Boosting tariff limits would make Trump’s bid to reopen NAFTA more palatable
IF WE’RE GOING TO reopen NAFTA – and, hey, Donald Trump always gets what he’s after, right? – we should make it more equitable. I’m not talking about balance of trade between the three amigos, but about opening up the playing field to consumers who travel south of the border(s).
The value of the loonie notwithstanding, it would be nice to pick up some bargains – I’m looking at you, nanny state, predatory booze pricing Ontario – so that there is some upside to the masses harmed by globalization and the trade fetish – i.e. capital flight to cheaper, unregulated jurisdictions.
In his bid to make America great again, Trump has set his sights on renegotiating the North American Free Trade Agreement, with talks expected to get going later this month. While Trump’s motivation is the trade imbalance with Mexico ($60 billion in 2016) – and imports of other kinds, naturally – Canada is getting swept along for the ride. That’s made some people nervous, particularly where agricultural supply management is concerned. Moreover, the list of aims announced last month by U.S. trade representative Robert Lighthizer includes the elimination of NAFTA’s Chapter 19 dispute resolution panels – a mechanism used by Canada for battles over softwood lumber, for instance.
On the consumer side, Lighthizer’s stated goals include raising the dutyfree threshold for shipping goods across the border to US$800. Canada currently has one of the globe’s lowest de minimis levels – the point where duties kick in – at just $20, so the NAFTA change favoured by the U.S. would be a big improvement, especially for online shopping. Don’t, however, hold your breath for any rational adult decisions on this country’s part when it comes to getting your hands on the wines and spirits.
The U.S. is also looking to protect “buy America” provisions, and to exempt all sub-federal governments from NAFTA commitments. That’s in marked contrast to the Comprehensive Economic and Trade Agreement (CETA) whereby Canada is eager to give up such sovereignty in exchange for dubious benefits.
In that vein, trade deals have increasingly little to do with trade, fixated on the free movement of cash – tax avoidance a large plus – and so-called investor protection measures. We’re told there are long-term macroeconomic benefits, that the positives outweigh the negatives (job losses, in particular). Depending on your take, studies show such agreements to be either a boon or a bust for Canadians.
I tend to go with the idea that sweeping trade agreements have largely been harmful for our economy, encouraging the kind of globalization that has gutted the manufacturing sector in Ontario, as it has even in the U.S. heartland.
Trade agreements have failed Canadians time and time again, yet we’re moving into another one – quietly, as is usually the case, so as not to draw attention to the process. History has shown the free trade deal with the U.S. and later NAFTA have been hugely detrimental to the middle class in Canada and the U.S., while even further eroding Mexico’s economy in the case of the latter.
Look, for example, at the original deal with the U.S. penned by Brian Mulroney and Ronald Reagan. The numbers tell the story, say critics. Canada’s exports to the United States accounted for 19 per cent of Canadian GDP at the time. Twenty-five years later, they accounted for 19 per cent of GDP. Where Canada once accounted for 19 per cent of all U.S. imports, after gaining “unprecedented” access to the market, we accounted for 14 per cent of imports.
In the mid-1980s, most of Canada’s exports to the U.S. consisted of relatively sophisticated manufactured goods (including automobiles, electronics and machinery). Today, most of our southbound exports consist of unprocessed or barely processed primary and resource products.
We’ve seen no productivity gains, no job growth and no increase in our incomes, which have stagnated for decades.
Calling them trade agreements is rather disingenuous. The real goal is the ability to move capital with the intent of securely offshoring jobs, intellectual property rights, extending pharmaceutical patents to raise the cost of drugs and reduce oversight.
The kind of undemocratic, consumer-unfriendly language in existing deals such as NAFTA becomes even more pronounced in CETA and the Trans-Pacific Partnership (TPP) allow for end-runs around national governments, essentially constraining their powers. In many ways, its continued deregulation by stealth, as governments would be handcuffed. As parties to the negotiations, they do so willingly, attempting to hide from the public the desire to turn more power over to corporations. Once the agreements are in place, national governments can simply wash their hands of any issues raised by their citizens, claiming they’re bound by the deals.
It’s a corporate-friendly agenda, to the detriment of other priorities citizens may have, turning over the levers of control from public hands to private.
It can be argued that liberalized monetary policies and trade deals that favour corporate interests over the well-being of citizens – policies that have eroded our standard of living for three decades – culminated in the 2008 financial meltdown. The cure, we’re told, is yet more deregulation and globalization, essentially offering a drowning man more water instead of a lifejacket.
Trump’s take on NAFTA – reopen or even drop out – is motivated by his campaign rhetoric about putting America first. Hundreds of thousands of manufacturing jobs were lost as companies headed to Mexico, exploiting workers and destroying the environment in the name of
increased profits, as goods could be shipped to the U.S. without tariffs.
The deal comes with pros and cons. The upside would be marginally better if the de minimis levels increased, giving more of us something resembling free trade. Now, if Trump would only hold out for the deal to apply to liquor ...