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The Consistency of Inconsistency: Tracing Ontario's Opposition to the North American Free Trade Agreement*

Published online by Cambridge University Press:  10 November 2009

Donald E. Abelson  and
Michael Lusztig
Donald E. Abelson
Affiliation:
University of Western Ontario
Michael Lusztig
Affiliation:
University of Western Ontario
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Abstract

Employing a rational choice perspective, this article seeks to explain the shift in the trade policy position of the Canadian province of Ontario during negotiations that led to the North American Free Trade Agreement. In doing so it highlights an important, though often overlooked, phenomenon: issue linkage in public policy construction. Early in 1993, Premier Bob Rae's New Democratic party government significantly shifted its position on the proposed agreement. While never actively supportive of the accord prior to 1993, the provincial government maintained close contact with federal trade negotiators as a means of advancing its core trade objectives. By February 1993, however, the government's position hardened perceptibly. Specifically, the government actively undertook to derail the proposed agreement. This article suggests that this shift cannot be understood in terms of growing dissatisfaction with the impending trade agreement, nor solely to a change in Ontario's trade policy preferences. Rather, it suggests that a broader perspective is needed, and argues that Ontario's position on NAFTA was linked to other priorities of the Rae government: namely, those in the fiscal policy arena.

Résumé

Utilisant l'approche des choix rationnels, cet article tente d'expliquer le changement de la position adoptée par la province de l'Ontario au Canada en matière de politique commerciale au cours des négociations ayant conduit à la signature de l'Accord de Libre-Échange Nord Amérique. Ce faisant, cet article met en lumière un phénomène important et quelques fois oublié, à savoir l'intrication de questions différentes dans l'élaboration d'une position publique. Au commencement de l'année 1993, le gouvernement néo-démocrate du premier ministre Bob Rae a modifié de façon significative sa position en ce qui a trait à l'ALÉNA. Bien qu'il n'ait jamais soutenu l'accord avant 1993, le gouvernement a maintenu d'étroits contacts avec les négociateurs fédéraux pour atteindre ses objectifs commerciaux fondamentaux. Dès février 1993, la position du gouvernement s'est durcie d'une façon notable. Plus préisement, le gouvernement a essayé de faire déailler l'accord. Cet article suggère que ce changement de position ne peut pas être compris en fonction d'une montée de l'insatisfaction à l'égard du traité à venir, ni simplement en raison d'un changement dans la politique commerciale de l'Ontario. Il est plutôt suggéré d'adopter une approche plus large. La position de l'Ontario à l'endroit de l'ALÉNA découlait d'autres priorités du gouvernement Rae et, plus précisement, celles liées au domaine de la politique fiscale.

Type
Research Article
Information
Canadian Journal of Political Science/Revue canadienne de science politique , Volume 29 , Issue 4 , December 1996 , pp. 681 - 698
Copyright
Copyright © Canadian Political Science Association (l'Association canadienne de science politique) and/et la Société québécoise de science politique 1996

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References

1 For an expanded and sophisticated discussion of the concept of rationality in the social sciences, see Jon, Elster, ed., Rational Choice (New York: New York University Press, 1986)Google Scholar, and Booth, William James, James, Patrick and Meadwell, Hudson, eds., Politics and Rationality (Cambridge: Cambridge University Press, 1993).Google Scholar

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4 Ibid., 6–7.

5 Putnam, “Diplomacy and Domestic Politics.”

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7 In addition to material already cited, see Mo, Jongryn, “The Logic of Two-Level Games with Endogenous Domestic Coalitions,” Journal of Conflict Resolution 38 (1994), 402–22CrossRefGoogle Scholar; Evans, Peter B., Double-Edged Diplomacy: International Politics and Domestic Politics (Berkeley: University of California Press, 1993)Google Scholar; and Lusztig, Michael, Risking Free Trade: The Politics of Trade in Britain, Canada, Mexico and the United States (Pittsburgh: University of Pittsburgh Press, 1996).Google Scholar

