The Observer XV.II - Blurred Lines: The Intersection of Politics and Economics

Blurred Lines:

The Intersection

Of Politics & Economics

Letter from the

Editor Editor Dear Readers,

Ohsada discusses potential solutions to the current waste crisis. Shifting into the Politics section, Sophie Huang takes a close look at AMLO’s plan to decentralize the Mexican government, while Anshul Pattoo writes on the state of the United States–Mexico–Canada Agreement. Aidan Chalmers covers the recent win by the Coalition Avenir Quebec (CAQ) in October’s election, and Ethan Mitchell’s article explores the current political turmoil plaguing Brazil. We end the issue with two articles on a particularly controversial topic - marijuana.

Annie Xie provides an overview of the Cannabis Act and its subsequent effects in Canada, and Sean Stead-Fescer discusses the potential of marijuana tourism in light of recent legalization.

I am pleased to welcome you to Issue II of Volume XV of The Observer. In this issue, we attempt to remedy the animosity that exists between international politics and economics in which state interests and the nation state are too often pit against each other. Our 13 articles take a journalistic approach to systematic economic analyses of government and institutional choices and failures, as our writers demonstrate that political decision-making and economic decision-making are not mutually exclusive.

Instead, both fields are intertwined within the same set of global problems - resulting in a sometimes complicated matter of “Blurred Lines”.

No issue can be published alone, and Issue XV.II would not be possible without the hard work of the editorial team and our talented team of staff writers. I would also like to extend my gratitude to the lovely Art Vijayaratnam for once again blessing us with her amazing cover art and layout design. We have only two issues left of Volume XV and I strongly encourage you to consider writing for the next issue.

We begin our issue by looking at topics within Business and Economics. David Lazzam discusses the lessons learned from the Lehman Brother’s bankruptcy 10 years ago, while MaeLin DeLange looks at the stagnation of multinational corporations (MNCs) and the rise of local firms. We then have Sinead O’Hara exploring corporate social responsibility and the role of corporations in disaster relief. The section ends with Harry Fang’s article about the implications of China’s Belt and Road Initiative (BRI).

Happy reading!

You can follow us on Facebook (The Observer Queen’s University) or Instagram (theobserver. qiaa) for any updates. As well, please do not hesitate to email contact@theobserver-qiaa.org should you have any remarks or concerns.

Sincerely,

We then delve into two articles that explore environmental issues. Angela Feng provides an insightful critique of REDD+ and Sari 2 ISSUE XV.II

Monique Sereneo Editor-in-Chief Applied Economics ‘19

Table of Contents Business & Economics

5

The Lessons Not Yet Learned from Lehman Brothers’ Bankruptcy

21

Rising Isolationist Policies and The Future of MNCs Whose Job Is It? The Role of Government Versus Corporate Philanthropy in Crisis Relief

Harry Fang

11 The Carrot and the Stick

Environment Angela Feng

14

A Critical Analysis of REDD+

Sari Ohsada

16 Recycling the Waste Crisis

USMCA Negotiations and the Precarious State of the USCanada Relationship

Aidan Chalmers

Sinead O’Hara

9

AMLO’s Project: Decentralization in Mexico City

Anshul Pattoo

Mae-Lin DeLange

8

18

Sophie Huang

19

David Lazzam

6

Politics

13

21 The Election of the CAQ

Ethan Mitchell

Economic Roots of Brazil’s 25 The Political Turmoil

Special Topic: Marijuana

27

Annie Xie

the High: The Cannabis 28 Riding Act’s Effects on Canada

Sean Stead-Fescer

30 Marijuana Tourism in Canada

3

meet Our Team Print Editorial Team Monique Sereneo Art Vijayaratnam Alexander Bernst Harrison Giovannetti Mae-Lin DeLange Jacob Ahearn David Lazzam

Editor-in-Chief Layout editor assistant editor assistant editor assistant editor assistant editor assistant editor

Staff Writers for this Issue Aidan Chalmers Angela Feng Annie Xie Anshul Pattoo Ethan Mitchell Harry Fang Sari Ohsada Sean Stead-Fescer Sinead O’Hara Sophie Huang The views expressed by the authors are their own, and do not necessarily reflect those of the editorial board or of the Queen’s International Affairs Association.

4 ISSUE XV.II

Business and Economics

The Lessons Not Yet Learned from Lehman Brothers’ Bankruptcy By: David Lazzam

Global markets plummeted ten years ago when Lehman Brothers Holdings Inc., one of the largest Wall Street investment banks at the time, declared bankruptcy on September 15th, 2008.

It was and remains the single largest bankruptcy in US history, with $639 billion in assets, and its Chapter 11 filing resulting in the largest drop in the DOW since 9/11. Over a decade later, Lehman Brothers stands as a lesson on the dangers of greed let loose in the open market and, perhaps, a warning of the lack of change that has occurred since the Great Recession.

As with the 2008 market crash, Lehman Brothers’ troubles centred around irresponsibly aggressive lending and borrowing practices in a market of subprime housing mortgages. Lehman had a leverage ratio (which measures assets/debt against owner equity) of anywhere between 3060:1 over various periods, meaning that a small shift in their assets would prove catastrophic as they did not possess the equity to cover it. And

Lehman’s assets were anything other than secure - the subprime mortgage market relied on dealing heavily in mortgages with low safety ratings and therefore high default levels. As the default levels rose, Lehman came under more and more risk, until cracks in the housing market finally sent the bank’s stock spiralling downwards.

Lehman Brothers, unlike Bear Stearns, who faced a similar fate six months earlier, was not saved by the US government or the other big banks. As shares dropped further and further and debt levels grew exponentially higher, Lehman’s last hope was some form of relief: in the form of a liquidity injection from the government that would temporarily right the ship, as was the case with Bear Stearns prior to it being bought by JP Morgan; or a buyout from another large bank.

When a deal with the Korea Development Bank fell through, Lehman was left scrambling for a rescuer. The bank ultimately had too many toxic assets to sell off, and in light of public sentiments

6 ISSUE XV.II

at the time, US Treasury Secretary Hank Paulson made it clear that there would be no help from the government. In Paulson’s words, “not a penny” would be given by Washington. And so it was that Lehman Brothers, a pillar of Wall Street, was left to fall, bringing the world’s markets down with it.

Since the collapse of Lehman Brothers, changes have been implemented to prevent a banking crisis like the one that occurred in 2008.

Most notably, in 2010 the Obama Administration passed the Dodd–Frank Wall Street Reform and Consumer Protection Act, which implemented several measures to decrease risk and bolster regulations. However, as we look back on the mistakes of the Lehman Brothers, the question is worth asking: have we learned our lesson?

It is true that banks have higher reserves of capital, and the leashes placed upon them are much shorter. However, it is not inconceivable to argue that the world has yet to confront the attitudes and policies that led to the 2008 meltdown, and which could lead to another catastrophe in the not-too-distant future. To begin with, the Trump Administration passed legislation in early 2018 that rolled back parts of Dodd-Frank, most notably by raising the size at which banks are subjected to more intensive forms of regulation and oversight from $50 to $250 billion in assets. While many, including Barney Frank, one of the creators of Dodd-Frank, agreed that the $50 billion threshold was too low, the 2018 legislation was met with significant criticism over the extent to which it relaxed regulatory bodies’ grip on the market. In response to the bill being passed, Frank stated that it would take only two or three newly freed-up institutions failing to put the market in “Lehman Brothers territory”- an ominous prospect to be sure.

