Free Trade and other Grimm Fairy tales

[MAJOR_Baker]

Okay,

I have been following the latest rants by the politicians in Ottawa. Seems to me a lot of political posturing to see if the, "I will stand up to the US bully about NAFTA and free trade" will payoff in votes.   So I was quite surprised to read this article:

http://www.theglobeandmail.com/servlet/story/RTGAM.20050830.wxsoftwood30/BNStory/National/

So.....what we have now is a Mexican Standoff, both sides say they are right; although both sides have some merit, the political stakes are quite high for Martin, as my buddy Rick Mercer points out, Americans in general don't give Canada a second thought.   Martin can be seen as a champion of Canada or a mouse backing down to the Elephant.   I prefer the other option, Martin puts his money where his mouth is, no half measures, open up the border!.   Allow goods and services to cross without any trade restrictions.   That means western Canada farmers no longer have to sell their wheat to the CDN wheat board.   The CDN federal government allows real trade links between Canada and the US not a bunch of bottlenecks centered around southern ontario and quebec.   What I would like to see is a 10 fold increase in roads and rail links, especially out west!   I think it is criminal that western CDN businesses have to ship their products through a small number of outdated shipping links.  

I doubt Martin wants to give up that much control, he talks a good game but rarely follows through.  

As for the US congress (they are the ones, not the president who controls trade law) they are pathetic, they try to protect their own little fifedoms, have northern states competing with southern ones for manufacturing jobs.  Ultimately to the ruin of both.  They need to pull their head out of their fourth point of contact and get a grip.  Giving free land and tax abatements to foreign companies or for that matter US companies doesn't pay for schools, roads, etc.

I don't have the answer but, the present course is going to sink us.   

 

 

[Gunnar]

While I can understand your frustration, why haven't we heard about these disputes being brought before the NAFTA board?   Similarly, since the NAFTA board has declared that our stumpage fees in Canada do not constitute dumping, when will we expect to see your border opened up for our stuff?

I don't disagree with your assessment, I'm just wondering if the channels have been explored.   It IS supposed to be a mutual agreement after all, and what makes the news here is that "The (bilateral) NAFTA board decided Canada was right, but the US is ignoring their decision".

The recent tiff discussed in the article sounds a lot like the US is appealing to Mom and Dad because the results of a mutual, fair agreement by the siblings didn't turn out as planned.   Did the NAFTA agreement have provisions for appealing to the WTO?

And if the US mostly doesn't give Canada a second thought, then obviously our cheap lumber can't be hurting you all that bad...so when will you abide by your committments under NAFTA?   (Feel free to rake me over the coals for any of our own failures...I simply believe that agreements are just that, and that neither side can abrogate them at whim.   If either side feels they got screwed, then they can terminate the relationship...they don't whine about parts of it and ask other people for help...)

 

[Edward Campbell]

I have, quite separately, proffered some advice based on two principles:

"¢ Free trade, even managed free trade and even managed free trade with inadequate dispute resolution mechanisms is, always, better than protectionism of any and all sorts.  Tariffs are bad things - they do more harm than good when they aim to protect weak, inefficient Canadian industries and they are worse when they attempt to retaliate; and

"¢ The USA is a law abiding, liberal democracy - the solution will be found in some combination of law and the democratic political process.  Negotiations are, relatively, pointless.

There are a whole hockey sock full of measures - real and for show, only - which Canada can and should take; tariffs and export taxes are not amongst them.  Both are so counter-productive as to be stupid; why else would Maude Barlow, Naomi Klein and Linda McQuaig be calling for them.  If that trio, and their fellow travellers say "white' then it is best to run like h__l for the black corner.

We can, should and probably will win the softwood lumber dispute but it will take time and money - money spent fighting the issue in America, using American lobbyists and law firms and PR firms, in the American way.  the Americans will win some, too - especially re: marketing boards, etc.

Tariffs may make most Canadians (those with two digit IQs anyway) feel better - they will do real harm to Canada.  Export taxes are only slightly less dumb.  Withdrawal from NAFTA is a silly idea but it is worth talking about - one the front pages of our papers as long as the government-of-the-day is never stupid enough to actually listen to Canadians, or Rick Mercer.

 

[Cloud Cover]

LOL, these two governments are carrying on like a couple of drunks at a snooker table:

 

C B C . C A  N e w s  -  F u l l  S t o r y :
--------------------------------------------------------------------------------


Canada loses latest softwood ruling
Last Updated Tue, 30 Aug 2005 07:11:32 EDT
CBC News
After a string of wins, Canada has lost a softwood decision.

