Free Trade Issues Enter the Counter-Branding Fray

In a new ad released yesterday, the Conservative party took advantage of a trade-related issue brought up by Stephane Dion.

Dion has suggested that the allgedly weak environmental policies of the Conservative government would imperil Canadian trade, as other countries impose punitive tariffs on countries judged to have taken insufficient action fighitng climate change.

"Other countries are considering slapping carbon tariffs on those who don't take action on climate change. As hard as it is to believe, for now, Canada is one of those countries," Dion recently said.

Dion's Green Shift plan promises to impose such "carbon tariffs" on other countries judged to be dragging their feet on climate change.

The ad itself seems to have been put together rather hastily. It features a different narrator than previous Conservative ads, and relies almost overwhelmingly on the analysis of a single expert -- Carlton University's Michael Hart. It features images of numerous Canadian trading partners being stamped with the word "tariff" as it progresses toward its logical conclusion: a map of the United States -- Canada's largest trading partner -- being stamped.

Perhaps it's inevitable that trade-related issues (in particular, Free Trade-related issues) were going to come up in the election campaign. In August, David Orchard, Canada's leading anti-free trader finally secured his opportunity to run for the Liberal party.

Perhaps it was only a matter of time before the Liberal party offered up some kind of Free Trade-related policy -- one that would inevitably require the abrogation of NAFTA -- in order to keep their newest star candidate in the fold.

Not so surprisingly, Dion's trade-related musings closely resemble musings by Barack Obama that he would try to renegotiate NAFTA in order to add environmental agreements. Considering Dion's poor performance on fighting climate change during his last go around, questions over whether or not Dion is, like Obama, merely bluffing remain lefitimate.

As such, the Conservative counter-branding effort in this case ironically tries to drive Dion closer to potentially unpopular policies of the man he would likely most like to emulate, even if Jack Layton is outdoing him on that particular front right now.

This subtext of the ad -- and reminders that many key details about Dion's Green Shift plan have been postponed in Campbellian fashion until after the election -- seem to be meant to work together to encourage voters to question Dion's genuinity and ponder the economic consequences of such a move.

The ad also represents a notable shift in the overall Conservative campaign -- moving away from tactics of ridicule and toward serious debate.

This particular ad is a bold move for the Conservative party. It will be interesting to see what kind of effect it has on the campaign.

Obama and Clinton May Want to Hold Their Abrogatin' Horses

Renogotiating NAFTA may be a good idea, but it may not be what Americans really want

In a presidential campaign in which -- depending upon whom you ask -- the Democrats appear poised to seize the presidency (that is, if they can maintain their momentum of the past four years), it was only a matter of time before the North American Free Trade Agreement came up.

And now it has.

During last night's Democratic debate both Hillary Clinton and Barack Obama declared their intention to abrogate NAFTA unless it's renegotiated.

"I have put forth a very specific plan about what I would do. And it does include telling Canada and Mexico that we will opt out unless we renegotiate the core labour and environmental standards," Clinton announced.

"I think actually Senator Clinton's answer on this one is right," Obama agreed. "I think we should use the hammer of a potential opt-out as leverage to ensure that we actually get labour and environmental standards that are enforced."

As noted previously, Obama and Clinton actually have a pretty good point there. NAFTA is in definite need of labour and environmental standards. To this end, it isn't alone: most free trade agreements do.

Solid environmental standards implimented via, and enforced by, NAFTA, could be infinitely more effective in curbing such issues as climate change than dead-end treaties like Kyoto could ever dream of.

And any changes to NAFTA that would make it more difficult for short term profit-seeking corporations from shipping manufacturing jobs abroad into the world's cheapest labour markets would be a boon not only to the American and Canadian middle class, but ironically to those companies themselves (although shortsighted profit-seeking motives blind them to it).

There is, of course, one other excellent reason to renegotiate NAFTA -- one that no American president should be altogether comfortable with. That reason is that the Americans themselves have rarely fully abided by it.

American economic protectionism -- particularly under Democrats -- has long been established. And while such protectionism generally springs from mercantilist modes of economic thought that are actually incompatible with the concept of free trade, that hasn't stopped the allegedly pro-free trade Americans from refusing to abide by their own agreements.