Even outside of the conversation on banking policy, the story of Lehman Brothers demonstrates the ways in which an overzealous devotion to free market principles and profit margins continues to affect the world’s trajectory. For one, the banking collapse still impacts the lives of everyday people today, something that is rarely mentioned as discussions on deregulation and corporate tax rates continue. Studies suggest that Americans alone will lose an average of $70,000 in lifetime income because of the 2008

recession, and public debt in advanced global economies rose by 30% in its aftermath. In a case like Lehman’s, especially with the distance ten years affords, causes and effects can be reduced to numbers and industry terms that fail to capture the impact of investment banks’ irresponsibility. The indisputable fact remains, however, that the subprime mortgage market failure hurt many, many people. So while a purely economics-based discussion of the Lehman case is worth having to better prevent such a disaster from occuring in the future, a more sociological perspective allows us to understand how betting on short-term results alone impacts not only the international economy, but the international community as well.

Even outside of the conversation on banking policy, the story of Lehman Brothers demonstrates the ways in which an overzealous devotion to free market principles and profit margins continues to affect the world’s trajectory.

As the world continues to face new challenges, it becomes easy to forget the ones that have passed. To do so, however, is to risk repeating the mistakes that caused them. The Lehman Brothers bankruptcy can teach us about subprime mortgages, leverage ratios, and the viability of last-ditch buyout efforts. However, it also shows us that shortsighted, short-term thinking is a dangerous way to handle the international economy and in turn, the livelihood of countless people.

So while Lehman Brothers Holdings Inc. may be consigned to the graveyard of history, current topics of discussion ranging from climate change to car tariffs make it imperative we remember that the avarice and irresponsibility of a handful of individuals led to a catastrophic economic failure, but more than that, a great deal of human pain.

7

Rising Isolationist Policies and The Future of MNCs By: Mae-Lin DeLange

Regarded as the driving force for global integration, multinational corporations (MNCs) have recently been experiencing certain levels of stagnation. A multinational corporation is a large business which has some form of facilities or assets in at least one other country than its home country. MNCs are centrally controlled by their head office where the global management of their business practices is conducted.

They can have portions of their supply chains in a different country, whether that refers to production, distribution, or subsidiaries. Generally, a multinational corporation benefits from cheaper labour, a broader market base, tax cuts, and creates more employment opportunities. Consumers have benefited from the efficient access to global products and services provided by multinationals. However, local firms have begun to financially outperform MNCs. Could they simply have grown so big that future growth can no longer be exponential? Or, have local firms gotten smarter and more specialized?

Major brands, such as Apple, are constantly under global scrutiny to assess whether their business practices and supply chains measure up to certain ethical standards. If any ethical issues arise, such as the poor labour conditions at a manufacturer’s factory location, major companies like Apple will still face criticism for not demonstrating sufficient corporate responsi-

bility. As a result, it is not unusual for brands to bring their supply chain management in-house in order to enhance control. This move is particularly supported by US President Donald Trump, who accuses these large global firms of outsourcing both jobs and factories. He is actively providing protectionist incentives to encourage American MNCs to keep their business dealings within America. These incentives include lower taxes, increased border chargers, and rewriting trade deals. This focus on protectionism forces many major companies to restructure in order to benefit from these policies - whether that means downsizing or integrating more heavily into the local markets where their firm operates. An example of a large multinational reacting to the changing political landscape is General Electric, who is ‘localizing’ a great deal of its business areas. The MNC is divvying up its supply chains, production, jobs, and tax operations into specialized regional or national units. With major multinational brands like McDonald’s and Coca-Cola originating from the US, these policies will have a significant impact on global commerce.

Primarily, the reason that global firms experienced such a great deal of success in the past was through their financial success. However, the profits of MNCs have dropped by 25 percent between 2012 and 2017. Globally, multinationals previously accounted for 35 percent of global profits, yet this has decreased to 30 percent within the last decade. It can be argued that global reach has become a corporate burden, rather than an asset. In China, where their competitive advantage was historically in their low cost of labour, factory wages are now rising. Furthermore, local companies are becoming more sophisticated and capable of innovation.

The impact of multinational corporations scaling back is difficult to predict. However, while firm localization will not likely result in the creation of as many jobs as claimed by President Trump, the decreased integration of multinationals will result in rising prices, decreased competition, and lower levels of innovation. In the space left

by MNCs, many local firms can establish themselves and cater to consumer desires. Nevertheless, these firms will be challenged to achieve the same levels of impact as the global giants, the multinational corporations.

8 ISSUE XV.II

Whose Job Is It? The Role of Government Versus Corporate Philanthropy in Crisis Relief By: Sinead O’Hara

The international economy appears to be at a crossroads. It is becoming increasingly clear that there needs to be a big change in the way we do business, one that considers the environments and the communities they operate within.

Try as they might, this shift isn’t coming from our governments, but from corporations. Corporations seems to be the newest agents of change that are impacting the world positively. Increased assistance from corporations in relief efforts is especially altering the way businesses are viewed and business models are changing to incorporate such efforts. There is no questioning that these companies have both the money and the power to do so. In a time crippled by severe weather crises, what responsibility do corporations have in providing relief? Are corporations usurping the government role of furthering and protecting the common good? Is the line between corporate and government, or even the public and private sectors, becoming that blurred?

Corporations have various initiatives, usually under the branch of Corporate Social Responsibility (CSR). Corporate philanthropy is usually under CSR, which generally consists of donations in the form of dollar amounts, use of their facilities, or time offered by the company’s employees. When a company agrees to follow CSR rules and codes of conduct, it is understood that these are merely guidelines. The rules are crafted by corporations themselves and their guidelines are self-regulatory, meaning they hold little weight in the legal system. This loophole gives corporations the power to make generous statements, while governments must be conservative with the promises they make.

After Hurricane Maria devastated Puerto Rico in September 2017, little to no action was taken by the United States government. There was public outrage over the mass death toll and inaction of the Trump administration. Tesla’s CEO Elon Musk was exemplary in his corporate philanthropy when he offered to help Puerto Ri-

co’s electricity crisis with new solar power-based Powerwall battery packs. A week after the storm, Powerwall and Tesla’s employees arrived in Puerto Rico. One of the first places to receive power was a children’s hospital, Hospital del Niño. Tesla’s action fast-tracked the restoration of power to Puerto Rico.

Originally, a small company called Whitefish Energy received the $300 million no-bid contract to restore Puerto Rico’s electric grid. Whitefish Energy only had two employees when the hurricane devastated the island, and the company seemed like an unlikely candidate for the project. The case is now under investigation by the FBI; the CEO is an acquaintance of the White House secretary, and an investment firm that is a donor to Trump’s presidential campaign owns a major stake in the Whitefish Energy. The company was ousted weeks after beginning restoration

by Puerto Rico Electric Power Authority, not for the ties the company has, but due to the expensive rates and slow progress.