 
Cedar is loaded onto a truck for export from Squamish, B.C. to the United States (CP File Photo) 
The World Trade Organization has ruled the U.S. did comply with international law when it imposed duties on Canadian softwood.

The WTO issued the confidential ruling Monday. Canadian officials confirmed the decision.

CBC INDEPTH: SOFTWOOD LUMBER DISPUTE

The WTO said that the U.S. acted properly when it issued a revised finding late last year that Canadian softwood threatened American mills.

That ruling contradicts a decision that a NAFTA panel released earlier this month. It sided with Canada, and Canada said that verdict marked the end of the dispute.

The WTO decision further complicates an already complex series of rulings in the trade dispute.

Washington called the latest announcement a vindication while Ottawa termed it a setback.

Yesterday's WTO ruling is an interim decision, with a final ruling set for October.

Both sides can appeal.


Copyright ©2005 Canadian Broadcasting Corporation - All Rights Reserved 

 

[jmacleod]

Canada must either strike a deal with the US to resolve the softwood lumber dispute, or press on
with legal challenges. The World Trade Organization WTO concluded that the US Commerce Dept
had erred in calculating it's 19% countervailing duty to offset alleged Canadian Provincial
timber subsidies, by using cross border timber price comparisons. The WTO accepted the notion
that provincial stumpage-what lumber companies pay to log on Crown land is a subsidy. Canada
has long denied the point, but WTO ruled that stumpage meets two key tests of what constitutes
a "subsidy"; it is a "Government contribution" and confers a "benefit" on a specific industry. Canada
is now destined to pay some level of countervailing duty in perpetuity under WTO Rules. There is
no evidence that the US industry has changed it's aim - to inflate prices and restrict imports, however
the demand for softwood lumber in the US continues to grow. There is a long tradition of free trade
in logs and forest products between the Maritimes and the Northeast US, beginning with the
Ashburton Webster Treaty of 1842 that provided free and unrestricted commerce in lumber along
the Saint John River on both sides of the border. The US domestic industry does not claim that
counteravailable subsidies are being provided from the Maritimes, because Maritime timber is primarily
sourced from private lands and purchased at open market prices. The Maritimes have a long established
agreement between the Four Provinces and the USA (source: Maritime Lumber Bureau Feb 2001)

 

[jmacleod]

Wanted to add this to the previous post, but this electronic marvel leaped ahead. From 1996 to
2001 Canada and the US had a Softwood Lumber Agreement (SLA) which allowed BC, Alberta,
Ontario and Quebec to export a quota of up to 14.7 billion board feet to the US each year, duty
free, a fee was attached to anything above that amount. When the SLA expired on March 31
2001, the US Coalition for Fair Lumber Imports filed petitions with the US Dep. of Commerce,
demanding sanctions against Canada - Canada was accused of "dumping" softwood lumber.
Despite what the media in Canada report, softwood lumber exports do not form part of the
NAFTA Agreement. The US controls NAFTA in any event, which any contractor on the MHP
dealing in industrial offsets are becoming painfully aware of, no surprise to us. Media keep
complaining that the NAFT Agreement is very complex; well it in fact is not, essentially Canada
got out manoeuvered because our trade "experts" were political appointees MacLeod.

 

[Edward Campbell]

By any fair and sensible definition of the term, Canada does dump softwood lumber.

Dumping means that the selling price is below the costs of production, and the costs of Canadian softwood are heavily subsidized by many provinces because provincial officials, not the market, set stumpage fees.

Civil servants and politicians cannot set market values; they have neither the wit nor the will.  The former is not their fault â “ defining market values is not part of their skill-set; the latter is inclination â “ civil servants and politicians have no inclination to secure the best value for the people from the people's resources â “ they are more inclined to pass benefits to their cronies and paymasters.

The solution â “ which will knock the foundations out of the American case â “ is to auction timber cutting rights.  Auctions determine, with fairness and accuracy, the real value of a resource.  Everybody benefits except a few rich lumber barons and some political hacks, flacks and bagmen.

