David Orchard
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(Published as a leaflet in 1996)

Canada's health care under NAFTA: Gangland takeover

by David Orchard

The assault on Canada's health care system is a direct result of the 1989 Canada-U.S. Free Trade Agreement and its 1994 extension, NAFTA, and was predicted by virtually all the opponents of these agreements at the time, including opposition leaders John Turner and Ed Broadbent.

How does the FTA (and NAFTA) impact on Canada's health care system?

Introduction of the FTA in 1989 drove the Canadian economy into a recession. 25% of Canada's manufacturing base and 1.4 million jobs disappeared by 1992, reducing the tax revenue of both provincial and federal governments. These jobs have not returned.

All of Canada's health services were included in the (NA)FTA. U.S. private health corporations received the right to establish themselves in Canada and all levels of government in Canada are required to treat them equally to Canadian health service providers. To create an opening for U.S. for-profit companies Canada's public system must be reduced and broken down. As Kevin Taft writes in his new bestselling expose of Ralph Klein's government, Shredding the Public Interest:

"Who would pay hundreds of dollars for a service they could get just as quickly without a charge? If the public health care system is working well there is almost no market for a private system. So as a matter of survival the private system must do what it can to prevent the public system from functioning at its best."

Under (NA)FTA U.S. corporations can now target medicare as an "unfair subsidy" to Canadian exporters. To avoid this the federal government is rapidly cutting transfer payments for medicare to the provinces. For example, a U.S. automotive employer pays almost $9,000 per year per employee for medical insurance benefits. In Canada, because of medicare, an employer in the same field pays only a fraction of that amount.

Mel Clark, Canada's former deputy head negotiator at GATT, explains:

"What will NAFTA do to the health care now available to every Canadian? The harsh but realistic answer is Medicare will be replaced by a U.S. style profit driven health care where the level of service will be determined by a patient's credit rating."

The biggest driver of costs in Canada's health system is drugs. The cost of drugs to the health system is now $9 billion per year and rising -- more than the entire federal contribution! Under the FTA, and again in NAFTA, Canada agreed to give U.S. drug companies greater rights, protection and profits. In a 1996 speech in Ottawa, consumer rights advocate Ralph Nader said:

"Come back now to your Bill C-91, when the U.S. drug companies, with the help of your government, engaged in what was virtually a gangland takeover of the Canadian drug market... In 1989, before C-91 was passed, Canada had the lowest pharmaceutical prices in the Western world!... The drug companies were still making lots of money, but not as much as they could if their monopoly patents on new drugs was extended to 20 years."

"So the multinational drug companies, with the support of the White House, went to Prime Minister Mulroney and told him that, if he wanted to get Canada into NAFTA, he had to scrap your compulsory drug licensing laws which were the envy of the world. And he did..."

In 1993, the Chretien Liberals promised to renegotiate or abrogate both the FTA and NAFTA, and swore an "unwavering... commitment to medicare."

Instead, it ratified, and then began praising NAFTA -- and dramatically increased the Mulroney cuts to health, social programs, and all of Canada's national infrastructure. Parliamentary hearings on Bill C-91 at the five year mark are now under way and the current minister of Health and his officials have declared they now can't change the Drug Patent law because of "international trade agreements." The agreement in question, of course, is NAFTA which his own government ratified against the wishes of the voters.

The wholesale adoption and escalation of Mulroney's policies by the Liberals constitutes a betrayal that all concerned and informed citizens must challenge -- there is virtually no Parliamentary opposition willing or capable of doing so. Both the FTA and NAFTA have a cancellation clause allowing Canada to withdraw at any time from these agreements, by simply giving the U.S. and Mexico 6 months notice. They not only must but can be cancelled.

In order to be successful, the campaigns being waged against cutbacks, downsizing, offloading and amalgamation, must also incorporate the demand for Canada's withdrawal from the FTA and NAFTA. Otherwise, the campaigners will end up smashing their efforts against the brick wall of these agreements.

The head of Ontario's Health Services Restructuring Commission, Dr. Duncan Sinclair, echoing similar statements from other provinces, declares, "We are out of money." This mantra needs closer scrutiny. In 1972, when NDP leader David Lewis wrote his book about corporate welfare bums, corporations were paying 21% of government tax revenues. By 1992, they were paying 7%. In 1991, corporate tax breaks amounted to a staggering $90 billion dollars, more than the combined amount spent on medicare, unemployment insurance, old age security, education, welfare and all other social programs. Alberta, the richest province, while leading "the cupboard is bare" chorus, has cut the funding of most public services to the lowest level of any province in Canada. At the same time Alberta spends more on corporate sector subsidies than any government in Canada; the Alberta taxpayer gives out more in corporate subsidies than is collected in all corporate income tax by the province.

So it's a question of priorities, not of cash. Canada spends less (11% of the GDP) on health coverage for all its citizens than the U.S. spends (15% of its GDP) for a health system full of exemptions which provides no coverage for 40 million people and inadequate coverage for 30 million others.

Medicare, which Ralph Nader calls "the best health care system in the world by far," was introduced in dirt poor Saskatchewan in 1961. Impoverished Cuba, struggling under the crippling U.S. embargo operates a universal health system which has achieved a lower infant mortality rate than Canada and U.S. Thus, "lack of money" is not an obstacle for adequate medicare for all: lack of political will is.

The lack-of-cash cry is a cover to bring Canada down to the U.S. level and open up our $70 billion health services market to U.S. industry. Let's not fall for it.


David Orchard is the author of The Fight for Canada - Four Centuries of Resistance to American Expansionism and was runner-up to Joe Clark in the 1998 federal Progressive Conservative leadership contest. He farms in Borden, SK and can be reached at tel (306) 664-8443 or by e-mail at davidorchard@sasktel.net

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