Politicians must convince Canadians that trade deals pass jobless sniff test: Don Pittis

As Canada and the world struggle with an unemployment problem, something seems to have gone wrong with the free trade model.

The conventional economic wisdom is that freer trade leads to greater global efficiency and thus togeneral prosperity. But the Brexit vote and rising anti-trade rhetoric from U.S. presidential candidateDonald Trump area warningto Canadian free tradersthat moreglobalization is useless unless it createsmore and better Canadian jobs.

• Canada's trade deficit for May remains near record levels
• Building permits tick down by 1.9% in May

"They are losing their trust in politicians' ability to act in their best interests," said OECDSecretary General Angel Gurrain a speech yesterdayon the concerns of the jobless and underemployed.

In their Thursdayreport, the OECD Employment Outlook,the rich countries think-tankwarns that the world is still suffering from a shortage of good jobs.

Good jobs needed

As jobs numbers come out today in Canada and the U.S., jobhunters and economists will be watching to see if the industrial regions of the economy continue to crank out jobs. As it turns out, job growth was flat, but the jobless rate ticked down to 6.8 per cent as fewer people were looking for work.

• Canada adds a surprise 14,000 jobs in May
• B.C. tourism industry sees 18% increase in tourists so far this year

All things being equal, a lower jobless rate would be reason for celebration.But the OECD says that despite Canada`s fallingunemployment rate, more jobshavenot led to the return to wage levels seen nineyears ago.

Not only have employmentlevels failed to bounce back to pre-recession levelsacross the OECD, but there are signs that thequality of the jobs that do exist are falling, especially for young people and women.

"Most people don't feel that they are doing as well as they were before the crisis," says Gurria. "They worry about unstable employment and poor job quality."

As Canadian politicians hammer out an inter-provincial free trade deal and International Trade Minister Chrystia Freelandpushes for freer trade with Europe, Canadians are waiting for signs that such deals really do help create good jobs.

The free trade theory is clear. When each country and regiondoes what they do best, the entire world functions more efficiently, producing more goods and services with the same amount of labour. But as Brexit voters and Trump supporters have complained, that theoretical globalizedefficiency does not necessarily translate into more and better jobs at home.

Maybe the business definition of efficiency just means fewer jobs at lower pay. Free traders must convince us otherwise.

Turning against trade

Even Democratic presidential candidateHillaryClinton has turned against Tran-Pacific Partnership and other "bad trade deals," echoing Trump, who recently said"Globalization has made the financial elite who donate to politicians very, verywealthy ...but it hasleft millions of our workers with nothing but povertyand heartache."

As with all real world experiments, it is hard to prove whether free trade has made us better off. Would the Canadian economy have been more or less efficientif Bombardier had made the parts for Toronto's street cars with Canadian workers?

The latest figures released earlier this week show thatCanada's trade deficit is growing worse, hovering near record levels. And that cannot be blamed on the Fort McMurrayfire as energy exports rose despite the blaze. Instead, poor exports are almost entirely due to a failed recovery in industrial manufacturing.

One senior economistcalled the trade report "very downbeat."

Can the loss of jobs in Canada's rust beltbe laid at the feet of NAFTAand cheap labour in China,or is the Canadian economy merely going through a bad patch for other reasons?

Convincing argument

Business leaders remain the biggest champions of freer trade. However,critics of the TPP and the Canada-Europe trade agreement (CETA) say one of the biggest worries about those two deals is the power they give businesses to use the courts to overturnlegislationmade in the interest of ordinary Canadians.

As Trump leads the way toward another round of protectionism against Canadian exports, includingforest products, it is the duty of ourleaders to convince Canadianstheir free trade policy really is acting in the interests of everyone. And that means good jobs.

As labour ministers gather in Beijing next week to discuss the current global state of employment theymust seriously think about how to make free trade compatible with job creation.

Because if Canadian voterslike the British and many Americans begin tobelieve evidence thatglobalizationhas beenbad for jobsso far, why would they want more of it?

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