Trade wars and deals

The new game from Hasbro!

Strike a deal about aluminum!  Tweet your rejection about iron!  Roll the dice and move your mice!  Is it a war?  Is it a deal?  Collect all the tokens and YOU DECIDE!!

This should not be an ideological question. We are not against trade deals becuase it is trade. We are concerned that the trade systems are designed to concentrate wealth, exploit people and drive social and environmental standards to the lowest common denominator.

Those who are ostensibly against this trade are in favour of a power approach that is nothing to do with local economies and everything to do with greater exploitation and domination. The chickens are coming home to roost with NAFTA in part becuase of the dependency it created.

Those against these deals from the right now have the same objective as those who promoted them in the 1990s.

The collapse of these deals will not provide a relief nor a benefit. The only thing that can is an industrial policy designed to make us less reliant on these deals.

This is just an evolution of the same process -- create the deal -- build dependency --once dependency is there, then make the realtionship more exploitative by altering or ending the deal completing the economic domination.

FTA-NAFTA is more like a drug pusher making you dependent and then withdrawing the favourable pricing so that you are ruined but due to dependency cannot get away.

The objective should not be to crash the deal but to as quickly as possible attack the dependency and then back off the deal.

I agree that Canada needs to expand its trading horizons to mitigate reliance on the US but trashing our existing trade deals is a much more costly method of doing so.......

As Mexico prepares its tariffs on US corn and soya, with Lopez Obrador waiting to assume power....NAFTA is finished....

what could possibly be more costly, than the total destruction of a sustained rural lifestyle of the indigenous and non indigenous especially south Mexico...which now is bringing on a revolutionary moment for them!

A different take:

http://business.financialpost.com/opinion/counterpoint-mad-at-trumps-tar...

ariffs aren’t optimal for an economy, but they come pretty close, given what passes for a free market today. Tariffs are certainly not the demons they’re made out to be, and that especially goes for U.S. President Donald Trump’s proposed “reciprocal tariffs” that infuriate America’s G7 trading partners.

Those who characterize tariffs as taxes that harm consumers by raising the costs of imports are giving us only half the story. While tariffs hit consumers, they relieve taxpayers, because the revenue governments raise through tariffs displaces money governments would otherwise raise through income taxes.

A century and more ago, when federal governments relied on tariffs for their revenues, there were no income taxes. The United States developed the greatest industrial economy on earth in less than a century under a tariff-based economic system, as did the United Kingdom before it. Those accomplishments were no coincidence.

We got hammered on softwood long before NAFTA and for that matter Can/US Free Trade. NAFTA was supposed to resolve the dispute and of course was no help whatsoever.

josh wrote:

Martin N. wrote:

Lost in all the anti-American hubris and general pro patria stupidity is the fact that trade and jobs are necessary to maintain our standard of living. Mr. Dressup has managed to reduce a professional negotiating position between nations into a political circus to shore up his reelection prospects. By sucking up to Quebec dairy farmers for votes and overreacting to Trump provocations for political purposes, he jeopardizes future trade relations with the US.

Supply management and government subsidies are levers that all nations employ. They need to be negotiated by competent professionals and deliberated in sober debate, not bandied about in media stunts by a moron more concerned about his image than his country.

I agree that Canada needs to expand its trading horizons to mitigate reliance on the US but trashing our existing trade deals is a much more costly method of doing so.

This may shock some people.  But there actually was trade before these trade deals.And you know what. Things worked pretty well.  Economic inequality was much less than today and you didn’t need a post-graduate degree to make good money.

That was then. You cannot assume that removing NAFTA puts us back in that position unless you overlook what was lost in the FTA-NAFTA years that cannot come back automatically.

Canada now likely has only two paths -- 1) to give in on trade and take a bad deal or 2) For the goververnment to bail and institute an industrial plan with considerable government investment to build replacements for what was lost entering these deals and what was in them.

Independent economy for Canada is not going to come without some pain given the last few years. As well, this is not a neutral end to NAFTA but one in the midst of a trade war following significant adjustments to those deals.

That said, Canada may find that this is the best opportunity to reduce dependency on the US but the pain will not be inconsiderable. The result of trade action by the US with all countries could be a deep global recession. If the government of Canada spends to invest in this cycle it might come out with a slightly different economy and a stimulous. It will also may have a smaller economy and a deeper debt.

alternately, if a trade deal is workable, the federal government should take the steps to make Canada less dependent  as soon as possible, within a less dramatic meldown of the arrangement.