8 The term “efficient” is borrowed from Tsebelis, who defines efficient institutions as those that “improve the welfare of all or almost all political actors” (Tsebelis, Nested Games, 95). The pursuit of the aggregate, or national, interest is a fundamental assumption underlying the realist paradigm within international politics. See James, Patrick, “Neorealism as a Research Enterprise: Toward Elaborated Structural Realism,” International Political Science Review 14 (1993), 123–48CrossRefGoogle Scholar. The concept is transferable to public policy. See, for example, Krasner, Stephen D., Defending the National Interest: Raw Materials, Investments and US Foreign Policy (Princeton: Princeton University Press, 1978).Google Scholar

9 Riker, William H., The Theory of Political Coalitions (New Haven: Yale University Press, 1962)Google Scholar. The minimum winning criterion in electoral coalition construction is qualified somewhat by uncertainty in terms of threshold necessary to achieve winning status. See ibid., 88–89, and Shepsle, Kenneth A. and Weingast, Barry R., “Political Solutions to Market Problems,” American Political Science Review 78 (1984), 417–34.CrossRefGoogle Scholar

10 The Auto Pact between Canada and the United States institutionalized cross-border trade in automobiles and automotive parts. Much of the considerable economic benefit of the agreement, by 1988 roughly one third of cross-border trade in manufactured goods was in the automotive sector, accrued to Ontario. See Winham, Gilbert, Trading with Canada (New York: Priority Press, 1988), 6Google Scholar. For more on the Auto Pact, see Ontario, Cabinet Committee on the North American Free Trade Agreement, Final Report (Toronto: Queen's Printer for Ontario, 1993)Google Scholar, and Maureen, Appel-Molot, ed., Driving Continentally: National Policies and the North American Auto Industry (Ottawa: Carleton University Press, 1993).Google Scholar

11 See Doern, G. Bruce and Tomlin, Brian W., Faith and Fear: The Free Trade Story (Toronto: Stoddard, 1991), esp. 146–48.Google Scholar

12 This legislation was in the security of energy supply and water exports and the safeguarding of constitutional jurisdiction (Speech to the Canadian Institute of International Affairs, Toronto, July 28, 1993, by Frances Lankin, Minister of Economic Development and Trade).

13 Interview with Senior Official, Department of External Affairs, December 30, 1992.

14 See, for example, Rae's letters to Prime Minister Brian Mulroney, December 3, 1990, and March 23, 1992; his Speech to the World Economic Forum in Davos, Switzerland, January 30, 1993; and see also Speech by Ontario Minister of Industry, Trade and Technology Ed Philip at the University of Toronto, July 14, 1992.

15 The government recognized, as had the previous Peterson government, that such a strategy would have had remarkably little likelihood of success.

16 Letter from Rae to Mulroney, March 23, 1992.

17 See, for example, the correspondence between Peter Sadlier-Brown, Assistant Deputy Minster, Policy Division, MEDT, and John Weekes, Chief Negotiator, North American Free Trade Negotiations on the issue of labour and environmental standards under NAFTA: April 16, 1992; April 23, 1992; May 22, 1992; May 28, 1992; June 23, 1992; and July 24, 1992.

18 Letter from Rae to Mulroney, March 23, 1992, and letter from Philip to federal Trade Minister Michael Wilson, January 6, 1992.

19 See correspondence between Weekes and Sadlier-Brown; Ontario, Cabinet Committee on NAFTA, Final Report, chaps. 4–6; and Canadian Environmental Law Association, The Environmental Implications of Trade Agreements (Toronto: Queen's Printer for Ontario, 1993).Google Scholar

20 The government was seeking to draft an environmental bill of rights, while at the same time attempting to entrench a social charter (with inherent protection of workers’ rights) into the Canadian constitution ( Winfield, Mark, “The Ultimate Horizontal Issue: The Environmental Policy Experiences of Alberta and Ontario, 1971–1993,” this Journal 27 [1994], 129–52Google Scholar; Ontario, Ministry of Intergovernmental Affairs, A Canadian Social Charter: Making Our Shared Values Strong [Toronto: Queen's Printer, 1991]Google Scholar; and Boer, Elizabeth C. De and Winham, Gilbert R., “Trade Negotiations, Social Charters, and the NAFTA,” in Jonathan, Lemco and Robson, William B. P., eds., Ties beyond Trade: Labor and Environmental Issues under the NAFTA [Toronto: C. D. Howe Institute, 1993]).Google Scholar

