Rs, food fights hat ig­no­res it all

La Jornada (Canada) - - ENGLISH SECTION -

open tra­ding and ins­tead many coun­tries want to pro­tect their do­mes­tic mar­kets.

Agri­cul­tu­re and food are of­ten con­si­de­red the most vul­ne­ra­ble and sen­si­ti­ve sec­tors when it co­mes to tra­de ba­rriers. They ma­ke easy tar­gets. Tra­de ba­rriers can ma­ke a sig­ni­fi­cant dent in an eco­nomy al­most ins­tantly and con­su­mers are of­ten af­fec­ted the most.

Most eco­no­mists see tra­de as an ab­so­lu­te good - un­til po­li­ti­cians get in­vol­ved. Trump clearly sees tra­de as a ze­ro sum ga­me. So­me win whi­le ot­hers lo­se. But Ca­na­da can’t win many tra­de wars, es­pe­cially not with the U.S.

We’re al­ready wit­nes­sing how a tra­de war could af­fect the Ca­na­dian agri-food sec­tor. Ca­na­dian pul­se far­mers are bra­cing for ma­jor tra­ding head­winds with In­dia. So­me po­li­ti­cal op­po­nents link Tru­deau’s re­cent vi­sit to In­dia with its de­ci­sion to in­crea­se its ta­riff on chick­peas from 44 to 60 per cent over­night. This co­mes af­ter In­dia in­tro­du­ced a va­riety of ot­her ta­riffs on pul­se crops, in­clu­ding len­tils, peas and chick­peas, in the past few months. Ca­na­dian pul­se ex­ports to In­dia alo­ne are worth well over $1 bi­llion and gro­wing - un­til now.

This could ea­sily es­ca­la­te furt­her and af­fect ot­her sec­tors of Ca­na­da’s agri-food eco­nomy. Mo­re go­vern­ments in Eu­ro­pe, South Ame­ri­ca and el­sew­he­re are re­du­cing their ex­po­su­re to in­ter­na­tio­nal mar­kets. Doing so re­du­ces risks for tho­se coun­tries and ma­kes ma­na­ging the eco­nomy mo­re sim­ple.

But tra­de wars can back­fi­re. Pro­tec­tio­nist po­li­cies sup­port inef­fi­cien­cies, which ul­ti­ma­tely hurt con­su­mers. Tra­de ba­rriers ma­ke eco­no­mies wea­ker and less com­pe­ti­ti­ve over ti­me.

Du­ties may look li­ke at­trac­ti­ve, sim­ple me­cha­nisms to pro­tect do­mes­tic in­ter­ests. But they’re a very ex­pen­si­ve way to re­tain jobs.

Ca­na­da doesn’t ha­ve an im­ma­cu­la­te re­cord on this front. This na­tion ap­plies heavy du­ties on many im­ports, such as dairy pro­ducts, poultry and eggs. The­se du­ties are em­bed­ded in­to our supply ma­na­ge­ment re­gi­me, which is one of the most pro­tec­tio­nist po­li­cies in the world. In so­me ca­ses, du­ties ex­ceed 300 per cent.

Most coun­tries pla­ce du­ties on a va­riety of food pro­ducts, but Ca­na­da goes even furt­her by enabling and con­tro­lling do­mes­tic pro­duc­tion with quo­tas. We’re the only wes­tern eco­nomy still doing it. And it’s awk­ward to ask tra­ding part­ners for exem­ptions on cer­tain sec­tors.

We need to be mo­re awa­re of how in­tert­wi­ned our eco­no­mies are. Du­ties in one sec­tor will af­fect the abi­lity of ot­her sec­tors to tra­de. It’s dif­fi­cult to link steel and alu­mi­num with dairy, poultry and eggs, but at ne­go­tia­tions li­ke tho­se for NAFTA, everyt­hing is on the ta­ble.

This pro­tec­tio­nist beha­viour could ea­sily wor­sen and that spells trou­ble for an open eco­nomy li­ke ours. Gi­ven our abun­dan­ce of re­sour­ces and know­led­ge, we ha­ve plenty to sha­re. Al­most 60 per cent of our eco­nomy is tra­de-dri­ven.

Mor­neau’s bud­get short­chan­ged Ca­na­dian tax­pa­yers by fo­cu­sing on equa­lity. The lack of fo­cus on what really mat­ters means Ca­na­dians should not be shoc­ked if Ot­ta­wa is ut­terly un­pre­pa­red to deal with Was­hing­ton’s tra­de wrath.

Up­hol­ding equity va­lues is un­doub­tedly no­ble. But the go­vern­ment could fall short on its so­cial pro­mi­ses if it runs out of cash as the eco­nomy floun­ders.-TROYMEDIA

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