Orchard is nobody you should be going to for advice, logic or direction. His ten reasons have contradictions built right in that many people who are not as out to prove a simplistic point are aware of.

First -- look at his point 7: the deal makes us less independent. Yes. That should give you pause. The real situation is that Canada lacks independence and walking away from something we are depending on is going to hurt badly: by definition. After nearly 30 years of "free trade" integration, Canada has to do more than declare economic independence.

Now let's remember that Orchard is a right wing farmer when you read what he has to say about tariffs. Orchard longs for the days of tariffs supporting the federal government. He skips over the minor detail that income taxes came many decades before free trade and that since income taxes were instituted we also got a lot more from government like social welfare, health care, and public pensions. Instead of looking at what income taxes pay for, he blames free trade for the existence of income tax. Orchard is a simplistic nationalist right-winger. He should never be lauded on a progreessive site -- even if you happen to agree with him the NAFTA and the FTA are not positive. Just becuase they are not positive it does not mean that we can drop these deals instantly and a full restoration of what used to be and could have been would occur.

His contention that no deal with the US would mean reversion to the WTO suggests he has been living under a rock for the last year. The US is not following WTO rules.

His solution which is to give up on a free trade agreement now is a complete contradiciton to what he said in the late 1980s. At that time, he stated that you could not get out of these agreements easily and that was a reason not to go into them. He was correct about that at the time.

Canada desperately needs to reduce dependence on the US to pursue a more independent industrial and economic policy. However, Orchard is more like a right wing "Brexit" for Canada not considering any of the present implications.

His point six speaks of integration and yet Orchard does not allow that since this integration is well advanced that abrupt change without preparation will do significant damage that may compromise any movement towards independent actions.

Let's look at this without the simplistic blinders for a moment: NAFTA and the FTA were not uniformly bad in result. No serious person at that time or since has said that there were no assets in the deal. The arguments then and now are that the deal was not worth it becuase we were giving up things of greater value than what we were getting. What Orchard proposes is giving up what we have now in a disordered manner without any return of what we gave up. It also does not acknowledge the cost of the disruption to the integration that he admits happened.

What he is calling for is not an unwinding of the dependence in an ordered transition (as much as possible) followed by a disengagement with this particular deal. He is calling for a torching of an integrated economic system that may be less than what we could have had -- but it it exactly what we have now.

Orchard makes no suggestion of what direction Canada should go in or what independence looks like. He is limited to the arguments of 1988 and a presumption that he can make Canada great again by an abandonement of the relationship we have without any concept of what has to be rebuilt to replace it or how long that might take. The fact that he has confidence that we can walk from NAFTA and use the WTO is truly something scary.

Canada does not need an Orchard answer. It needs an answer coming from the left if we want to get out from the dependence. It requires an industrial policy to move Canada from a mostly service-commodity economy to a developed mixed economy. It requires the kinds of investments that Orchard, as a Conservative, would never want to make.

It also requires a policy of managing the relationship with the US to mitigate damge and buy enough time for Canada to have some alternatives.

Most here are clear that I am no fan of Trudeau, however, the policy of standing up to the US while trying to get some kind of short-term mitigation of what Trump is doing is correct. The issue of dependence on the US is a serious one but it is a long-term problem that cannot be fixed by walking away right now. Trudeau's investment in the pipeline is misplaced. Canada should be investing not in delivery of commodities (perhaps moving dependence from one customer to another) but the development in Canada of an economic policy that will use our resources rather than export them all in raw form and that will support industries and workers not just to compete in Canada but globally.

Orchard and others who fought the battles of 1987-1989 must recognize that they lost the battle then and the battle now is different. We cannot go back in time and right the wrong of those agreements.  In the context of those agreements, we have to find a way forward to reduce dependence and rebuild the choice we gave up 30 years ago. We will not be able to replicate what was lost forever but we can with time put ourselves in a better position to live without NAFTA than the circumstance we would find today.

And, if we have no choice but to walk now, we need people thinking about what we need to do urgently rather than cheering the torching of these deals without acknowledging the difficulty we face in leaving them so abruptly.

