Thank you for drawing attention to the potential folly of the EU trade deal. In all “deals” there is a winner and a loser. There are never two winners. In recent decades China has been a consistent winner, with the rest of the world accumulating prodigious debts. In this case, the workforces of Canada and of the EU will be redeployed.
More cheese makers there; fewer here. More autoworkers here; fewer there — and so on. The total consumption of goods in the Canada/EU bloc remains the same. However, some potential increases in efficiency will produce a net loss of jobs, in both places.
Stephen Harper plans to compensate the Canadian losers at taxpayers’ expense. Taxes will go up and jobs will go down. How does that help us?
The only people to gain from free trade are the traders themselves. Greed always wins.
At one time politicians could get a little boost from this kind of deal. Now they just look naive and inept. Let us not give Harper that boost. And let us hope that the provincial leaders reject this folly.
Where does one start? Evidently the writer has never heard of a win-win deal, which makes one wonder how he even does his grocery shopping each week. I mean, buying food is a "deal", right? You want the food, and the store wants your money. It's an exchange in which you both give up something you have so as to get something you want. How is there a winner and a loser?
If we upscale this reasoning to international trade, the same principle applies. Canadian drivers want BMWs and Europeans want Canadian lumber, so by trading, we both end up with something we want. The added insight that economics brings is that even if both we and our trading partners can in theory produce all the same things, there's still a benefit to trading. If Canada produces lumber more efficiently and the Europeans are better at making cars, both countries are better off doing what they do best and then trading for what the other guy does best. It's known as "comparative advantage".
Because of this, it's a fallacy to assert, as the Star's correspondent does, that "the total consumption of goods in the EU/Canada bloc remains the same". If free trade means that Canadians spend less on cheese and BMWs in the future, that frees up purchasing power and creates demand for other goods. If Europeans can buy Canadian lumber and pork more cheaply, they too have more cash to spend elsewhere.
It's because of the expected net gains for the economy as a whole that Stephen Harper feels he can promise to compensate the losers.
We still need to see the details before deciding whether this particular deal is a fair one for both sides, but one thing we can already be sure of is that it's not actually "free trade" that we're talking about. Take cheese, for example, which bizarrely seems to have occupied most of the column inches since the deal was announced. European producers aren't getting unfettered access to the Canadian market: they're getting a bigger quota, but one that will still limit them to much less than 10% of the market. The dairy supply management regime, which is the reason I pay three times as much for milk as I would if I drove a few miles across the (Niagara) river to shop each week, will remain firmly in place.
The Star's correspondent hopes that provincial leaders will "reject this folly". Looks very unlikely: most of them seem to be onside with the deal already, while expressing concerns over some of the details and vowing to hold the PM to his promise of compensation. "Baffled of Bobcaygeon" certainly has some allies, including the irritating Maude Barlow and some of the trade unions, but it seems all but certain that this deal will be put into effect in the second half of the decade.
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