According to an official after-action report released in July, the Federal Emergency Management Agency (FEMA) acknowledge that they were unable to provide Puerto Rico with sufficient help in the wake of the crisis. FEMA was an important agent in the response to Hurricane Maria, and their failure led to further detrimental effects on Puerto Rico. The Federal Coordinating Officer, Michael Byrne, who is leading FEMA’s recovery efforts said, “[this] is a massive job and it has taken a massive effort by everybody: the Government of Puerto and the municipalities, federal agencies, voluntary and faith-based organizations and the private sector”. While the private sector has commonly been involved in emergency response and restoration, their increased voluntary participation is a recent development. In this instance, the participation of Tesla provided much-needed, concrete help when the government provided none.

Mitigating the damage quickly and efficiently is of the utmost importance, especially during the early stages of crisis relief. From an 9

omies. The problem most often is mobilizing and financing relief efforts. With the increased frequency of natural disasters, it is become increasingly clear that businesses must not only consider the environment, but also integrate methods of restoration and sustainability. Corporations have the financial means to help in crises and they have the power to create change. Perhaps the role of government in such efforts is complicated because for some corporations, their assistance is also a matter of cleaning up their own mess. economic perspective, the longer the state of In navigating this new development, it is importemergency lasts, the longer it will take for the ant to critique it ruthlessly. Is this a new way of economy to recover. It is in the corporation’s best business? Or is this leading down the dangerous interest to aid in the recuperation of these econ- route of the commodification of crises?

From an economic perspective, the longer the state of emergency lasts, the longer it will take for the economy to recover. It is in the corporation’s best interest to aid in the recuperation of these economies.

10 ISSUE XV.II

The Carrot and the Stick By: Harry Fang

China’s Belt and Road Initiative (BRI), a massive infrastructure investment project designed to strengthen China’s ties not only with the traditional powers in Europe, but also the emerging markets in the Middle East and Africa, has managed to catch the eyes of the world. The investment project is perhaps the most ambitious since the Marshall Plan that rebuilt Europe after the fires of World War II - aiming to build several new “trade corridors” both overland and over the seas with a focus on transporting energy, material, and labour. The sea route is often referred to as the “21st Century Maritime Silk Road,” a name which may sound familiar to some, but is often but a distant note in history. For those that built it, the “Silk Road” was a name that evoked endless visions of prosperity and wonder.

The Silk Road was an ancient trade network consisting of a multitude of different trade routes connecting the East and the West. It was the core method through which civilizations from both ends of Eurasia interacted economically and culturally. The Silk Road drew its name from the lucrative silk trade carried out through it, beginning during the Han Dynasty of China (207 BCE – 220 CE). When Rome defeated their greatest rival Carthage in the Third Punic War, China launched major efforts to open up trade corridors through Central Asia. The maritime portion of the Silk Road, on the other hand, was respon-

sible for connecting China with the Indian, Arab, and East African states. Despite their proximity, the ancient Chinese and Indian civilizations had little contact overland, primarily due to the Tibetan Plateau. In a modern world, where control of the oceans often indicates dominance in a region, the impact of a revived Maritime Silk Road (MSR) cannot be understated.

It seems clear that China’s ambition for the 21st century is to expand to the seas.

The term “21st Century Maritime Silk Road” was first used in a speech by Xi Jin Ping to the Indonesian parliament in late 2013. Xi Jin Ping referenced the prosperity brought by the original Silk Road as a model for the maritime portion of the BRI. This portion of the overall initiative was to encompass Southeast Asia, the Middle East, and much of Eastern Africa. Much of the infrastructure will be funded by loans from the Asia Infrastructure Investment Bank - projects which are proposed to cost $8 trillion USD. While such an injection of loans may be welcoming for some, many Western and Southeast Asians see it as a way to gain political leverage over the Global South, a form of neocolonialism.

It seems clear that China’s ambition for 11

the 21st century is to expand to the seas. China noy been a major maritime power since its defeat in the Opium Wars. However, recent trends indicate a clear intention to change that fact. In the last 5 to 10 years, the naval wing of the People’s Liberation Army saw a massive injection into both research and development, and ship building efforts. This led to a period of intense growth for the Chinese navy in which it rapidly eclipsed the Japanese navy - once considered its equal or superior. The military development was matched by the political and economic growth, as the same period also saw Chinese expansions in the South China Sea and other hotly contested sea zones. Now, with the MSR project, the intention to expand beyond Asia is clear.

There are two key parts to the MSR project to focus on in order to understand the implications of the project: the Middle East and India.

Strategically, the Middle East is the focus of the world, bar none - an unsurprising fact as the largest producing region of natural gas, the strategic asset clamored by all. Countless wars, coups, and political struggles racked the region as the great powers struggled for dominance.

China, however, is rarely mentioned when proxy conflicts occur in the region, as Russia and the

US were the traditional powers. As the MSR connects China and states deep in the Persian Gulf and the Red Sea, it indicates a willingness to enter the Middle East power struggle.

On the part of India, the intention of the MSR may also be more dangerous than meets the eye. Many believe in a strategy to navally encircle India, commonly referred to as the “String of Pearls” strategy. It is believed that by befriending, coercing, or otherwise gaining the backing of a series of states from Malaysia, to Sri Lanka, to Gulf States, China will be able to form a “string” of military and commercial outposts surrounding India. This would effectively place the entirety of the Indian coastline under threat as well as significantly reduce the capability of the Indian Navy. While many dismiss this as conspiracy, the potential threat will always loom.

At the end of the day, the question remains of whether the BRI is an economic or political play. The answer is most likely somewhere in the middle. The developing states will likely welcome the prosperity brought by the investment, whereas China’s strategic rivals will fear its growing influence. Despite the looming question, the message is clear: China is going beyond its borders and into the world.

12 ISSUE XV.II

Environment

A Critical Analysis of REDD+ By: Angela Feng

The unsustainable growth demanded by the global economy have resulted in a long list of irreversible environmental degradations, one of which is deforestation. Every minute, 36 football fields’ worth of trees are lost as a result of deforestation. This is devastating for the 1 billion rural people and 80 percent of species dependent on forests for survival. In addition, deforestation eliminates the carbon absorbing function of trees - responsible for significantly reducing carbon concentrations in the atmosphere and preventing temperature increases. One-fourth of the carbon emitted from human activities over the past four decades have been absorbed by forests. Ultimately, deforestation only adds to carbon emissions; carbon released from deforestation is responsible for 11 percent of global greenhouse gas emissions, second only to the energy sector.

In response to this deforestation crisis,

parties to the United Nations Framework Convention on Climate Change (UNFCCC) have developed REDD+, an initiative aimed at conserving forests and financing sustainable projects in the world. While the programme offers short term solutions, however, it fails to address the root causes of climate change as well as the unbalanced power relations within deforestation.

REDD+ stands for “Reducing Emissions from Deforestation and forest Degradation”. The UN-run initiative is designed to incentivize countries with high deforestation to participate in climate change mitigation in the forestry sector by reducing carbon emissions from deforestation and forest degradation, conserving forest carbon stocks, manage forests sustainably, and enhancing forest carbon stocks. REDD+ is a voluntary carbon offset project designed to address forest degradation by quantifying the economic value of forests. Carbon payments are made to local and regional actors as economic incentives to conserve forests and adhere to their nation’s strategic plan.

The United Nations Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (UN-REDD Programme) is a complementary multilateral body to REDD+. UN–REDD partners with deforestation intensive countries such as Indonesia, Cambodia, and Ethiopia, providing country-based advisory and technical support throughout the 3 stages of REDD+: readiness, demonstration, and implementation.