Also let's not pretend that Orchard had the answer then either: at the time he was insistent that we not enter the FTA but he was never an advocate of the kind of economic investments Canada needed then or now. He is, after all, a Conservative in outlook. He is more akin to Trump and a Brexiteer (although I do not believe Orchard is a racist), than an advocate of the kind of Caanda most here want to see.

Maybe sector-by-sector deals is the future of trade with the US. We have stuff they want. What they have, we can buy in many other places, and at the same or better quality for the same price. Love him or hate him, Jean Charest is now a bigshot lawyer, and he says there is quite a bit of work being done to do some deals with Europe. Quebec has wanted access to Europe for a very long time, and Europe is the natural overseas market for Atlantic Canada. From Ontario, stick it on a boat and send it down the river. A very old trade route indeed.

Our values, especially being much more open to immigrants, will ultimately give our domestic economy more home-grown growth. Once we hit about 40,000,000 people (which is not long from now) we should hit a critical mass where we can be economically self-sufficient.

The markets outside the US are 3-4 times bigger than the US. They all want to deal. The time is now for restructuring away from US trade, and as we recover to previous levels, when the US taps go on again, we will only be to the good.

It's going to be a hard slog for many of us, but it should hopefully turn out for the good. CANADA! OPEN FOR EXPLOITATION! CALL D. FORD!

josh wrote:

I don’t believe Orchard is right wing.  He’s more in the Red Tory tradition.  As for losing the argument in ‘87-‘89, a majority in the ‘88 election voted for parties opposed to the FTA.

The election was lost and the result was it came in -- that is losing the argument -- even if you had more people on your side. The argument was settled by that election when it came to policy.

Red Tory is a bit of a fantasy -- Orchard is in favour of smaller government. He is imagined to be a red Tory (whatever that means now) becuase of his views on trade. By that definition so is Trump? I heard his appeals in his leadership bid. He is to the right of centre. Not as far as Harper but that is a meaningless distinction. His views are not compatible with the vision of the country represented here. He should be no hero here.

Progressive??? 17

josh wrote:

Progressive??? 17

It will increase the Canadian deficit by 36% to buy the oil pipeline. Government seems to spend 10 times the value of things.  Granted, this may have been a Heisenburg Uncertainty Principle ploy by the Liberals, as the observers might unnecessarily deem the experiment of government intervention to be bad.

This is not what we can afford now we are at war with the United States which Donald Trump has declared.

With a few exceptions based on bulk buying, no government in Canada is capable of running a profitable business, especially in emergency situations. Government should provide necessary services it is impossible to make a profit on. Expecting them to invest in things like oil pipelines or steel mills takes their eye off of the ball of taking care of the people.

However government can build infrastructure, which it should do while the Trump is in power. However there will not be enough money to cover employment losses in the auto sector which will be coming next. In trade wars, as the history of the 20th Century shows, everything shuts down! Unemployment can go up to 30% in situations like this. Perhaps, some of the 30% can take time off, but not everyone can afford to do that.

Now the business owners in the steel and aluminum businesses are going to shut down unless they get government help. If the government gives them a specifically targetted tax rebate or subsidy, the USA can retailiate again, as they will be able to identify it. 

Worse still, this discriminates against every other worker in Canada, who should also get the same subsidy if the employment market is to stay fair. With targeted subsidies, workers may flow from industries to the steel and aluminum businesses, which will cause those other industries to lose production. With less production and the same external demand, the price will rise.

The USA has to be considered as completely malevolent. They have declared war on our economy. Now, according to the US Supreme Court, the US government could ban all travel from Canada at whim.

The US already took the move to undercut our corporate taxes. You can run a plentiful social democratic economy with very low corporate taxes and very high personal taxes levied on high incomes. They do it very well in Northern Europe.

The USA is attacking Canada's ability to earn a living. If they are going to give steel and aluminum subsidies, what are they going to do to compensate all of the areas of Canada where the workers are not employed in steel and aluminum? As we know, steel and aluminum are based in Ontario and Quebec. Why should people in BC and Alberta tolerate subsidies or tax breaks for Ontario and Quebec when there is no corresponding action for them?

Targeting subsidies and tax breaks will just make our situation worse. We need to incentivize investment. Investment creates jobs. I think, "I am going to hire someone for 3 months, and I need $12,000 or whatever to cover that. If it is paying me, I can hire them for another 3 months at the end, or whatever." We need to unlock those $12,000s. The money is not moving in the Canadian economy, even though there are trillions at hand.