 

[jmacleod]

Yes you are absolutely right Edward, Canada does subsidize and dump lumber, we have said that
in several Business Plans focused on Federal aid for sawmill upgrades and prefabricated panelized
housing plants - and you are right, timber prices are market driven. We are fortunate in Canada
however that we do have skilled bureaucrats in Industry Canada who have a thorough understanding
of the industry - they do not set prices of course but are a substantial source of information that
would be difficult and costly to obtain otherwise. Auctioning off timber rights is a good idea, but
in New Brunswick and Nova Scotia in particular, access and market source control is in the hands
of one company; Irving Forest Products, who harvest, own saw mills and manufacture many valued
added wood projects; and as I am sure you are aware, control the newspaper print media here.
The politicians of New Brunswick gave up control of virtually all natural resources decades ago; the
irony is of course that the largest contributor to our GNP are our (or their) forests. But one thing
about the Irvings, here and in Maine, they replant what they cut, have been for years, their theory
being "we after all, own all the trees, forever". MacLeod

 

[squealiox]

it's not my industry, and i don't know the details of how stumpage fees are actually set, but the NAFTA dispute resoution panel did find that canada did not dump in this case.
in fact, the us lumber industry is now fighting the ruling on the grounds of the constitionality of the NAFTA process itself.
anyway, it's too bad the US construction and homebuilding industry (the users of the wood) don't step up to the plate and lobby for their interests in this matter. we wouldn't be hearing about "dumping" then. i don't think these groups are lobbying their govts out of a principled commitment to the concept of free trade and competition.

 

[jmacleod]

Softwood lumber is not contained in the Schedules and Product Categories to the North America
Free Trade Agreement (NAFTA).  Softwood lumber marketing is driven by supply and demand
and in the case of softwood lumber, US politics. States in the south eastern US produce two
mature crops of softwood trees capable of harvesting twice per year normally. The same States
are almost wholly represented by Republicans in the House and Senate - President Bush is a
Republican, and needs their political support. Former Canada Senior Trade rep, now retired,
reiterated the political implications in the National Post last week, in company with David Orchard
both not fans of NAFTA. End users of the product don't care where the product comes from,
as long as there are plentiful supplies to support the increasing demand for stick built housing;
and price differential is passed on to the consumer, who do not appear to care either. In any
event, the US will only pay attention to NAFTA dispute mechanisms when it suits them.Canada
was not a winner in the NAFTA process. MacLeod

 

[Edward Campbell]

... Canada was not a winner in the NAFTA process. MacLeod

I don't agree.

Overall NAFTA - especially the Canada/US FTA has been somewhere between 3 and 4 on a 1 (disastrous) to 5 (wonderful) scale; there is adequate data to support that contention but, of course, you remember what Disraeli said about statistics.

On principle: free trade always, without fail - there are no valid historical exceptions to disprove the rule - is more beneficial than protectionism.  (Those who claim that the US was protectionist in the 19th century are correct; those who claim that this benefited US industry are wrong; it was - as someone else here on army.ca, I think, said "unrestrained immigration" which grew America - that coupled with a highly (traditional, albeit radical; in the mid 19th century) liberal and secular society.)  Free trade is much harder to sell, implement, manage, enforce and maintain than protectionism - for precisely the reasons we can see in the softwood lumber agreements: greed (on both sides of the border), particularism which verges upon being xenophobic (on both sides of the order) and ignorance (on both sides of the border, in spades in Canada when anything American in involved.)

(There is a wonderfully precise maxim about Canada and the USA: Americans are benignly ignorant about Canada; Canadians are malevolently well informed about America.)

North America is a continental economy - Canada has sovereign rights, some of which it has traded away for other perceived advantages but Canada doesn't trade much with the USA*, nor is the reverse true.  Canadian companies trade with American companies and vice versa; they do that, in preference to all other markets, because we (Canadian and American companies) are close and familiar - it is easier, it is, in fact, natural in all sensible geographic, economic and social terms - politics, especially Paul Martin's posturing, is incidental.

Despite the softwood lumber tariffs Canadian softwood lumber exports to the USA have grown, and grown and grown.  The industry is healthy and profitable.  Some inefficient producers have gone under, jobs have been lost - that, too, is natural and, arguably, the tariffs have helped the Canadian industry by making it more efficient.

Efficiency (productivity) is usually a general benefit from free trade: imagine how much more efficient our textile industries would be if we had free trade with India and China - thousands of Québecers would suffer, temporarily, when they lost their jobs in inefficient, unproductive mills but millions, tens of millions of Canadians would benefit in the long term - ditto a million or so Asians who might have a little more disposable income, some of which might buy some Canadian goods or, more likely, services.

----------
* The exception is, of course, when the Canadian Commercial Corporation, and agency of the Government of Canada, sells (mostly defence products) to US Governmnet departments and agencies - most often DoD.

