International Trade Minister Chrystia Freeland put Canada’s signature on the long negotiated Trans-Pacific Partnership trade deal in New Zealand the other day, assuring the 11 other countries involved that although the current federal government had almost nothing to do with negotiating the deal, Canada remains nonetheless very pro-free trade and committed to bringing the text home for eventual ratification.
In an “open letter” to Canadians written in advance of the deal’s signing, Freeland assures us that signing the deal is not necessarily an endorsement, but just a way of remaining “at the table with the other TPP countries” while its merits are debated over the next couple years.
Meanwhile, ex-Research In Motion co-CEO Jim Balsillie has been sounding the alarm on Canada’s behalf, writing recently in a Globe & Mail op-ed, “We are signing up future generations to an economic framework that indefinitely locks in our self-imposed competitive disadvantages.”
He continues, asserting that the “TPP needs to be assessed not for its legal purity or alignment to U.S. laws, but for the economic impacts colonial IP policies have on Canada.”
Colonial? No, this is not your graduate seminar in Marxist Intersectionality talking. It’s Jim Balsillie, echoing somewhat the language of the anti-free trade campaigns of the late 1980s.
Except that Balsillie isn’t a parochial or protectionist fear monger. He built a global multi-national technology company, essentially creating the smartphone market, only to watch that company fail spectacularly in the wake of the iPhone.
On the grounds that we already have 14 bilateral free trade agreements which already cover most of the needs of the Canadian economy, Balsillie is suggesting that the TPP will not only do nothing to advance Canada’s interests, but will also further deepen our existing disadvantage.
Canadians are perhaps used to this idea of a “competitive disadvantage” when compared with the United States, at least in the realms of business innovation and watchable television.
Balsillie, very publicly in his new role as advocate for Canada’s innovation and tech sector, has been raising a lot of somewhat counter-intuitive points lately, given his capitalist credentials.
Namely, on a theoretically level playing field, shouldn’t Canadian entrepreneurs be able to succeed no matter where they are? Or is the deck stacked against them? Isn’t saying no to TPP a little protectionist, at least coming out of the mouth of one of Canada’s preeminent capitalists?
“We are signing up future generations to an economic framework that indefinitely locks in our self-imposed competitive disadvantages.” – Jim Balsillie
On CBC Radio’s “The Current” this morning, Balsillie sums up Canada’s failure to capitalize on innovation as at least partly self-inflicted.
“We’re very smart. We’re very resourceful,” he says, “We just don’t know how to make money.”
Citing the fact that Canada has systematically, for the past 40 years, blindly hewed to a 19-century economic model that privileges tangible assets sprinkled with a bit of mid-20th century manufacturing prowess, Balsillie asserts that the country’s ad hoc approach to innovation and technology has set us up for failure in the global digital economy.
Talking on CBC radio this morning, he also points to an alarming fact concerning the TPP, also detailed in a New Yorker article called “Silicon Valley’s Big TPP Win”, that the agreement “was written in the U.S., an intense on-going collaboration between their chief negotiator and their main innovators. For six years, there was not one conversation between our lead innovators and our negotiators.”
So while the United States, sensibly, consulted closely with their tech leaders during the writing of the deal, the Canadian government of the day treated it as just another free trade deal, fine for shipping out tangible goods but not at all concerned with helping Canada’s innovators.
From Balsillie’s perspective, Canada has treated its innovation economy the same as its traditional economy, with the added strategy of what he calls “spray and pray”, whereby the government flings a bit of grant money at innovators and then hopes that they can work things out for themselves.
The United States by contrast has moved from a situation in which intangible assets made up one-sixth of the value of S&P 500 companies in 1975 to five-sixths in 2015.
In his 2014 State of the Union address, President Barack Obama said, “We know that the nation that goes all-in on innovation today will own the global economy tomorrow.”
Americans are secure in that conviction today because they’ve been at it for over 40 years now, paying special attention to research and development, innovation, patent portfolios, and intellectual property rights.
Canada, meanwhile, has spent the past 40-plus years selling beef, oil, lumber, crops, and generally living out a 19th century heritage minute version of an economy, while manufacturing moved to lower-cost jurisdictions in Mexico, Peru and Vietnam and intellectual property is swallowed whole by companies in nations that take intangible goods seriously.
“What the design of the TPP is, if you go through the key chapters, it’s basically written in a way to advantage those who have pre-existing positions,” says Balsillie on CBC radio. “So if you’re Japanese, or you’re American, this is a really good deal, because America ships $3.5 trillion a year of intellectual property and 30% of their people work in the innovation economy. So it’s a way for the rich to get richer.”
Balsillie has watched the United States, Germany, Japan, and Scandinavian countries, among others, control the conversation through the vigorous protection of their intellectual assets and generally tilting the field of play to favour themselves, which has seen the explosion of the growth of the digital economy that we now enjoy the fruits of, but that Canada is uniquely ill-equipped to participate in.
While the Office of the U.S. Trade Representative heralds the TPP as a “Made in America” solution and “the first agreement that addresses the global digital economy,” Canada now sits at the table negotiating from a position of weakness bolstered by a few decades of apparent unwillingness to give Canada’s innovation economy the tools it needs to compete in the 21st century.
That position of weakness is evident in the fact that BlackBerry is the sole Canadian company named in the Intellectual Property Owners Association’s most recent ranking of “Top 300 Organizations Granted U.S. Patents”, and that UBC is listed in 78th place in their “Top 100 Worldwide Universities Granted U.S. Utility Patents” with 29 patents granted, compared to the University of California’s 453.
“We’re very smart. We’re very resourceful,” he says, “We just don’t know how to make money.” – Jim Balsillie
If Balsillie had anything to do with shaping Canada’s innovation future, what would he suggest?
“We should be teaching how to commercialize in a global economy,” he said on CBC radio this morning. “We should design incentives in our post-secondary research institutions. We should have performance accountability to our incubators. We should be having collaboration frameworks between our business innovators and our government.”
Education? Incentives? Performance accountability for start-up incubators? Collaboration frameworks?
All this rather flies in the face of the ethos of start-up culture, largely a creation of Silicon Valley, that basically treats government as a “gatekeeper” standing in the way of the free spinning up of ideas with cream rising naturally to the top.
If you’re been paying attention to the rise of start-up culture at all, you’ll have noticed the basic hostility towards any hint of institutional help.
But you’ll also have noticed that while the philosophy of Silicon Valley has spread around the world, Silicon Valley itself is very cosy with the idea of working with legislators to advance their interests.
Not to suggest that the libertarian notion of a free market economy based on merit alone is essentially an adolescent fantasy, but Balsillie’s experience in the international marketplace pretty convincingly casts doubt on the old American Horatio Alger narrative.
Even the highest-profile champions of laissez-faire capitalism can admit doubt in the face of reality.
Alan Greenspan, testifying before a House oversight committee in the wake of the 2008 financial collapse admitted, “I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms.”
In speaking out so publicly against TPP, Balsillie seems to be making the case that Canada’s own self-interest would be best served by stepping away from this agreement, a position that in the past might have seemed isolationist or protectionist.
Balsillie writes in the Globe & Mail, speaking as someone who’s been there, that “TPP will further solidify U.S. hegemony over global technology standard-setting because harmonization entails adopting what the large sophisticated market decides. These standards entrench the profit-making abilities of companies who own the IP embedded in them.”
Hegemony! Let’s take a second to pause and drink in the sheer weirdness of one of Canada’s foremost capitalists advising us against signing an international trade deal while using language more typically associated with post-colonial academics.