchewan would rather work within the Agreement on Internal Trade, a national pact dealing with similar trade issues addressed in TILMA.

The NDP in Saskatchewan, just like the NDP in the Yukon, has a great disdain for the corporate community, said Fentie.

“Unlike the NDP, who are very protectionist, which comes from Marxist-Leninist doctrine, we’re a party and a government that firmly believes in the growth of the private sector as the major contributor to the well-being of any jurisdiction.”

However, both the Saskatchewan NDP and the province’s Official Opposition, the conservative Saskatchewan Party, have stated TILMA will not benefit Saskatchewan.

The Yukon government’s Economic Development department confirmed a review of TILMA is underway. All government departments are studying how TILMA would affect operations and programs, said assistant deputy minister Andrea Buckley.

“Why did Alberta and BC sign on in the first place?” said Buckley. “And what does it mean when we say ‘we’ll sign on’? Do we just sign on the bottom line or are there exceptions?”

Any agreement of this nature would require public consultation before signing anything, said Fentie.

It may also need legislative approval.

The Agreement on Internal Trade, a similar national agreement dealing with similar trade issues addressed by TILMA, did not go the legislature for approval, said Fentie.

“(But) that’s irrelevant,” he added. “It has no bearing on the issues. If you want to spin that way, that’s your business.”

One major hurdle governments struggle with is that they won’t truly know how broadly clauses in TILMA could be interpreted until they sign up — by then it’s too late, say TILMA critics.

“We need the information and the debate to make decisions for ourselves and not have the territory sign off on deals that could very easily alter the future of the society we build,” said Hardy.