Economic ‘rights’ don’t need their own charter

TheStar.com – Opinion/Editorial Opinion – Proposed document would lock in bias toward deregulation and conservative economic policies / Worthy goal of lowering provincial trade barriers is no excuse for enshrining free market dogma.
Published On Wed Aug 04 2010.   Adam Harmes, Associate Professor in the Department of Political Science at the University of Western Ontario

As premiers gather for their annual conference in Winnipeg this week, the issue of reducing interprovincial trade barriers will no doubt be a topic of discussion.

However, for one conservative think-tank, interprovincial trade is an issue best left to the federal government.

In fact, rather than waiting for the premiers to reduce trade barriers on their own, a recent report by the Macdonald-Laurier Institute argues that Ottawa should impose a solution by creating an “economic charter of rights.” While Canadians should say Yes to promoting interprovincial trade, they should voice a resounding No to an economic charter.

The problem with an economic charter of rights is that it’s less about promoting trade within Canada and more about locking in a bias toward deregulation and other conservative economic policies. It’s part of a broader conservative strategy known as “constitutional economics” developed by free market luminary James Buchanan and long-promoted by business lobby groups and free market think-tanks in Canada and the United States.

The idea is to create a business version of the Canadian Charter of Rights and Freedoms by making government economic policy subject to “judicial review.” Under our existing Charter, the courts can strike down a law as unconstitutional if it’s deemed to violate our fundamental rights, such as freedom of religion or freedom of the press. An economic charter, reinforced by a proposed “economic freedom commission,” would give the courts a similar ability to strike down government regulations on business, including everything from environmental policies to health and safety standards.

Proponents of an economic charter argue that it would not affect these types of legitimate and necessary regulations. Instead, it would only target the purely protectionist and “silly” regulatory differences between provinces that create red tape for business and provide no real benefits for Canadians. An oft-cited example is the way that different provinces mandate different sizes for the small cream containers we get with our coffee.

While such regulations should clearly be removed, history shows us that there’s no real way to legally distinguish the silly and protectionist regulations from those that genuinely protect Canadians. The closest thing we have to a precedent for an economic charter is Chapter 11 of the North American Free Trade Agreement, which was designed to prevent governments from the outright expropriation of businesses, without compensation, as was done by Fidel Castro in Cuba and Hugo Chavez in Venezuela.

However, clever lawyers were able expand the application of Chapter 11 and use it to force governments to abandon legitimate environmental regulations. Because Canada still has many clever lawyers, there is every reason to believe that the application of an economic charter would be similarly expanded and create similar problems.

This is why proposals for an economic charter and equivalent measures are only promoted by business lobby groups and free market think-tanks and are consistently opposed by environmentalists and consumer advocates.

Back in 1982, when Pierre Trudeau repatriated the Constitution and brought in the Charter of Rights and Freedoms, the Fraser Institute think-tank proposed that governments be constitutionally prohibited from running deficits. A decade later, during the Charlottetown accord negotiations, the Fraser Institute and the Business Council on National Issues supported a proposal to include protection for property rights in the Canadian Charter. Similar proposals to subject economic policy to forms of judicial review were promoted in relation to Canada’s 1994 Agreement on Internal Trade (AIT).

While these efforts to lock in a deregulatory bias largely failed, the same cannot be said for the B.C.-Alberta Trade, Investment and Labour Mobility Agreement (TILMA), which came into effect in April of 2007. Under the TILMA, companies can now challenge a wide range of legitimate provincial and municipal regulations, with governments paying penalties of up to $5 million per claim, simply because they are an impediment to investment.

Following this victory, and the later inclusion of Saskatchewan, efforts to expand the TILMA to other provinces and to reform the AIT along more free market lines have stalled. This is why the Macdonald-Laurier Institute, whose directors are almost exclusively CEOs, is repackaging some old conservative wine in the new bottle of an economic charter of rights. This is also why the institute wants an economic charter to be imposed by the federal government rather than implemented through negotiations with the provinces.

If the federal government did impose such a charter, it’s hard to see how it would improve interprovincial trade or help national unity as the report’s authors suggest. At a minimum, it is unlikely in the extreme that Quebecers would support a measure that locks in conservative economic policies and would be imposed in a way that tramples on provincial rights. At the same time, if we’ve learned anything from the recent financial crisis and the BP oil spill, it’s to be wary of an excessively deregulatory approach couched in the language of “economic freedom.”

Canadians should support all sensible and democratic measures to reduce interprovincial trade barriers. But a charter of economic rights, designed to impose a deregulatory bias from above, is simply not one of them.

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