21 Canadian Environmental Law Association, NAFTA and Water Exports (Toronto: Canadian Environmental Law Association, 1993).Google Scholar

22 This was formerly known as the Ministry of Industry, Trade and Technology (Mill).

23 MITT internal memorandum, “Economic Impact of the Proposed North American Free Trade Agreement,” November 1992.Google Scholar

24 Memorandum from Rae to ministers and deputy ministers, February 2, 1993. In a sense, this strategy is the obverse of what happened within the federal government during the run-up to the Canada-US FTA. Some have argued, for example, that a major stimulus for the federal government's desire for a free trade agreement with the United States in the mid-1980s can be traced to the shift of trade policy responsibility from the more protectionist Department of Industry, Trade and Commerce to the Trade and Economics Branch (and later United States Branch) of the Department of External Affairs ( Wright, Gerald, “Bureaucratic Politics and Canada's Foreign Economic Policy,” in Denis, Stairs and Gilbert, Winham, eds., Selected Problems in Formulating Foreign Economic Policy [Toronto: University of Toronto Press, 1985]Google Scholar, and Doern and Tomlin, Faith and Fear). For a discussion of how bureaucrats influence political outcomes, see Breton, Albert and Wintrobe, Ronald, “An Economic Analysis of Bureaucratic Efficiency,” Law and Economic Workshop Series, University of Toronto, 1981Google Scholar, and Lindquist, Evert A., “Public Managers and Policy Communities: Learning to Meet New Challenges,” Canadian Public Administration 35 (1992), 127–59.CrossRefGoogle Scholar

25 See Abelson, Donald E., “Environmental Lobbying and Political Posturing: The Role of Environmental Groups in Ontario's Debate over NAFTA,” Canadian Public Administration 38 (1995), 352–81.CrossRefGoogle Scholar

26 Rose, a former head of the Canadian Union of Public Employees, had very close ties to organized labour. Another close advisor to the premier, Laurie Stephens, was sent to MIA to organize the Secretariat's communications strategy.

27 While input was solicited from academics and research institutions, a conscious decision was made to fund studies by those that shared the government's concerns about NAFTA.

28 News Release, Office of the Premier, February 17, 1993.

29 Letter from Buchanan to The Globe and Mail (Toronto), February 18, 1993 (emphasis in original).

30 Campbell is co-author of two books that are extremely critical of free trade in Canada ( Barlow, Maude and Campbell, Bruce, Take Back the Nation [Toronto: Key Porter Books, 1991]Google Scholar and Take Back the Nation 2: Meeting the Threat of NAFTA [Toronto: Key Porter Books, 1993]).

31 Cabinet Committee on North American Free Trade, Final Report, 44.

32 Letter from Sadlier-Brown to Weekes, May 4, 1993.

33 From the spring of 1993 onward, in fact, Johnstone and other dispirited MEDT officials attended C-NAFTA meetings only with reluctance. Indeed, they were accompanied by representatives of MIA to ensure that Ontario's presence at the meetings did not extend to active participation.

34 In a memo written by Johnstone he notes: “In accordance with instructions, the Ontario delegation did not comment on the matters under discussion other than to ask questions for clarification. With respect to federal requests for information, the Ontario delegation said that it was the government's position that we would not provide any information” (Robert Johnstone, MEDT, internal memo, April 7, 1993).

35 These actions were outlined by MEDT Minister Frances Lankin. See her speech to the Canadian Institute of International Affairs, July 28, 1993; see also MIA Interdepartmental Memo, “Strategic NAFTA Issues,” May 11, 1993.Google Scholar

36 This was an updated version of the unproclaimed Water Transfer Control Act of 1988.

37 Lankin, Speech to the Canadian Institute of International Affairs, July 28, 1993.

38 Ibid., and MEDT Internal Memo, “Economic Impact of the Proposed North American Free Trade Agreement.”

39 A noted exception to this virtual consensus concerns protection necessary to nurture infant industries. However, given the profile of the Ontario economy, this qualification is not relevant in the Ontario case.