Countries design strategic plans to implement REDD+ policies and initiatives. Such action plans are proposed and assessed by UN–REDD to ensure UNFCCC REDD+ requirements are met. Actions are then implemented at the national level and countries receive results-based payments once their results are measured, reported, and verified.

Through promoting sustainable forest management, REDD+ facilitates water regulation, soil protection, climate regulation and biodiversity conservation. The programme offers a variety of social, environmental, and economic benefits to forest communities in developing countries.

Additionally, the programme also places a heavy emphasis on stakeholder engagement from forest dependent communities, indigenous groups,

14 ISSUE XV.II

civil society, government, and businesses to achieve equal partnerships, consensus, and inclusive policies that will make REDD+ transformations accessible and enduring.

Despite the benefits of REDD+, the programme ignores the root causes of carbon emissions and deforestation. REDD+ is founded on the notion of carbon offsets. A carbon offset is a credit for greenhouse gas reductions achieved by one party that can be purchased and used to compensate the emissions of another party. They are typically bought and sold through international brokers, online retailers, and trading platforms.The programme’s reliance on carbon credits is not a constructive solution as it promotes carbon offsetting rather than reduction.

Privatizing carbon stored in forests and creating a financial value for forest ecoservices leaves matters up to the unregulated market of carbon credits. Middle men, such as consultants, development companies, and traders, earn most of the profit from this carbon market while little go to forest communities. More importantly, it gives fossil-fuel dependent industries the opportunity to purchase carbon credits. This allows them to continue polluting and earn profits from conducting business as usual. REDD+ allows high-polluting companies to manoeuvre around reducing their emissions, using the excuse that there is a forest in the Global South that will “offset” their pollution. Thus, although REDD+ countries may report millions of tons of emissions reduced and thousands of forests shared, there is no net change in carbon emissions.Carbon emissions are simply shifted.

There is also a lack of consideration for the social and political implications of assigning economic values to forests. There is potential for serious conflict and opportunities for abuse in REDD+. For example, it worsens the struggle for land rights recognition many Indigenous and forest communities face. The promise of economic gain from forests incentivises governments to take ownership of forests, leaving forest dependent communities with little land access rights.

Consequently, local agents and governments enter into potentially violent conflicts that often lead to the displacement of people and disen-

franchisement of those most affected by forest policies.

Finally, REDD+ fails to address the root causes of deforestation and why partner countries carry the uneven burden of deforestation.

The underlying causes of deforestation in partner countries is resource and labour extraction to fulfill the demand for fuel, meat, and fibre among developed countries such as the United States and Canada. Unsustainable agricultural expansion is the foremost driver for 80 percent of global deforestation, with infrastructure, mining, and urban expansion as other prominent drivers.

Deforestation to create grazing lands for cattle and the production of agricultural commodities such as soy, sugar cane, palm oil, and coconut are clear drivers of such expansion. By 2050, the global demand for food is projected to double, exacerbating the existing pressure on forests.

The consumption of forestry products is also a major driver, as the lumber, pulp, and paper industries make up a $200 billion annual market in the U.S.

REDD+ allows high-polluting companies to manoeuvre around reducing their emissions, using the excuse that there is a forest in the Global South that will “offset” their pollution.

Although REDD+ encourages the national protection of forests, it introduces problems.

REDD+ should not be emphasizing the responsibility of the Global South when the drivers of deforestation are the consumers and industry of the Global North. Shifting the responsibility of climate change mitigation only excuses polluters from polluting and deepens the inequalities within the global political economy. Global institutions should not rely on market-orientated solutions such as REDD+, but rather seek to reduce pressures on the forests by regulating consumption trends in affluent countries, limiting the unsustainable demands of the human economy, and work alongside forest communities to strengthen their land rights.

15

Recycling the Waste Crisis By: Sari Ohsada “Even trash has become worthless” – Tian Wengui, Chinese recycler on the 2008 global economic crisis, quoted by (Samson, 2017)

For the last 25 years, wealthy developed nations have been shipping waste abroad to Asia, generating a significant export-import recycling industry primarily taking place outside of consumer nations. Recipient countries have benefitted from this flow of recyclables, using them as raw materials within their industries to contribute to economic growth. Conversely, North America, Europe, Japan, and other affluent nations have relied on these waste-recipient countries to take away their trash. But recycling, contrary to popular public belief, is not an economically viable solution, nor is it environmentally or socially-sound. Instead, it is part of an unsustainable and increasingly problematic system.

China is one of the biggest buyers of recyclables.Their recycling industry involves $24bn worth of material every year. However, last January China implemented the National Sword Policy, an attempt to put an end to this unsustainable cycle. Now, waste-exporting countries are no longer permitted to ship away their plastics, used papers, and cardboards to China’s shores if they exceed the 0.5% contamination policy. In other words, China is not accepting low-quality, dirtied, and poorly-sorted recyclables, causing a rift with countries that have relied on this system for more than two decades. Consequently, an overwhelming quantity of value-less and useless recyclables in the Global North have been either stored in recycling centers or left on curbsides. These plastics are estimated to reach up to 111 million tons by 2030. Countries are currently struggling to find ways to discard their nations’ trash, or choosing to deal with it within their own countries - often through landfills or by incineration.

The recycling crisis poses a grand problem for North Americans. On average, North America produces about 4.40 to 4.70 pounds of waste daily. From grocery shopping to replacing old clothing, consumption is deeply embedded in everyday habits and mainstream culture.

While recycling products such as plastic bottles, packaging, or used furniture is an option to mitigate ever-increasing materials in homes, most recycled products ultimately end up in landfills through downcycling. This only results in greater demand for larger landfills or incinerators domestically and abroad, creating an unsustainable climate.

But the current global recycling crisis, as one may think think, is not novel. China has historically implemented stricter import policies on recyclables during the global economic crisis of 2008, as the cost of recycling became more expensive than the profit created by their recycled products. This led to immediate consequences across small communities in the US and Canada that were required to pay for recycle collection services as opposed to being paid to provide recyclable materials to sell abroad. While this experience revealed the stark economic vulnerability of the North American recycling industry, consuming and shipping recyclables abroad still continued.

Recycling seems to be a viable and cre-

On average, North America produces about 4.40 to 4.70 pounds of waste on a daily basis. ative option especially in our high-consumer society. Approximately 700 to 800 million tonnes of the world’s useless waste are transformed back into useful, profitable items each year. Various environmental investments have been made around the recycling industry worldwide. However, we are forgetting that beyond economic costs, there are environmental and social costs as well. Waste-recipient countries have lax environmental and safety regulations which enables Global North waste to be dumped in the backyards of the less wealthy Global South without accounting for environmental and social costs.

16 ISSUE XV.II

As well, the blame is placed on the recycling industry for their inefficient technology and processing methods. Developing countries in particular are frequently blamed for not properly regulating their own informal industries and for allowing environmental degradation and pollution to occur. Even individual consumers in the Global North are blamed for not putting recyclables into proper bins, thus contaminating entire bins. However, who is really to blame?

Truly positioning ourselves away from the unsustainable waste-export regime means addressing the fundamental problem of recycling itself. Continuing to ship recyclables abroad and making recycling systems cleaner, more sorted, and more efficient is not the solution. Reducing our consumption however, will solve the issue.

