The art of a deal
I’ve never been a fan of unbalanced trade deals. Heck, I’m such a cranky old codger that I didn’t even like the idea of the North American Free Trade Agreement (NAFTA) when it was first pitched. It seemed to me then that making a deal for open trade with the United States and Mexico had some pretty clear dangers - to put it bluntly, because the U.S. was so much bigger than us, and Mexico was cheaper.
It’s even worse when the deals that are being struck are being struck with places that already hold an even larger competitive advantage over us.
For example, when labour safety conditions, environmental requirements and labour costs are so low that manufacturers in a foreign country can not only beat the price of your own manufacturers, but beat it with the inclusion of long-distance shipping costs, well, you know that you’re not going to be a manufacturing nation for long.
Make the wrong deal with the wrong group of nations and you practically guarantee that your only role in an open, multi-state economy will be to produce raw materials that you happen to have a large supply of: welcome back to being the hewers of wood and the drawers of water.
It’s not an idealistic stand it’s a pragmatic one.
Labour tends to be the most expensive piece of any business. With open borders, jobs flow downhill to their cheapest possible denominator.
Add into that mix the very real concern in deals like the European CETA pact, where, in order to get a deal, we apparently had to agree to allow foreign companies to be able to do things like sue this country for our possible future temerity of passing unfavourable laws - say, strict environmental requirements supported by a Canadian electorate - and there are plenty of reasons to say no thanks.
Face it, if a foreign company can sue you over what your elected government does, you’ve pretty much surrendered your sovereignty.
But even with those fears, there’s a new problem, one that hearkens back to the problem of deals with larger nations
And that brings me back to the top of this column, and my original fears about NAFTA. We’ve done all right by NAFTA, even if my long-ago original concerns about Mexico’s ability to use cheaper labour rates to lure manufacturing jobs did, in fact, turn out to be true. The trouble now is that U.S. President Donald Trump seems intent on using my other NAFTA concern to his country’s advantage; he now argues that he wants to redraft NAFTA, forcing partners to agree to something more favourable to the U.S., and already claims to be “winning” by doing things like demanding that American steel be used in the Keystone pipeline. He’s also talking about having bilateral deals instead of group deals - and face it, bilateral deals will always end up helping whoever is the biggest economy in the deal.
It looks like we’re going to need new friends - more specifically, new trading partners - in a hurry. That may mean moving further with countries other than the U.S.
My advice? Stick to similarsized, similarly economically advanced democracies for partners. On the home front, there’s another thing we can do: buy local. Buy local if it costs more, buy local if it’s not even quite everything you want. Buy local because it’s good for the country, and, because it requires less transportation, it’s good for the environment as well.
But deals with less-developed economies and bully-boy neighbours? Unless we’ve got knowledge-based goods to sell, we should take a pass.
It’s great to have a larger potential customer pool.
It’s not so great when customers is all we’re going to be.