Twenty-five year anniversaries are symbolized by silver, but on the 25th anniversary of the Canada-US Free Trade Agreement (FTA), that symbol is pretty tarnished.

The FTA and the now 20-year-old North American Free Trade Agreement (NAFTA) managed to tilt the balance in favour of big corporations at the expense of the public good.

The FTA/NAFTA’s characterization as a trade agreement misses the forest for the trees. It was a big business-driven initiative whose primary purpose was investment deregulation.

Trade was important, but as a second order rather than a primary goal.

The agreements did make it easier for business to ship goods and services across the border. However, at its core were new powers and freedoms granted to corporations to facilitate their pursuit of shareholder value.

These provisions enabled corporations to move with minimal restrictions on the North American continent, shifting production to jurisdictions that offered the greatest returns in terms of regulations, subsidies, taxes, labour costs, etc.

Exports to the US as a share of GDP, boosted by a low Canadian dollar and a robust American economy, rose from 15% in 1990 to 34% by 2000. But then exports shrunk back to 18% of GDP, almost where they were when the FTA was implemented. Services exports followed a similar trajectory.

Now freed from government restrictions, corporations have been able to relocate production, whether because of the post-9/11 “thickening” of the border, or to offset the higher costs in Canada caused by the petro-boom-driven rise in the dollar.

The FTA/NAFTA laid the institutional foundation for the petro-boom, reorienting production North-South and preventing any recurrence of the National Energy Program. It also limits governments’ ability to actively shape business investment. Industrial policies such as the 1960s Auto Pact—which had greatly expanded value-added exports—were no longer possible.

Post FTA/NAFTA, Canada has regressed toward its traditional status as a resource exporter. Exports of unprocessed petroleum and other resources now account for almost 2/3 of Canada's goods exports, from 40% just before the turn-of-the-century. Value-added products have shrunk from almost 60% of exports to roughly one-third in 2012.

The FTA/NAFTA was expected to close the relative productivity gap between Canada and the US. In 1950, Canadian business productivity was about 70% of the US level. The gap closed steadily in subsequent decades reaching over 90% by 1980. However, it stagnated throughout the 1980s. The FTA/NAFTA was supposed to provide the boost that would eliminate the gap, but instead the gap began to widen; and by 2011 business productivity had fallen back to 70% of US levels.

Of course, there are specific examples of firms that did restructure, increasing efficiency, exports to the US market and employment. But the fact remains that for the economy overall, the FTA/NAFTA failed spectacularly to boost productivity.

Even more important were provisions that enabled large corporations to grow even larger through cross-border restructuring of corporate ownership. FTA/NAFTA triggered a massive increase foreign direct investment flows—overwhelmingly in the form of mergers and takeovers.

During the previous 40 years, foreign direct investment flows (inward and outward) fluctuated between 2-3% of GDP. After NAFTA they rose dramatically, peaking at almost 6% of GDP in the early 2000s.

Large corporations grew even larger as did profits. So too did the corporate universe become more concentrated. Investment deregulation—20-25 years out— has produced impressive results for big business.

The average firm size of the 60 largest corporations on the Toronto Stock Exchange (TSX 60) compared to all firms registered on the TSX, had increased slightly, from 5 times to 6 times between 1950 and 1990. Thereafter it climbed to 23 times by 2010.

While TSX 60 companies’ share of the total revenue of all TSX companies remained the same before and after NAFTA—hovering just under 20%—their share of TSX company profits rose from 30% to 60% by 2010.

The trends in the concentration and profits of these dominant corporations are shadowed by the trends in income share of the richest 1%. At its most extreme, the compensation of the 100 most highly paid CEOs has risen from 105 times that of the average worker in 1998 (when records first became public) to 177 times in 2012.

During the four decades to 1990, there was a steady drop in the share of national income appropriated by capital (profits) and a rise in labour's share (wages and salaries) of national income. In the wake of the FTA/NAFTA, that relationship reversed, with capital’s share rising back to where it was in 1950, and labour's share declining in lock step.

Not coincidently, these trends also correlate closely with the rise and subsequent fall of union density in the trade-exposed private sector, and with the proliferation of bad jobs—low income, temporary, precarious.

Contrary to assurances given Canadians prior to the FTA/NAFTA, big business lobbied hard to reduce both program spending and taxes in the name of competitiveness.

Unemployment insurance, health and education transfers, social assistance and housing programs etc. were “harmonized downward” toward US levels. Governments, either willingly or grudgingly, reduced taxes.

From the mid-1990s to 2012 the overall tax level of Canadian governments shrunk from 36% of GDP to 31% GDP. Had it remained the same, they would have had $90 billion more last year to invest in social programs and public services.

Corporate income tax rates were cut in half and the total tax rate of the richest 1% of families dropped to less than that of the poorest 10%.

The FTA/NAFTA has not been solely responsible for these outcomes, but was a key component of a web of mutually reinforcing “market friendly” policies that produced them.

It ensured, in an international treaty, that continental integration would proceed within a policy framework consistent with big business priorities. Both directly and indirectly the FTA/NAFTA enhanced the power of business relative to that of workers and communities. It shrunk the boundaries of allowable public sector economic activity and constrained the power of governments to shape economic and social development, regulate markets and empower workers.

The FTA/NAFTA failed to meet the fundamental test of any major policy initiative—to better the lives of its citizens. And it helped to weaken the bonds of nationhood embodied in the Canadian social state.

Bruce Campbell is the Executive Director of the Canadian Centre for Policy Alternatives. With thanks to Jordan Brennan’s study, Shrinking Universe (CCPA, November 2012).

A shorter version of this op-ed originally appeared in the Toronto Star.