While we should continue scrutinizing the recycling industry, both home and abroad, as well as interrelated corporations that produce consumer materials, we need to see China’s new policy as an opportunity to shift the system rather than reinforce it. We need to take action on upstream solutions that leads to more reducing and less recycling.

Recycling is not an environmentally-friendly or socio-economically viable solution. Addressing the core issue through policy change at congressional and parliamentary levels could be effective. Implementing new legislation promoting clean production and waste reduction, protecting communities’ right-to-know, and phasing out persistent, bioaccumulative or highly toxic chemicals are also some upstream solutions. Beyond raising awareness and short-term technological fixations, stronger racial, ethnic, and crossclass collaborations in addition to establishing inter-community trust is critical. Greater research on environmental injustices and improved methodologies have helped advance these needs, but it is just the beginning of understanding the overwhelming extent of this social problem.

17

Politics

AMLO’s Project: Decentralization in Mexico City By: Sophie Huang

Bright lights, colourful murals, and absolutely brimming with the bustling of its citizens are traits well known to Mexico City, a huge metropolis with a population of 22 million people.

New president-elect Andrés Manuel López Obrador (known often as simply AMLO) has an ambitious project he plans on enacting in the span of the next six years that will drastically change the composition of the city - to relocate Mexico’s 31 government agencies out of the capital. The plan would spread civil service job opportunities across the country. With approximately 700,000 government employees in the capital, many with families, this project could lead to the expulsion of nearly 2.7 million people from Mexico City.

This move will not only impact government workers, but also smaller establishments that depend on the business of civil servants and their families. Despite these concerns, AMLO argues that the move is imperative to refuel investment in less prosperous areas of Mexico.

For years, Mexico has been struggling with the consequences of uneven growth across the country. The lack of opportunities and responsibility in some states has led to crumbling infrastructure, the out-migration of important young talent, and the scrambling of the Mexican people to find additional sources of income. AMLO was regarded as the presidential candidate who emerged with a promise to return power to the Mexican people. Coming from humble beginnings as a son of merchants, he vowed to fight corruption and implement policies for a more even distribution of growth. During his election campaign, he swayed crowds with his mission of “no one forgotten”. It is this mission that emphasizes the need for decentralization and growth in the underdeveloped parts of the country.

Currently, nearly all government agencies are located in Mexico City. The rationale behind decentralization asserts that economic growth should be evenly distributed as to enable all states to benefit from it. The proposed six-year plan means that almost every state in Mexico could be home to a government agency.

Currently, AMLO is proposing location changes to 31 different government agencies.

Some of these changes include the Ministry of Tourism in Chetumal, Quintana Roo; the National Immigration Institution in Tijuana, Baja Cali19

fornia; and the Federal Electricity Commission in Tuxtla Gutiérrez, Chiapas, amongst many others. A noticeable pattern in how each agency is matched with their destination is the current infrastructure and industries present in each locale.

Quintana Roo sees flocks of spring-breakers and resort-hoppers; the border between San Diego in the United States and Tijuana sees the most traffic in all of North America; and there is an established petroleum and hydroelectric power sector found in Chiapas. For each of the destination states, the move would bring the government agencies closer to the people they serve. If decentralization asserts that there are social and economic benefits as well as greater efficiency in how the government operates, the question is raised as to how that may be achieved.

During his election campaign, [AMLO] swayed crowds with his mission of “no one forgotten” - a mission that emphasizes the need for decentralization and growth in the underdeveloped parts of the country.

To address how he plans on achieving his plan, the president-elect has used the example of the small northern city of Aguascalientes as a positive case study. After a devastating earthquake killed many in Mexico City in 1985, there was a push for decentralization of the government apparatus. However, the only agency that actually ended up relocating was the National Statistics and Geography Institute (INEGI). Its 800 workers left Mexico City for Aguascalientes over the next couple of years. During that time, Aguascalientes went from the capital city of Mexico’s smallest state to being home to an important government agency. The establishment of the new state form began to increase its regulatory control over the private sector, and the presence of the agency brought benefits in the form of increased job opportunities, emphasis on education, and private investment. By all accounts, any logistical hurdles that the 800 workers faced

went smoothly. So were the moves of the Federal Roads and Bridges of Revenue and Related Services (CAPUFE) to the city of Cuernavaca, and the Agricultural Trust Funds Institution (FIRA) to the city of Morelia. However, before these cases became success stories, many people were anxious about their implementation. It will be the task of AMLO’s administration to ensure that success will also be the case for their own civil servants.

Civil servants are worried for their futures.

For many of them, they have lived their entire lives in Mexico City. They have a home, a family, and a way of life established. The move would be uprooting the structure they’ve created for a risk and huge uncertainty. However, it would be difficult for the civil servants to remain in Mexico City as well, as there will be other government workers in the same predicament. Many people would be unemployed and looking for work.

AMLO’s administration says that there will be other entities created in the metropolitan area so the economic consequences would not be as severe. However, the proportions of economic downturn is still uncertain as the administration has still yet to say what they plan to replace the government agencies with. Due to the city being a large metropolitan with an established and healthy business climate, there will likely be businesses willing to fill in the gaps left by the moving agencies.

This project is not without its risks, but it gives underdeveloped cities a chance at prosperity. At the moment, there is little incentive for the private sector to fuel investment in many of the proposed destination cities because the commercial environment is not yet established for them to do business. AMLO proposed this project because he wanted to encourage economic growth outside of just one centralized location. His politics are fueled by wanting tangible change which comes in the form of economic growth for the Mexican people. Mexico City will likely bounce back from the consequences of this decision because of its already established commerce environment. The other cities in Mexico just need to be given the opportunity to bounce forward in terms of economic growth.

20 ISSUE XV.II

USMCA Negotiations and the Precarious State of the US-Canada Relationship By: Anshul Pattoo

Early in October, the United States and Canada reached a trade deal and announced a policy that substantially revised the nearly threedecades-long pre-existing NAFTA agreement.

The modified deal has been given a new name: the United States-Mexico-Canada Agreement, or USMCA. While the agreement’s new name suggests a true revamping of NAFTA, the primary framework of the deal has largely stayed the same. Two significant changes include higher rules of origin requirements for the auto sector and marginally greater access to the Canadian dairy market.

The higher rules of origin requirements for the auto sector are exactly what they sound like: automobiles that have less than 75 percent of their components manufactured in North

America - as opposed to the previous 62.5 percent - would be subject to tariffs. The goal of the increase is to incentivize companies to use parts manufactured within the continent rather than cheaper ones from Asia - theoretically stimulating North American business and employment.

Whether or not the deal will be successful depends on the extent to which the tariffs motivate car manufacturers to change their behavior.

Additionally, American farmers will gain more access to Canada’s dairy markets through the agreement - a hotly debated issue that slowed US-Canada NAFTA negotiations earlier this summer. The United States had previously exported a high-protein dairy product called “ultrafiltered” milk which helps in cheese and yogurt production. However, Canada had industry regulators make their own high-protein milk products cheaper than those of the U.S., in turn reducing reliance on American imports. In fact, the reverse happened in 2017: Canada began exporting this product to the United States. Furthermore, Canadian dairy markets are difficult for the United States to access as Canada employs a supply management system. This system closely monitors the level of production for each dairy good and imposes strict tariffs and quotas on those that are shipped into the country.

