The Shotgun Blog
Friday, February 06, 2009
Canada needs a radical approach to free trade to stimulate the economy and guard against protectionist retaliation
Depending on how you ask the question, most Canadians will tell you they oppose protectionism.
The results of a JMCK Poll published exclusively in the Western Standard in April 2008 showed that less than 20% of survey respondents supported protectionism if consumers would be expected to pay more to protect the profits of Canadian manufacturers:
1. Should Canadian consumers pay more for goods and services in order to protect the profits of Canadian manufacturers?
• Agree 19.0%
• Disagree 62.5%
• Undecided 18.5%
If the results of this survey can be trusted, and if public sentiment has not changed dramatically since the data was collected, the Conservative government could dismantle Canadian protectionism and pursue an aggressive policy of unilateral free trade with little political risk.
With President Obama’s anti-NAFTA rhetoric and recent Buy America proposal, Canadian prosperity has been suddenly threatened by creeping protectionism in the US. The response to this threat should not be retaliatory trade restrictions, but instead a radical commitment to free trade.
The first step should be the elimination of Canada’s own Buy Canada policy.
As recently as December 17th, International Trade Minister Stockwell Day was championing the federal government’s Buy Canada policy. Day has now been forced to defend Canada’s trade interests against the Obama administration’s protectionist Buy America policy from a position of weakness and arguably hypocrisy. Day also faces hostile opposition parties in Parliament demanding an explanation for Canada’s weakened trade relationship with the US.
The second step, although the order is unimportant, should be to eliminate anti-dumping duties. In Antidumping Exposed: The Devilish Details of Unfair Trade Law authors Brink Lindsey and Daniel Ikenson show how anti-dumping laws in practice are “trade-restrictive measures...inflicted on normal, healthy competition” that “squelch foreign competition.”
The Bush administration provided a shocking example of the political nature of import tariffs with a tripling of import duties on French Roquefort cheese one week before handing power over to President Obama. I guess former President Bush prefers American cheddar with his Freedom fries.
Canada isn’t innocent in its use of protectionist import duties, with China being the #1 target.
In March 2008, under the Anti-dumping and Countervailing Program, the Canadian government levied anti-dumping and anti-subsidy duties on seamless casing pipes manufactured in China widely used in oil exploration and gas wells.
In October 2008, the Canada Border Service Agency, which enforces the Anti-dumping and Countervailing Program, initiated an investigation of alleged below-cost selling of laminate flooring again from China.
There are about 150 products subject to anti-dumping and countervailing duties from countries across the globe. All these duties should be removed, and the Anti-dumping and Countervailing Program should be scraped.
Canada should adopt a unilateral declaration of free trade with all nations, and ignore the counterproductive impulse to insist on either reciprocal trade agreements or countervailing protectionism. We should also, where possible, avoid so-called free trade agreements that come with provisions governing labour, the environment and taxation that compromise national sovereignty and violate the spirit of laissez-faire capitalism.
Posted by Matthew Johnston
Posted by westernstandard on February 6, 2009 | Permalink
Matthew, great article and even better prescription.
I think I'll take your advice myself. I hereby declare a unilateral no-tariff policy. If someone wants to sell me goods or service I want at a price I agree to, or wants to buy my services (which include writing, editing, and researching -- if there are any takers, I'm also selling a large bookshelf) at a price I like, I'm going to realize that I'm the one accruing the benefits, and that doing anything to interfere with that is simply self-sabotage that results in me being worse off.
"The Bush administration provided a shocking example of the political nature of import tariffs with a tripling of import duties on French Roquefort cheese one week before handing power over to President Obama. I guess former President Bush prefers American cheddar with his Freedom fries."
Obama could never get away with something like that. He would risk angering his all-important "Stuff White People Like" constituency of latte-swilling, organic-arugula-munching coastal elites and flyover-country haute bourgeoisie.
WRT, "Buy Canada" policies , you might like this William Watson piece on ""The CAW's protection racket"
Posted by: Kalim Kassam | 2009-02-06 7:46:20 PM
"Buy Canada" policies ".
One of the main problems to thwart this line of thinking is that almost everything we produce, with few exceptions is owned by outside interests.Primarily Americans. The only trump card we hold is one we don't want to play. Water.
Posted by: peterj | 2009-02-06 10:33:42 PM
"everything we produce, with few exceptions is owned by outside interests"
If this is an accurate description of the situation, what's the problem with that?
I'd be very happy if we got rid of all foreign-ownership restrictions. Maybe Air Canada would finally disappear or start providing me with some decent service if American, European or Asian-owned airlines could compete with them for Canadian domestic air traffic.
Posted by: Kalim Kassam | 2009-02-06 11:10:50 PM
"what's the problem with that?"
There is no problem with that. It is the reason why a "buy Canada" policy would not work.
Posted by: peterj | 2009-02-06 11:31:12 PM
peterj, I see; I had misunderstood you.
Posted by: Kalim Kassam | 2009-02-07 12:36:11 AM
Has the MSM mentioned our government's Buy Canada policy?
Posted by: Matthew Johnston | 2009-02-07 1:07:50 AM
Trade benefit both the buyer and seller unless we buy more than we can afford. If we buy more than we can afford, is it the seller's fault? When I buy, I go for the best value. If some one want to sell below cost, I love it, because it will not last long. NO one can sell below cost for long.
If someone can make things cheaper and better than we can, we better smart up. If we have some thing to sell, we have to make it attractive and affortable. And smile. If someone else also want to sell what we have to sell has a better smile, we may have a disadvantage.
Posted by: Ben Gee | 2009-02-07 5:18:56 AM
"If someone can make things cheaper".
That is the magic sentence that has now come home to bite us. For the past 20 years we have been shutting down factories and shipping them to countries that can make things cheaper. Much cheaper. We cannot compete with 50 cents per hour labour no matter how much we smile.The objective was never to make things cheaper for the consumer, (although it did) but rather to increase the corporate profit margin 20 fold. Like all great ideas, there are consequences.
Posted by: peterj | 2009-02-07 9:24:03 PM
One of the worst abuses comes from Canada's supply management farmers, dairy, chickens, and eggs have huge tariffs on them (up to 300%). Which keep cheaper foreign products out of the country. Because they don't have to compete these are the richest farmers in the Country and they do it by getting a free ride from Canadian consumers.
Posted by: Farmer Joe | 2009-02-08 9:21:00 AM
Posted by: Farmer Joe | 2009-02-08 9:21:00 AM.
When one considers that a milk Quota is worth more than the farm, the land and all the cows, it sure makes one wonder how it got to that point and why it was untouched during the nafta negotiations. There had to be some big payoff money moving under the table.
Posted by: peterj | 2009-02-08 8:23:58 PM
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