Ok so say I hire 10 people at $12,000 for 4 quarters. That is $480,000. I decide that I only need them to break even to keep them on, as I know I am enjoying many intangible benefits from their labour.

Corporate tax 50%, $240,000 left to invest. 5 fired.
Corporate tax 40%, $288,000 left to invest. 4 fired.
Corporate tax 30%, $336,000 left to invest. 3 fired.
Corporate tax 20%, $384,000 left to invest. 2 fired.

As the corporate tax goes down, investment can go up. Because we are in a global economy, money can go anywhere in the world. The law of supply and demand dicates that we want the money to go here.

It is much easier to lower corporate taxes than to subsidize people. Workers will seek the highest profit, which is the way an economy should work.

progressive17 wrote:

josh wrote:

I guess 

Progressive??? 17

It will increase the Canadian deficit by 36% to buy the oil pipeline. Government seems to spend 10 times the value of things.  Granted, this may have been a Heisenburg Uncertainty Principle ploy by the Liberals, as the observers might unnecessarily deem the experiment of government intervention to be bad.

This is not what we can afford now we are at war with the United States which Donald Trump has declared.

With a few exceptions based on bulk buying, no government in Canada is capable of running a profitable business, especially in emergency situations. Government should provide necessary services it is impossible to make a profit on. Expecting them to invest in things like oil pipelines or steel mills takes their eye off of the ball of taking care of the people.

However government can build infrastructure, which it should do while the Trump is in power. However there will not be enough money to cover employment losses in the auto sector which will be coming next. In trade wars, as the history of the 20th Century shows, everything shuts down! Unemployment can go up to 30% in situations like this. Perhaps, some of the 30% can take time off, but not everyone can afford to do that.

Now the business owners in the steel and aluminum businesses are going to shut down unless they get government help. If the government gives them a specifically targetted tax rebate or subsidy, the USA can retailiate again, as they will be able to identify it. 

Worse still, this discriminates against every other worker in Canada, who should also get the same subsidy if the employment market is to stay fair. With targeted subsidies, workers may flow from industries to the steel and aluminum businesses, which will cause those other industries to lose production. With less production and the same external demand, the price will rise.

The USA has to be considered as completely malevolent. They have declared war on our economy. Now, according to the US Supreme Court, the US government could ban all travel from Canada at whim.

The US already took the move to undercut our corporate taxes. You can run a plentiful social democratic economy with very low corporate taxes and very high personal taxes levied on high incomes. They do it very well in Northern Europe.

The USA is attacking Canada's ability to earn a living. If they are going to give steel and aluminum subsidies, what are they going to do to compensate all of the areas of Canada where the workers are not employed in steel and aluminum? As we know, steel and aluminum are based in Ontario and Quebec. Why should people in BC and Alberta tolerate subsidies or tax breaks for Ontario and Quebec when there is no corresponding action for them?

Targeting subsidies and tax breaks will just make our situation worse. We need to incentivize investment. Investment creates jobs. I think, "I am going to hire someone for 3 months, and I need $12,000 or whatever to cover that. If it is paying me, I can hire them for another 3 months at the end, or whatever." We need to unlock those $12,000s. The money is not moving in the Canadian economy, even though there are trillions at hand.

Ok so say I hire 10 people at $12,000 for 4 quarters. That is $480,000. I decide that I only need them to break even to keep them on, as I know I am enjoying many intangible benefits from their labour.

Corporate tax 50%, $240,000 left to invest. 5 fired.
Corporate tax 40%, $288,000 left to invest. 4 fired.
Corporate tax 30%, $336,000 left to invest. 3 fired.
Corporate tax 20%, $384,000 left to invest. 2 fired.

As the corporate tax goes down, investment can go up. Because we are in a global economy, money can go anywhere in the world. The law of supply and demand dicates that we want the money to go here.

It is much easier to lower corporate taxes than to subsidize people. Workers will seek the highest profit, which is the way an economy should work.

I guess you haven’t seen the results of the U.S. corporate tax.  Almost all the money went for stock buy backs and bonuses.  Hardly a trickle made it for new hires or raises,  If you believe in trickle down economics, you should change your handle to Conservative17.

I say take their investment capital in the manner described above. Hit them where it hurts.