The softwood lumber dispute is the greatest case in point. While the American government accused Canada of maintaining an importing advantage by allegedly indirectly subsidizing Canadian lumber by keeping stumpage fees low.

Various trade commissions ruled in favour of Canada, all while the United States continued to defy virtually every ruling, ocassionally deferring back to their own trade commissions for rulings that -- quelle suprise! -- tended to be in their favour.

Thus, the position that the Americans would find themselves in under the conditions of a renegotiating of NAFTA: their economy desperately needing imports of Canadian resources (lumber, steel, oil and water, amongst a myriad of other items) and simply having not engendered the good will with their trading partners to wrestle any disproportionately favourable conditions out of them.

Of course to pretend that Canada or Mexico should be eager to put a squeeze on the Americans in a NAFTA renegotiation overlooks the undeniable interdependence of our three economies. After all, having resources is one thing -- you have to be able to trade them, and it's a looooooooong (and expensive) boat ride to China.

Which is precisely why we as Canadians -- as well as Barack Obama and Hillary Clinton -- should accept Finance Minister Jim Flaherty's words of caution.

"[They] should recognize that NAFTA benefits the U.S. tremendously," Flaherty warned. "Those who speak of it as helpful to [just the] Canadian or Mexican economies are missing the point."

As are we if we view NAFTA as only benefiting the American economy (and it certainly has).

The idea of renegotiating NAFTA need not necessarily be a non-starter. But both Obama and Clinton need to keep in mind what they need to bring to the table -- greater compliance, not economic protectionism -- in order to get what they want (which just so happens to be what we should want).

If they don't they may find themselves in a very uncomfortable position, even if that discomfort won't be theirs alone.

Despite "Presidential" Gaffe, Obama Has a Point

NAFTA needs to be renegotiated -- for various reasons

This past week, would-be Democratic presidential candidate Barak Obama provoked a notable response when he mis-titled the Prime Minister of Canada.

"I would immediately call the president of Mexico, the president of Canada, to try to amend NAFTA, because I think that we can get labour agreements in that agreement right now," Obama announced during a Democratic debate in Chicago.

While the remark has spawned numerous criticisms accusing Obama of lacking an understanding of foreign policy issues, many of the critics are overlooking a fundamental fact about Obama's gaffe.

Mostly, that he's right.

While Free Trade has benefited Canada's economy in various ways -- including allowing for increased flow of American development capital into Canadian industries -- NAFTA has, in many respects, turned out to be a failed god economically.

Part of this has to do with fundamental flaws in free trade regimes. Free trade is an economically sound concept. It focuses around the belief that every different country in the world possesses areas of competitive advantage, and encouraging countries to focus on their areas of competitive advantage allow for an aggregate increase of production of those various products, thus benefiting everyone by making them superior, more plentiful, and cheaper.

This is free trade in theory. In practice, free trade has turned out to be very different. For one thing, because it focuses on generating wealth through aggregate production increases that are pursued through an economic environment that encourages non-competition in areas of competitive advantage, the concept of trade deficits should not be part of the economic lexicon of a free trading state.

Yet, the trade deficit has become something of an obsession for some American economists. An economic moral panic emerged when 2003 turned out to be a record year for the American trade deficit, as the United States imported 17.1% more than it exported. Under proper free trade principles, this is entirely to be expected in a country whose comparatively strong currency gears its economy toward importing.

Of course, this is an area where free trade theory fails. Comparative advantage may encourage countries to import more than they export, but this importing must be sustainable, and it becomes unsustainable if insufficient wealth is being produced within the country to finance such imports.

In particular, the outsourcing of American jobs into the Mexican market has become problematic. As American jobs are exported to Mexico, putting those once employed out of work, this undermines the economic viability of the United States, in both its private sector (as exporting manufacturing jobs also undercuts the domestic market for those products), as well as the public sector (as the tax revenue lost harms the government's ability to operate and remain fiscally solvent).

Part and parcel of this problem is the comparatively poor wages paid to such workers in Mexico, which also contributes to the problem of illegal immigration into the United States, as Mexican workers smuggle themselves north in order to live in the United States and enjoy its far superior labour conditions.

