The art of the deal

The Labradorian - - EDITORIAL - Rus­sell Wanger­sky

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.

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.

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