Ottawa Citizen

A debate he didn’t intend, writes William Watson,

- WILLIAM WATSON William Watson teaches economics at Mcgill University.

‘So much depends upon a red wheel barrow,” wrote William Carlos Williams in the world’s most famous 15-word poem, “glazed with rain water beside the chickens.” In asking his first parliament­ary question as Liberal leader Monday, so much depended for Justin Trudeau on a “little red wagon,” on school supplies and on a tricycle that middle class parents would like to buy for their kids but now maybe won’t be able to because of the tariff increases in the Conservati­ves’ budget last month.

You notice the subliminal messaging. The wagon is red because that’s the colour of the Liberal party. Middle-class Canadians are naturally red in their political sympathies and in just two years they’ll be able to return to their natural governing colour. The kid’s amazing, isn’t he? He makes poetical allusions. He’s doing Canadians’ colours for them. He stood through the whole question without falling down! Surely it won’t be long now before our national nightmare is over and the Tories go back to the opposition benches where God always meant them to live.

(The Tories are spending money, not very effectivel­y judging by their first attempts, trying to tear Trudeau down. Don’t they realize that’s our job in the media?)

In fact, it was heartening to see the first question from the new leader raising an ancient Liberal/ liberal theme, namely free trade, one of the great causes in support of which the party was founded in the 19th century. Liberals believe in individual freedom, or at least they’re supposed to, and the government taxing imports is an offence against individual­s’ ability to choose what goods they wish to consume. On Tuesday Trudeau returned to this issue, bemoaning the effect of the new taxes on the price of scissors, coffee makers and wigs. Wigs? Is there a big middle-class lobby for wigs? And is it really wise to reinforce the Tories’ dumping on his drama teacher background?

But never mind what goods Trudeau likes. If the Liberals are returning to their roots and pushing free trade — Martha Hall Findlay in her campaign even proposed doing away with the politicall­y sacred cows and chickens and cheeses guarded by marketing boards and the skyhigh tariffs they require — that’s real substance worth noting and maybe even supporting electorall­y.

It’s a little more complicate­d than that, however, as I hope the new leader understand­s fully. The Tories aren’t actually imposing new tariffs across the board, as the prime minister explained in his answer to Trudeau’s question. Since 1974 we, like most rich countries, have exempted developing countries from most tariffs. It’s a way of helping them with “trade not aid,” which is probably a more effective form of assistance and, unlike aid, requires almost nothing in the way of bureaucrac­y on our part.

But some formerly developing countries are now “emerging economies,” or even emerged economies. And maybe those, like China, that are so emerged that the whole world’s stock markets decline when they announce lower-than-hopedfor growth numbers, no longer need either our aid nor our trade on a preferenti­al basis. My all-time favourite cover of the Economist magazine ran in 2003 after the Chinese put their first man in space. It showed the rocket blasting off with the caption: “Congratula­tions, China (So, no need for any more aid, then?).”

Taking this view, last month’s budget announced we are going to “graduate 72 higher-income and trade-competitiv­e countries (e.g., Korea, China, Brazil)” to pay the tariffs faced by all our other “most-favoured nation” countries (who, confusingl­y, aren’t actually our most favoured nations: those we have special deals with are). “Graduate” is a little condescend­ing but it’s otherwise a perfectly defensible decision.

The budget estimates these higher tariffs will bring in $300 million a year as of 2015, when they kick in. Trudeau was correct in his question. Tariffs are taxes. The change therefore means the government is raising taxes, though not just on middle-class Canadians. Rich Canadians and poor Canadians have also been known to buy little red wagons for their kids, too, though no doubt rich Canadians opt for the motorized ones with air conditioni­ng and GPS. Though the Liberal party apparently doesn’t care about these groups they, too, will pay more because of the higher tariffs.

So, deep down, what does Trudeau’s question imply? Does it mean he thinks the government shouldn’t “graduate” these 72 countries but should let them keep tariff-free access to the Canadian market? Does he think doing so would be fair to other countries that may never have had this preferenti­al access but that China, Brazil, Korea and so on have now caught up to in terms of per capita income? Or, as someone who seems not to like tariffs, does he think we should gradually extend this sort of preference to all countries, possibly even unilateral­ly, so that middle-class Canadians never have to pay tariffs on literal red wagons or little red Hondas or for that matter on any import of any colour ever again — which would be a very liberal policy and one many economists would welcome?

Unfortunat­ely, what’s most likely is that there is no deep-down and that none of this was behind the question. Rather, it was just a quick, easy and evocative way to catch the government in what seems like a contradict­ion in its generally antitax policy. As such, it is essentiall­y a sign of immaturity. Which of course means that in Question Period, Trudeau will fit right in.

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