 

[Edward Campbell]

This is a somewhat longer than usual but, I think, correct editorial from today's Globe and Mail at: http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20050906/ETRADE05/TPComment/Editorials

Softwood fight or not, free trade is a boon

Tuesday, September 6, 2005
Updated at 10:32 AM EDT

This newspaper has been an ardent advocate of free trade with the United States since before Confederation. The Globe's founder, George Brown, argued that it would produce strong economic growth without posing any risk to the sovereignty of a young Canada. Later, in 1911, when the Liberal government of Sir Wilfrid Laurier went down to defeat over a reciprocity deal with Washington that would have freed up cross-border trade, The Globe editorialized: "What sort of base-born, nation-bartering men do these faint hearts think Canadians are? . . . That the [reciprocity] agreement, if passed by Congress and Parliament, will greatly increase the trade between Canada and the United States is true, but on what page of history is it taught that intimate trade relations necessarily lead ... to the sinking of national existence to insure their permanence?"

The track record since Canadians finally took a leap of faith in 1988 has proved George Brown and his successors right. Nationalist opponents of that free-trade agreement (FTA) with the United States warned that Canada's cherished social programs would be chipped away, its national identity lost, its flagship corporations swallowed up and its ability to craft independent foreign, economic and monetary policies forever compromised. Today, nearly a dozen years after the more far-reaching North American free-trade agreement (NAFTA) came into effect, all such fears have proved groundless.

The Canadian government has steered a much more conservative and sensible fiscal course than Washington, while the Bank of Canada has consistently shown its ability to operate independently of the U.S. Federal Reserve Board. Canada's identity is more distinct today than before the free-trade era, its culture is more robust and its foreign policy is more independent than at any time since the Trudeau era. Its health and social programs not only remain unaffected. They have proved advantageous in attracting corporations eager to tap the vast U.S. market but looking for ways to reduce their costs.

All of this is worth remembering as Canada and the United States continue their long-running feud over softwood lumber. Canadians are right to be outraged over the Bush administration's refusal to live up to its obligations under NAFTA. What is the point of having mutual trade rules if one side refuses to play by them? What is the point of having a trade agreement at all if it cannot prevent an escalating battle over as important a Canadian export as lumber? "This trade deal is a dud," proclaims Jim Stanford, an economist with the Canadian Auto Workers union. Plenty of other Canadians now wonder if he and other NAFTA naysayers are right. But that is because they have allowed the lumber row, which predated free trade, to obscure the larger trade and investment picture.

It would be utterly foolish for Canada to abandon a free-trade deal whose benefits far outweigh its weaknesses, and whose absence might very well trigger the tit-for-tat wars that have long marred U.S. trade relations with Europe. If the goal is to prevent future blow-ups and to persuade the Americans to abide by rulings coming from impartial arbiters, abandoning free trade is not the way to go about achieving it.

NAFTA is far from perfect. The dispute-settlement mechanism is particularly flawed, as illustrated by the softwood lumber situation. The problem is that the United States has adamantly refused to submit to a binding process in which its own laws and court rulings could be superseded by the decisions of an outside authority. It took a brief walkout by Canadian negotiators in 1987 to get even a watered-down dispute arbitration process into the original agreement. And no U.S. administration, regardless of its political clout, would have been able to get anything stronger past Congress. As a result, neither the FTA nor NAFTA, which added Mexico to the mix in 1993, were given any powers to impose or lift duties or to levy sanctions for unfair trade actions.

But, then, no one ever said that a free-trade agreement would abolish disputes. What it does do is provide a framework for co-operation, setting the standards of behaviour expected of its members and giving all sides a forum in which to make their cases. If the result of the process proves unsatisfactory, governments remain free to apply traditional remedies, including tariffs and other sanctions. That's why it's far better to have such an agreement, for all its weaknesses, than none at all.

And when its flaws are measured against its virtues, free trade has worked well enough to justify keeping what we have, while continuing to press for improvements. The numbers tell the tale. Two-way trade between Canada and the United States has more than tripled to $680-billion since free trade went into effect, allowing unfettered movement of a wide range of goods and services. Much of this flow has been in Canada's favour. Canadian industry was forced to become more competitive and adaptable, particularly because the Canadian dollar was initially strong.

When it declined, Canada continued to prosper. Critics said Washington would never countenance a weak Canadian currency, because of the huge advantage that would give Canada's exporters. They turned out to be wrong. Consumers have benefited from lower prices and more choice. And if Canadians' standard of living has not risen to levels envisioned by proponents of an open border, it is not the fault of free trade.

The trade surplus with the United States hit a record $96-billion last year, up from $4.4-billion in 1989. In the same period, gross domestic product nearly doubled to $40,484 a person and personal disposable income climbed by more than a third to $23,203. Canadian investment in the U.S. market has soared nearly fourfold, reaching $193.9-billion in 2004, while U.S. investment in Canada is about three times higher, at $238.1-billion.

