The Trudeau government has said that the new USMC agreement continues to give us an effective means of resolving bilateral disputes with the United States, allowing us to appeal to a special tribunal if that country (or Mexico) has, in our view, violated the agreement.
Global Affairs Canada is conducting public consultations on a possible Canada-China Free Trade Agreement. Based on the record since China joined the World Trade Organization in 2001, further liberalization of trade and investment on the current model would not benefit most Canadians.
Following the ground breaking work of Branko Milanovic at the World Bank, economists increasingly accept that the rules of the liberal global economy have produced both winners and losers. The big winners have been the top one percent around the world who have benefited from a global rise in corporate profits and senior executive incomes and, to a degree, workers in developing countries who have enjoyed rising real wages.
It is now three months into the Presidency of Donald Trump, and policy makers around the world are still unsure how to respond to the new administration's challenge to the liberal global order and the looming threat of “America First” trade policies.
While Canadians are understandably focused on what the election of President Trump means for our bilateral trading relationship and the future of NAFTA, a much bigger issue for the global economy is the pending clash between the United States and China.
Donald Trump’s ascension to the US presidency is being hailed by some as the end of globalization as we have come to know it in the last four decades. Others see in Trump’s electoral victory the end of neoliberal economic policy, which promoted free trade and free markets, and limited the scope of government. But German sociologist Wolfgang Streeck discerns in the demise both of globalization and neoliberalism the end of capitalism itself, at least the variety of capitalism that exists in North America and Western Europe.
The election of President Trump and the potential imposition of border taxes and other protectionist measures is clearly of great concern to Canadian exporters, the workers they employ and the communities they support. This underlines just how much NAFTA and the wider liberalization of trade with rising economic powers such as China have shaped our economy and made us highly vulnerable to forces outside our control.
As the new Liberal Government takes over the reins of power from the Harper government it will be interesting to see what has and hasn’t changed in Canada’s approach to international trade policy. The early signs, for those concerned with how new trade and investment agreements impact policy making in the public interest, are cause for concern.
The recent conclusion of the Trans Pacific Partnership negotiations between Canada and eleven other countries has resulted in the usual chorus of condemnation by right wing economists of Canada’s system of supply management covering dairy, eggs and poultry.
Economists love to talk about the theory of comparative advantage, which holds (somewhat counter intuitively) that two countries trading with each other will be better off if each specializes in what it does best, even if one country has an absolute competitive advantage in the production of all goods and services traded.
David Ricardo famously argued that it made sense for England to specialize in the production of cloth and Portugal that of wine, even though Portugal could produce both goods more cheaply.
Unfortunately, the theory has limited application to the real world, and can have pernicious policy consequences.
article originally appeared in the Globe and Mail's Economy Lab.
Photo: teegardin. Used under a Creative Commons license BY-SA-2.0