Due to the impact that both the ultrafiltered milk exports and Canada’s dairy supply 21

management system had on the U.S., there was growing American pressure during negotiations to eliminate Canada’s exports for ultrafiltered milk and open up a portion of Canadian dairy markets to the US. While this pressure was met with strong resistance from Canada and became a contributing factor to the slowed negotiation process, Canada did eventually make modest concessions. Under the new deal, Canada has eliminated ultrafiltered milk exports and opened up 3.6 percent of its dairy markets to the United States. This aspect of the agreement was a crucial win for American domestic producers.

After a year of intense negotiations, both countries were able to reach a consensus.

Though Canada opened up its dairy markets and eliminated ultrafiltered milk exports, it was able to retain arguably the most crucial element of NAFTA - the dispute resolution mechanism. This mechanism allows companies to dispute unfair trade practices such as tariffs, trade barriers, and subsidies for foreign manufacturers through an independent body consisting of representatives from each country. Given America’s recent protectionist trade policies, and especially considering the steel and aluminum tariffs applied to Canada this year, Canada urged that this section be left unchanged to ensure that all parties follow the trade rules set in the agreement.

While the success of American producers is an important issue as Canada’s supply management system and previously, the ultrafiltered milk exports adversely affects their income, the method through which the United States addresses these concerns should not be tariffs, especially ones that target a separate industry.

The only circumstance in which tariffs are tolerable is a nuanced one: they need to be in direct, targeted retaliation to recent tariffs. Yet even in that scenario, they should only be a short-term solution aimed at speeding up diplomatic procedures. Though the United States had legitimate concerns about their dairy producers, the matter should have been resolved from the onset through negotiations that revise NAFTA, in which both countries reach a compromise. As such, the way Canada has decided to respond to America’s tariffs is the proper one: they should be met

with an equally strong reaction that symbolizes the importance of the original, rules-based status quo. During negotiations, this means maintaining a rigid stance on preventative measures that allow companies to dispute unfair trade practices. Outside the deal, however, it means applying equally strong retaliatory tariffs that target the same industries the United States targeted. Canada’s behaviour, both during negotiations and tariffs, indicates a policy of equivalently responsive measures. The United States wants to make crucial changes to NAFTA in ways that benefit its domestic producers but hurt foreign ones, while Canada would like to largely maintain the status quo, particularly with regard to resolving trade disputes. The only exceptions Canada would make to this policy of maintaining the status quo are revisions that truly benefit all parties involved

The way Canada has decided to respond to America’s tariffs is the proper one: they should be met with an equally strong reaction that symbolizes the importance of the original, rules-based status quo. and thus, do not come at a cost to any particular group of people.

Following the rules is important as it helps maintain a robust bilateral relationship between both countries. The U.S. is one of Canada’s closest allies, and trade is one of the crucial components of that relationship. The shared values, including a respect for the rule of law and mutual trust, that form the basis for the two countries’ relationship are being undermined by an aggressive and confrontational American administration. Canada’s retaliatory response attempts to maintain that foundation. The response is measured and ultimately effective in doing so - it reminds the United States of the importance of the well-established process of resolving North American trade issues through diplomacy, and shows that no single party has the right to unilaterally change the nature of their relationship.

22 ISSUE XV.II

On October 1st 2018, the people of Quebec freed themselves from the de-facto two-party rule of the Liberals and Parti Quebecois (PQ).

The Coalition Avenir Quebec (CAQ) was elected to a majority government with over 70 seats. The CAQ was established less than 10 years ago by their leader and now premier-elect, Francois Legault.

The CAQ is neither a federalist nor a separatist party; their party and campaign platform is focused on the economy. Over the last half century, both the Liberals and PQ were elected by focusing on the issue of secession. To understand how and why the CAQ achieved a majority in 2018, we need to go back over 50 years to the rise of the PQ.

The separatist movement in Quebec has always existed, but it was in the 1960s that it grew to a significant level. In 1973, the PQ were elected to their first majority government and it was the first time a pro-separatist party formed the government. Many believed the election of the PQ would lead to the full secession of Quebec from Canada. While the PQ never achieved their separatist goals, the trend of provincial elections focusing on the separatist question had been established.

With the trend of populism rising all over the world - especially in Western nations - some may wonder if the CAQ’s election is apart of that wave.

The Election of the CAQ By: Aidan Chalmers

Referendums were held in 1980 and 1995 for Quebecers to vote on separating from Canada. Both times the “No� vote won the majority. Despite the referendum losses, the separatist movement never died; it only became comatose for a period. During that time, the Bloc Quebecois and the PQ, the separatist federal and provincial parties, maintained strong representation in their respective levels of government.

Separatism has remained at the forefront of Quebec politics even in its inactive state. Most federal elections are dominated by economic issues while Quebec elections have always revolved around separatism. Every provincial elec23

tion has been viewed through the lens of support for the separatist movement at the time of election. In the 2018 election, the PQ - fearing another defeat - announced they would not pursue a referendum if they were elected. This created a unique scenario in that Quebecers’ stance on separatism played a much smaller role in how they voted.

With separatism no longer a primary issue in the elections, other issues such as the economy and immigration took on new importance. Since the last election, Quebec has been thriving. Its economy is one of the strongest in Canada and it has seen consistent growth over those years. As well, the Liberals successfully eliminated a large portion of public debt during their time up to the 2018 election. In light of the strong economy, voters focused on the creation of well paying, white collar jobs and high taxes.

With the economy thriving, there was a growing sentiment of less need for the enormously high provincial taxes. Over the years, both Liberal and PQ economic platforms focused on high levels of government investment in social programs and fostering growth in the private sector. Accordingly, both parties have always supported high taxes to fund many social programs and infrastructure projects. The CAQ is a centre-right party and campaigned on lowering taxes for Quebecers. Their stance on lower taxes runs counter to that of the other major political parties in Quebec and created a clear distinction from the other parties. There was a growing sentiment that very high provincial taxes were no longer needed and the CAQ’s lower tax platform took advantage of that new sentiment.

The centre-right position of the CAQ is perhaps best exemplified by their promise to significantly reduce the number of civil servants in Quebec. Public service jobs represent a large number of jobs in Quebec as the province is one of the largest employers. The CAQ took a significant risk by promising to reduce the number of such jobs. Quebecers have always favoured a large provincial government and high public service employment. Supporting a party promising to make massive layoffs of civil servants is unprecedented for Quebec voters.

Despite its differences in fiscal policy, the

CAQ remains a staunch advocate for the protection of the French culture and language. They focused on immigration as a potential threat to Quebec’s culture and language. Their platform included the promise to expel immigrants who fail to learn French within their first three years of living in Quebec. Quebec has always been extremely protective of its culture and worried that it would be eroded through assimilation. The CAQ played to those fears as other political parties have done in the past.

With the trend of populism rising all over the world - especially in Western nations - some may wonder if the CAQ’s election is part of that wave. With their focus on growing the private sector and reducing government spending, the CAQ is truly a pragmatic, center-right party. Their immigration policies lean more toward populism given Quebecers concerns about their culture and language. Their decision to ignore separatism in this election could also be viewed as pragmatic since it allowed them to differentiate themselves from the other parties. However, attitudes towards immigration and separatism have been tied together since Jacques Parizeau’s infamous quote claiming “money and the ethnic vote” were the reasons for the “Yes” side defeat in the 1995 referendum.