NAFTA has also contributed to the spread of sweatshop work conditions in Mexico. This is no surprise, as this has turned out to be the case almost anywhere where free trade policies have allowed business from developed countries to exploit the lax labour laws of such countries.

This is actually natural under free trade, as labour becomes a comparative advantage for countries that have such lax conditions -- advantageous for nearly everyone involved but the workers; those who would be unemployed, and those who would be exploited.

When Barak Obama talks about the need for labour agreements to become part of free trade agreements, he isn't demonstrating a lack of understanding of the issue. In fact, he's demonstrating rare and remarkable clarity.

The other reason why NAFTA needs to be renegotiated is that the United States has, of late, has refused to abide by it.

Consider the recently-settled trade dispute between Canada and the United States in regards to softwood lumber. During the dispute, the United States argued that the Canadian government unfairly subsidized softwood lumber producers.

NAFTA and World Trade Organization rulings routinely favoured Canada (although one NAFTA ruling merely concluded that the tariffs being imposed were too high, although tariffs were, in principle, justified).

Yet, the United States refused to abide by the rulings, all along insisting that Canada negotiate with them. A 2003 attempt to negotiate such a deal failed, although a deal was reached in 2006, amidst great controversy.

As a treaty signed between the United States, Canada and Mexico, NAFTA represents international law. Yet international law is administered essentially in two ways: what countries agree to do (as in the case of NAFTA) and what countries actually do (as in the softwood lumber dispute).

As such, NAFTA is already a broken agreement, and needs to be either renegotiated or scrapped althogether. Because Free Trade has proven to have economic benefits for everyone involved -- fuelling Canadian economic growth through the acquisition of development capital and increased exports and fuelling American economic growth by making it easier and cheaper to acquire the necessary resources -- the necessary action is pretty clear: NAFTA needs to be renegotiated. The case for scrapping it outright is rather thin.

If Obama, as the American president, does choose to renegotiate NAFTA, he'll need to be very careful about how he goes about it. The United States desperately needs the resources it can acquire in Canada, and any move that hurts Canadian business by making it harder to export south of the 49th parallel will only hurt the American economy more, possibly even forcing it to the verge of strangulation.

If one presumes that Stephen Harper will still be Prime Minister by the time Obama has hypothetically taken office, this is something that can pay dividends for him, as well. He would do well to see a Conservative Prime Minister building an amicable relationship with a Democratic president (something that hasn't occurred since John Diefenbaker and John F Kennedy put the two parties at odds).

Most importantly, however, the United States will have to learn to abide by NAFTA one way or the other, and find ways to stop the treaty from stabbing America's working class in the back.

In the meantime, Barak Obama could stand to get better acquainted with Canada.

Conservative Party: "Ah, Fuck."

Brian Mulroney says Harper's off to great start. How would he know?

In one of Canadian politics more ironic occurances, Brian Mulroney said during an interview today, "Judging from Prime Minister Harper's first -- I guess I could call it 'term' in office, in the sense that there appears to be a break coming -- I think he's done exceptionally well."

This is one of those times that makes those who remain aware of Canada's political history giggle just a little bit.

While capturing one of the largest majorities in Canadian history in the course of two back-to-back majority governments, Mulroney's nine-year span governing this country turned out to be such an absolute train wreck that Canadians responded to it in 1993 by electing only four Progressive Conservative candidates.

Exhausted and just plain angry after two failed and ill-concieved attempts at Constitutional reform, Canadians instead opted for 13 years of Liberal party government.

Mulroney expanded Canada's national debt at a truly mind-bloggling rate (although, to his record, he did manage to reduce its overall share of the Gross Domestic Product). In the meantime, he got more or less nothing done, aside from the North American Free Trade Agreement.

This was perhaps the greatest irony of Mulroney judging the CBC's "Next Great Prime Minister" competition: he was far from being a great Prime Minister, although he admittedly eclipsed all of his co-judges (Joe Clark, John Turner, Paul Martin and Kim Campbell).

As such, if Mulroney's approval of Stephen Harper's performance as Prime Minister is meant to suggest that Harper is governing the way Mulroney would, then Harper ought to batten down the hatches.

Then again, Harper has clearly outperformed his predecessor, Martin.

Then again, it isn't as if that's a challenge.