The World Trade Organiziation Decision Against Technology Partnerships Canada: Implications for Disarmament.

The interim ruling this month by the World Trade Organization against Technology Partnerships Canada (TPC) is the culmination of a game of chicken played between two competitors in the lucrative regional jet market: Canada's Bombardier and Brazil's Embraer.

At the urging of Bombardier, last summer the Canadian Government launched a challenge at the WTO against Brazil's Pro-ex program, claiming it unfairly subsidizes exports of Embraer's regional jets. Brazil fought back and launched its own claim against the Canadian government's TPC and other programs which give long-term loans with loose repayment requirements to aerospace and defence corporations, thereby subsidizing exports of Bombardier's regional jets.

Interim decisions by the two WTO panels ruled that both governments unfairly subsidized exports, but business analysts suggest that the harshest criticism was reserved for Canada's Technology Partnership Canada.

It's a fact that every government with aerospace htmlirations subsidizes its industry. Subsidies take many forms: military spending and government procurement, research and development grants, tax credits, foreign investment performance requirements, regional development programs, public-private joint ventures, and export financing programs.

What are the implications for disarmament_

While it may be satisfying to see an international panel rule against corporate subsidies, especially subsidies destined in many cases for the production of weapons, it still needs to be determined whether the decision is beneficial to the goal of disarmament.

On the one hand, the ruling could be the beginning of a world-wide reduction in government subsidies to aerospace and defence corporations if governments challenge each other's industrial programs.

But on the other hand, the decision could be the end of industrial programs which have non-military mandates or promote the conversion of military to civilian production. Instead, this ruling could encourage governments to pursue economic and industrial development through internationally sanctioned military spending.

This decision by the WTO, to be properly understood, needs to be viewed in the larger context of globalization and the international climate of trade and investment liberalization. The WTO, like NAFTA and even the MAI, is a tool to promote unfettered capitalism and to reduce the role of governments in the economy.

During the Cold War, the government played a direct role within the aerospace and defence industry. The Defence Industry Productivity Program (DIPP) was Canada's flagship industrial program, providing billions of dollars in grants to aerospace and defence corporations to develop advanced technology - especially weapons.

With the end of the Cold War, the program was replaced by the smaller Technology Partnerships Canada program to fund many of the same corporations which benefited from DIPP, but eligibility requirements for funding were expanded to include non-military and other promising high-tech industries as well.

One could argue that Technology Partnerships Canada is simply a job creation program which uses subsidies to promote domestic corporations and to lure transnational corporations to open plants in Canada, while encouraging the conversion of military industries to dual-use and commercial production.

However, it could also be argued that TPC is a $300 million a year corporate welfare program which unfairly hands public funds over to profitable corporations. Since TPC added a few non-military categories to the defunct DIPP, the government can be accused of using TPC to hide the fact that it continues to fund the development of weapons and military technology.

But in the eyes of the institutions promoting globalization such as the WTO, Technology Partnerships Canada is an unwelcome interference in the free market by a government, is contrary to the principles of liberalized trade and investment, and therefore must be sacrificed.

There is a danger that the government, in order to satisfy the demands of the WTO while still subsidizing the aerospace industry, will revert back to the old Defence Industry Productivity Program and focus its industrial subsidies exclusively on weapons and military technology.

National security, and hence military spending, is the sacred cow of globalization. Consistently within international trade and investment agreements, government programs for the purpose of the production of arms for national security are exempted from the demands of liberalization and privatization.

The result could be that Canada and other countries will use military spending to "trade proof" industrial and economic development programs. Over the long term, this trend will have many negative effects, including the promotion of the arms industry and the arms trade, the militarization of social programs by governments trying to achieve social goals through military spending, and significantly increase the economic and political influence of the military-corporate complex in general.

Therefore, this decision by the WTO is of concern for two reasons:

It rules against the principle of government involvement in the economy, and
By ruling against non-military industrial programs while exempting military programs, it encourages governments to pursue economic goals through military spending.

The protection of war preparations accorded by international trade and investment agreements will promote war economies over civilian economies. To pursue a disarmament agenda, governments must be able to intervene in the economy in non-military ways to assist in the conversion of military industries to economically productive, civilian industries.

Therefore, the Canadian government should use this decision to expose the fact that governments are using military spending to covertly subsidize aerospace and defence corporations. This momentum could be carried through to the Millenium Round of the WTO negotiations in November where members could challenge the obscene military budgets of the U.S. and other major offenders such as Britain and France.

Clearly, a WTO decision which favours military spending over non-military spending cannot be left to stand. Instead, the United Nations needs to establish a principle which recognizes the right of governments to participate in the economy in the interests of its citizens, while at the same time creating a multilateral agreement to reduce global military spending, thereby starving the arms trade and demilitarizing the global economy.

February 1999