Legault led his party to victory by gaining supporters tired of the de-facto two-party rule that existed for so long in the province. He pulled off pragmatism and populism in one campaign.

Emphasizing the importance of private sector growth, promising lower taxes and less social programs while also implementing policies to strengthen the French language and culture, the CAQ is unlike any political party Quebec has seen in the modern era. It will be an interesting four years.

24 ISSUE XV.II

The Economic Roots of Brazil’s Political Turmoil By: Ethan Mitchell

Brazil is in a state of crisis. Trust in government is low, unemployment is high, violent crime is climbing, and the rise of a far-right ex-military officer, Jair Bolsonaro, has sparked fears of a relapse into dictatorship. The country has been convulsed with discontent and wrenched apart by polarization; now, it faces an uncertain future.

On October 28th 2018, Brazilians were asked to choose between a reactionary strongman and the current ruling party -- the former notorious for his inflammatory bigotry and authoritarian style, the latter for its deeply-ingrained corruption. How did the country get here?

The burden of responsibility for the Brazilian people’s crisis of confidence, and for the rise of Jair Bolsonaro, must be borne by the dominant Workers’ Party (PT). The most obvious way the PT has failed the Brazilian people lies in its widely-publicized series of corruption scandals.

Particularly through the so-called “Car Wash” investigation (ongoing since 2014), the widespread venality of the Brazilian political class has become a high-profile topic of conversation throughout the world, and has reinforced the Brazilian people’s distrust in the country’s government.

Despite the visibility of the corruption investigations, the true failures of the PT run much deeper, and are far less obvious. Corruption is nothing new in Brazil. Even before the Car Wash scandal, the vast majority of Brazilians have seen their government as corrupt. Despite this, however, until the early 2010s Brazil had been spoken of in recent years as a success story: a country led by a genuinely popular President on the road to economic and social progress. If corruption has always been an acknowledged part of politics in Brazil, what changed between the good old days of the 2000s and the polarizing crisis of the 2010s? The answer, as so many times before, is the economy.

Beginning in 2014, Brazil was hit by its worst recession in history. GDP contracted by almost eight percent from 2015-2016, and unemployment skyrocketed. Within only two years, the rising tiger of South America had descended

into frailty and disease. The social progress and economic boom of previous years was gone, replaced by discontented malaise. As the economy collapsed, Brazilians became less and less satisfied with their lives. It was this economic crisis, then, that is most closely correlated with anti-establishment anger, as corruption is nothing new. As it turns out, voters can tolerate a great deal from politicians as long as they have money in their pockets and a chance to make it in the world.

That is not, in any way, to let the PT off the hook. It was largely the PT’s economic short-sightedness and their mismanagement of the crisis that stand responsible for the dismal situation in which the country now finds itself. In the 2000s, when Brazil was the bold capital-B in “BRICS”, the PT presided over a thriving economy. Largely due to a high demand for commodities, the government was able to finance a number of socially progressive initiatives, resulting in the reduction of both poverty and inequality. All-in-all, things looked good. But they weren’t built to last.

The harsh wake-up-call came when commodity prices dropped. In 2011, the market for Brazil’s commodity exports, the primary driver of its economic success, began to dry up. As the massive gains of the commodity trade faded away, Brazil’s economic weaknesses emerged, and it became clear that the economy was nowhere near as robust as it had seemed. It is a country of poor infrastructure, inefficient taxation, and a sluggish private sector, among myriad other problems, and the government was now burdened by the additional cost of newly introduced social programs. Without the magic of a thriving commodity market the government faced contraction and budget deficit, and then it got worse.

The president at the time, Dilma Rousseff, attempted to deal with the situation by implementing a program of fiscal austerity. She slashed spending and choked off investment, and the economy subsequently deteriorated even more.

With the economic plummet, so too fell the willingness of the Brazilian people to tolerate their corrupt government. And so, with the country 25

reeling from recession, and the life satisfaction and confidence in government of the citizens at a fatal low, the stage was set for the rise of Jair Bolsonaro.

So, what did the PT do wrong? As mentioned earlier, Brazil’s economy was fragile and unwieldy, bolstered by the tenuous conditions of global markets. When those markets fluctuated, as they are prone to do, everything fell apart. The greatest sin of the PT was economic short-sightedness. When the commodity boom was pouring money into government coffers, the PT invested in high-profile social programs. While this was not wrong in itself, it was not implemented in a sustainable way. The dependance of Brazil’s social programs on the health of a single market was a situation that was built to fail. As long as times were good, the social programs would be funded, the economy would expand, and Brazil would stride confidently down the road of progress. When times were bad, however, the underlying fragility of the system became clear, and crisis engulfed the country. In other words, the structure developed mainly by the PT government was one that could work only while global conditions remained extremely favourable. Since these conditions were bound to not

last, the well-being of Brazilians in the future was effectively traded for well-being in the present.

Now that the future has come, that debt is being collected.

Social spending is not a bad thing. Redistributive programs are not only desirable but are a necessary component of a modern economy.

The failure of the PT lies not in its introduction of these programs, but rather in its failure to introduce them in a sustainable way. Instead of using the gains of the commodity boom to invest in development of Brazil’s underlying economic structure (for example, improving infrastructure), or using the party’s popularity to reform Brazil’s diseased sociopolitical structure (for example, significantly reducing inequality, reforming taxation, or addressing the lack of class mobility), the PT focused almost exclusively on popular social programs. In effect, implementing window-dressing solutions to deal with deeply-rooted problems, and winning political popularity at the expense of bringing about lasting change.

Now that the frailty of the PT’s economic management has been exposed, the myopic shallowness of the party’s time in power is costing the country dearly.

26 ISSUE XV.II

Special Topic: Marijuana

Riding the High: The Cannabis Act’s Effects on Canada By: Annie Xie

On October 17th, 2018, recreational marijuana was officially legalized in Canada, making it just the second nation to do so. However, even with the law enacted, many citizens are still conflicted about the pros and cons of this hazy act.

How will this affect the economy on both the national and global level? How will the government regulate this market when it has been unregulated for nearly a century? Will this act ultimately be beneficial for Canada, or is the nation taking on more than it can handle?

Prior to being elected, Justin Trudeau’s Liberal Party actively campaigned for the legalization of cannabis. The party stated that by legalizing the drug, “we keep marijuana out of the hands of children, and the profits out of the hands of criminals.” This was met with varying responses, some supporting the movement to decriminalize the possession of cannabis and other strongly opposing it. However, the main controversy discussed was an area which is unclear for most people: is marijuana harmful? Although many in the general public typically view cannabis users in a negative light, researchers have not been able to test the drug to truly understand its long-term effects. Once the Liberal Party won the

federal election, and after months of discussion and revision between the House of Commons and the Senate, Bill C-45, the Cannabis Act, was finally given royal assent, legalizing recreational marijuana.

However, the main controversy discussed was an area which is unclear for most people: is marijuana harmful?

Now with the law enacted, there are still many controversies arising from it. Many entrepreneurs have been excitedly anticipating legalization, viewing it as a fruitful economic opportunity. They defend the government’s choice as one which will create jobs and boost to the national economy. In their quarterly economic forecast, TD Bank stated that the “legalization of cannabis will result in a one time boost” for the economy.

