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Two Worlds Are Colliding: Social Policy Is Coming Up Against a Survival-of-The-Fittest Strategy

Editor's Note: Editor's Note: The following article is reprinted from the Hamilton Spectator, June 23, 2003.

There is a deep-seated clash of cultures between the worlds of trade policy and social policy. Trade policy is driven by the demand for economic growth and the interest of multinational corporations, where the competitive market rules supreme and the biggest and strongest tend to win.

Social policy seeks to even out inequalities, support those who have trouble getting their needs met by the market, and ensure services for all. It often does that by supporting non-profit groups responsive to the needs of the communities they serve.

The world of struggling non-profits may seem far removed from the world of international trade deals. Yet social services are affected by the North American Free Trade Agreement and even more so by the ongoing negotiation of the Free Trade Agreement of the Americas (FTAA) and General Agreement on Trade in Services (GATS.)

The danger is that public policy measures to support non-profit services could be considered, under the trade agreements, to unfairly affect the ability of foreign-owned firms to establish operations in Canada.

U.S. and other transnational corporations see social services as a new world of opportunities for profit, and trade rules as the means to gain entry.

They are likely to argue that, to have equal opportunity to provide services to Canadian governments and consumers, they should benefit from the same government support measures as the non-profit sector.

Such measures now include subsidies and tax supports; exclusive and preferential contracting regimes; and effective exclusion of commercial providers from social services markets.

For example, several provinces will not contract for-profit corporations to provide long-term or home care services for the elderly -- and the evidence clearly shows this is the best policy in terms of quality of care.

The not-for-profit sector includes thousands of social agencies which operate at arms length from the state, but are funded and supported by governments to help meet our social needs. They include providers of child care and elder care services, residential and community-based services, and services to people with special needs such as persons with disabilities and women fleeing domestic violence.

The significance of a strong non-profit sector for social development has been formally recognized by the federal government through the Voluntary Sector Initiative.

In some provinces, notably Quebec, governments have seen non-profits as key partners for the delivery of high quality social services.

In other provinces, notably Ontario, funding for non-profits has been cut deeply under a privatization agenda. The federal government has publicly committed to safeguard our ability to support, regulate and deliver social services as we see fit.

But these safeguards tend only to apply in sectors purely not for profit -- which is not necessarily the case for the social service sector.

In the context of privatization of social services, existing safeguards may not be adequate protection for a government that decides to shift direction by expanding not-for-profit delivery or by forging partnerships with the for-profit sector.

NAFTA has shown us that trade obligations have unintended consequences, and that trade panels favour very limited exceptions for public programs.

And the current NAFTA exemption for social services -- delivered for a public purpose -- is vague and unlikely to count for much if private for-profit delivery becomes entrenched.

Yet this is precisely what is happening in the delivery of home care and long term care services for the elderly.

In our study, we present a detailed analysis of what might happen if a future Ontario government tried to establish a Quebec-style partnership of public and not-for-profit providers in home care, excluding the commercial sector.

A successful NAFTA challenge from commercial providers could significantly increase the cost to Ontario taxpayers. More insidiously, the threat of such a challenge could deter future governments from pursuing any approach that favours non-profits over existing commercial providers.

Our study also uncovers prospective dangers from developments now being considered at the GATS and FTAA negotiating tables. Government preferences to not-for-profits in the tendering of contracts could be threatened by GATS provisions on national treatment, market access and domestic regulation if social services were to be scheduled by Canada, or by possible changes to the WTO Agreement on Government Procurement, or by FTAA procurement provisions.

Grants and contributions to not-for- profits could be undercut by GATS or FTAA rules on subsidies.

The dangers of a conflict between social policy and trade policy are real, unless the federal government maintains, clarifies and strengthens the current reservations and exclusions for social policy purposes.

Let us hope that International Trade Minister Pierre Pettigrew and his officials are listening, before the two worlds of policy collide.

Andrew Jackson and Matthew Sanger wrote the book, When Worlds Collide: Implications of International Trade and Investment Agreements for Non-Profit Social Services, published by the Canadian Council on Social Development and Canadian Centre for Policy Alternatives.