40 MITT Trade Policy Branch, Internal Memo, “The Action Canada Network Briefing on the North American Free Trade Negotiations,” March 23, 1992Google Scholar. For more information on the Network's position on NAFTA, see Action Canada Network, ACN Action Dossier 38 (1992).Google Scholar

41 It should be noted, however, that the environmental movement was not as cohesive on the NAFTA issue as other core elements of the NDP electoral coalition. For example, Pollution Probe, the National Wildlife Federation, the Sierra Club of Canada and Friends of the Earth urged the Rae government to continue participation in the C-NAFTA (letter from Janine Ferretti, Executive Director of Pollution Probe to Frances Lankin, March 4, 1993, and Abelson, “Environmental Lobbying and Political Posturing”).

42 Abelson, “Environmental Lobbying and Political Posturing.”

43 Canadian Federation of Labour, Report to Canadian Federation Executive Council on CF of L Delegation Visit to Mexico, May 1991Google Scholar; Canadian Labour Congress, Critical Notes on the Economics of the Proposed North American Free Trade Agreement (NAFTA), February 27, 1992Google Scholar; and Canadian Centre for Policy Alternatives, Popular Sector Organizations and Trade: A Report to the Ministry of Industry, Trade and Technology, Government of Ontario (Ottawa: Canadian Centre for Policy Alternatives, July 1992).Google Scholar

44 In addition to those listed above, the Canadian Union of Public Employees, Ontario Public Service Emloyees Union, International Ladies Garment Workers Union, Ontario Federation of Labour, United Food and Commercial Workers International Union, Public Service Alliance of Canada, Canadian Union of Postal Workers and National Farmers Union testified before the committee (Cabinet Committee on North American Free Trade, Final Report).

45 The move was reminiscent of the socialist experiment of the French government of François Mitterrand in 1981. In that case, attempts to stimulate the French economy by traditional Keynesian prescriptions proved unsuccessful and led to a dramatic policy reversal. See Hall, Peter, Governing the Economy: The Politics of State Intervention in Britain and France (Oxford: Polity, 1986)Google Scholar, esp. chap. 8.

46 It was predicted, on the strength of projected interest rates and programme growth estimates, that without a $6 billion reduction in the provincial budget the deficit would balloon to $17 billion ( Molloy, Andrew, “The Political Economy of the Ontario Government's Social Contract Process: A New Beginning in Total Quality Relations?” paper presented at the annual meeting of the Canadian Political Science Association, Calgary, 1994).Google Scholar

47 Tufte, Edward R., The Political Control of the Economy (Princeton: Princeton University Press, 1978).Google Scholar

48 Negotiations on the Social Contract continued through the spring of 1993, breaking off on June 3. The time frame is significant, of course, insofar as it overlaps with the timing of Ontario's trade policy shift. For more on the Social Contract, see Ontario, Ministry of Finance, A Guide to the Social Contract Act (Toronto: Queen's Printer, 1993)Google Scholar, and Molloy, “The Political Economy.”

49 Ibid.

50 Letter from Ryan to Rae, November 30, 1992. These sentiments were also expressed late in 1992 by other elements of the Rae coalition (letter from Michelle Swenarchuk, Acting Executive Director, Canadian Environmental Law Association to Rae, November 19, 1992). In addition, an internal MIA memo suggests that Ontario's decision to mount a constitutional challenge to the NAFTA was prompted by a request from “every provincial labour organization and many social advocacy groups” ( internal MIA memo, “Strategic NAFTA Issues: Preliminary Report,” May 11, 1993).Google Scholar

51 In fact, continued participation in the C-NAFTA discussions could well have served Ontario's objectives in attempting to scuttle NAFTA if participation permitted it to seek an anti-NAFTA coalition among representatives of other provinces.

52 Side-deal negotiations on environmental and labour standards under the proposed NAFTA did not begin until March 1993.