However, others say that the law would have benefited the economy more if the government had not set such restrictive policies. With tight regulations placed on the marketing and sale of the

28 ISSUE XV.II

drug, many business owners say that the act will not allow this industry to achieve its full potential.

Regulations such as barring business from marketing their product in a fashion which could be appealing to young persons and even restricting what terms and phrases are used when marketing have already stirred up controversy.

Beng only the second country to legalize marijuana, Canada is at the forefront of the cannabis controversy. Canada has previously signed international treaties to discourage the drug trade and impede the development of the industry. However, with the Cannabis Act in effect, is this not a direct renouncement of these treaties? Canada has already violated three UN treaties regarding the traffic of narcotic drugs and psychotropic substances. Nations such as Russia have been critical of Canada, stating that they “expect Canada’s partners in the G7 to respond to its ‘high-handedness’ because this alliance has repeatedly declared its adherence to the domination of international law in relations between states”.

actions necessary to control the illicit sales of marijuana and will reap many economic benefits.

However, these benefits come with a cost and it leaves many questioning how Canada plans to reconcile with other nations after violating international treaties. Will legalizing joints prove to be the powerplay Canada needed to get ahead in the international economy or will it just be a political headache?

Canada has already violated three UN treaties regarding the traffic of narcotic drugs and psychotropic substances.

From an economic perspective, the Cannabis Act will only continue to increase international exports and Canadian companies are dominating the global trade platform for marijuana.

Unlike other industries, Canada’s companies are able to easily sign trade deals with other countries because they have so little competition. Due to this, Canada has produced and sold a massive amount of cannabis internationally and now that the federal government has lifted the prohibition, the demand for cannabis will only increase.

Ultimately, the Cannabis Act, in theory, seems to be a perfect solution for a long-time drug problem in the country. Prior to the act being implemented, many Canadians were arrested and prosecuted for possession of this drug, regardless of the amount, which took a huge economic toll on the judicial system. By legislating this market, the government has taken the 29

Marijuana Tourism in Canada By: Sean Stead-Fescer

With Canada’s newfound legalization laws on the sale of recreational marijuana, some are expecting growth in the tourism sector. Not the classic, family-friendly version of tourism, but one that’s much more cannabis-focused. Canada is now the only G7 country and the second country in the world, after Uruguay, to federally approve the legalisation and distribution of recreational marijuana. Uruguay currently does not allow non-Uruguayan residents to purchase marijuana, so Canada will be the only country to legally offer tourists access to the plant. Since Canada is now one of the only countries in the world where recreational marijuana is legal and available to citizens, people are anticipating many tourists to cross the border to be able to legally smoke the plant.

There is certifiable evidence across the world that cannabis increases tourism rates. In the US state of Colorado, where recreational marijuana has been legal since 2012, the demand for marijuana has increased by over 50 percent. Research in Amsterdam has showed that 25-30 percent of visitors come to Amsterdam simply to experience a Dutch cannabis coffeeshop. The Dutch coffeeshop allows people to buy and consume small amounts of marijuana.

Although marijuana is technically not legalized in the Netherlands, it is generally tolerated, as long as individuals possess only up to 5 grams, while coffeeshops are allowed to possess 500 grams.

Some businesses in Vancouver have already taken a similar model to that of the Dutch.

Cafes such as the Vancity Bull Dog Café and New Amsterdam Café have already begun emulating Dutch marijuana coffeeshops. With cannabis coffeeshops being a staple for tourism in Amsterdam, Canada could experience similar success.

One barrier to the success of cannabis tourism in Canada could be the differences in provincial laws regarding the selling and distribution of the drug. In provinces like Ontario and Alberta, the selling of marijuana and distribution

will be sold by private businesses. In Ontario (the province where there has been the most marijuana demand), access to marijuana was originally meant to be regulated through public-run institutions, such as alcohol through the LCBO. Currently in Ontario, marijuana is still only available online. In New Brunswick and Quebec, sales will be restricted to government-run establishments, such as through their already-existing liquor companies.

Some provinces also have different rules and regulations about where smoking marijuana is legal. In Ontario, people can smoke the plant where it is legal to smoke tobacco. However, in provinces such as Saskatchewan, it is limited solely to private property. The differing laws on legalization of the drug could make it difficult for businesses and the government to establish a consistent and profitable marijuana tourism sector. Tourists may have difficulty distinguishing between where they are and are not permitted to smoke and buy legal marijuana. As a result, these complexities might deter some tourists from visiting Canada for the purpose of recreational marijuana use.

Canada’s budding weed tourism industry is already beginning to show signs of growth.

One trend that is established in Colorado, yet just now starting to take off in Canada, is called ‘bud and breakfast’. The idea behind this concept is much like the classic ‘bed and breakfast,’ where travelers will be greeted by a host with local knowledge about the weed industry and marijuana products. Some places offer meals like breakfast pancakes microdosed with marijuana.

Others offer ‘bud bars’ where, instead of alcohol, they have an array of different types of marijuana that can be sampled, as well as several ways of smoking the herb.

Some services are now starting to offer marijuana tourism in the country. On the Canadian Kush Tours website, an array of marijuana-centered tourism activities are offered, from a ‘rolling class’ teaching participants how to roll a joint to a ‘tour guide package’ that offers a guided tour of Toronto’s marijuana-scene.

However, in Amsterdam, some local residents of this cannabis tourism-hub have actually expressed their concern and disdain for the cannabis industry. Certain residents do not like the

30 ISSUE XV.II

‘disruptive clientele’ that it attracts and the public criticism from some of these residents have contributed to the recent harsher laws on cannabis sale and distribution in Amsterdam.

However, many say that the country lacks the international tourist visitation that other countries experience. Yet considering the country’s unique position of being able to offer legal weed to tourists, there is a serious advantage for those tourists looking to experience the now legalised In the state of Colorado, where drug. Following in the footsteps of places like recreational marijuana has been Colorado and Amsterdam, Canada could devellegal since 2012, the demand for op a booming marijuana tourist industry being one of the only two countries that has federally marijuana in that state has increased legalized the drug. The government should look by over 50 percent. to align with private businesses who wish to offer services in the marijuana tourism industry, since

Overall, I believe that Canada should there is clearly significant demand, as shown by embrace marijuana tourism. Canada currently Colorado and Amsterdam. Ultimately, the Canagenerates 88.5 billion dollars on tourism, with a dian government should treat marijuana legalgrowth rate of 1.5 percent. ization as an asset.

31

The Ob se rve r

O c i r et M

2 countries legalize recreational cannabis

8: % Brazil’s GDP contracted between 2015 and 2016

74 ridings won by the Coalition Avenir Quebec (CAQ) for a majority government in October’s election

25: % decrease in the profits of the top 700 multinational firms between 2012 and 2017

300,000,000 : $ amount Whitefish Energy received to restore Puerto Rico’s electric grid

3.6: % of Canada’s dairy market opened up to the United States through the United States-Mexico-Canada Agreement

$639 billion in assets at the time of Lehman’s bankruptcy filing in 2008

111 million tons of plastics estimated to be displaced by 2030 700,000 government employees currently working in Mexico City

$8,000,000,000,000 USD estimated cost of 21st Century Maritime Silk Road initiative 80: % of global deforestation caused by unsustainable agricultural expansion 500 grams of marijuana permitted for possession by coffeeshops in the Netherlands