Yet apart from their fulminations about softwood lumber, certain agricultural products and a handful of other trade irritants, U.S. politicians have remained largely unmoved by the distinct advantage enjoyed by Washington's largest and most important trading partner. Does anyone seriously think that would be the case if Canada rips up a deal that many Americans have come to question over the years, amid disappearing manufacturing jobs, a weakening U.S. dollar and soaring trade and budget deficits? The current impasse over lumber does not negate the long-term value of free trade. The more open and liberal the trading environment, both within North America and globally, the better off a trade-dependent nation like Canada will always be.

"There are no two opinions about the advantages to be drawn from reciprocity," George Brown editorialized in 1854. "Freedom is always a blessing, whether it is the shackles you throw from the arms of a slave or restrictions from the dealing of a merchant." His words remain as valid today as they were a century and half ago.

© Copyright 2005 Bell Globemedia Publishing Inc. All Rights Reserved.​

Our coveted, comfortable position as America's largest and preferred trading partner - for the same reasons I mentioned above - will be assumed, partially, (the 'largest' bit) by China which will eclipse Canada despite our social, structural, cultural, legal and geographic advantages.  That is neither a good nor a bad thing; it is just part of the inevitable historic ebb and flow.

Free trade, with all comers, is a good thing; tariffs, especially retaliatory tariffs, are the 'tools' of the terminally stupid - tools they use over and over and over again to nail their own feet to the floor, the end effect being that they (their countries) fail to advance. 

Canadian Liberals are - have been since 1967, at least - amongst the stupidest of the stupid and this government with its inane posturing and fat arsed complacency is no exception to the rule.  We should be slashing tariffs - and, as a consequence, bribing e.g. Québec (and Ontario) textile workers and dairy farmers with their own money - and signing free trade pacts with China, India, Australia, New Zealand, Singapore, South Korea, Japan, Malaysia and, and, and, ad infinitum.  Instead the relevant ministers, led by the PM, are sitting on their fat arses whinging about 2% of our trade with the USA.

 

[a_majoor]

I fully concurr with Edward on this matter.

In fact, I will go several steps farther and say free trade should be the centerpiece of this so called "3D" approach to foreign affairs. Lets negotiate free trade deals with all our democratic friends and neighbours, such as Israel, India, the "Little Tigers" and the nations of the Anglosphere, to name a few. This will provide an incease in wealth and opportunities for the people in all these nations linked by free trade. It will also provide conduits for effective "tiger teaming" in event of an emergency, such as we have seen with the Tsunami disaster last year, and provide closer ties, including defense ties, as the free trade bloc nations strive to protect their trade lanes. As a benefit, it will also create new wealth and resources for defense initiatives.

As a follow on, entry into the Free Trade Bloc would be offered to nations transitioning towards democracies, such as Afghanistan and Iraq. Certainly the people of those nations would be quite pleased to see their goods and services offered to hundreds of millions or even a billion new customers, and the growth of prosperity is certainly something most citizens of the nation would actively defend as being in their best interest.

It is true that lots of areas have to be cleaned up, such as effective dispute mechanisms and transparent definitions of contentious issues like what is a subsidy or what constitutes dumping, but as an evolving process, we can continue to work on this while building the free trade bloc. America will eventually come into line, firstly since most domestic business do not wish to be shut out of markets due to political squabbles, and second because the eventual mass of the free trade bloc would make it dangerous to stray too far out of line. Do you really want a billion customers in India to decide that dealing with an English or Isreali company is prefferable to putting up with some nagging trade irritant?

 

[a_majoor]

More on the use of trade as policy by VDH (what timing)

http://www.nationalreview.com/hanson/hanson200509090832.asp

Our Strange Foreign Policy
Are we isolationists, imperialists, or wide-eyed dreamers - or all and none?

For all the national angst over Afghanistan and Iraq, historians will come to appreciate that sometime after 2001 the United States embarked on a radically different, much riskier, and ultimately more humane foreign policy - one of both pulling in our horns while at the same time promoting risky democratic reform in targeted areas.

Such a complex and hard-to-define change explains why conservative realists are chagrined by its Wilsonian traits, even as leftist isolationists are equally furious that it is imperial. Mainstream out-of-power Democrats don't like what we are doing because of George Bush, while traditional Republicans stay the course mostly because it is now the party line.

But examine the policies of the last four years in some detail and the current charges about empire, hegemony, imperialism, and all the other common invective increasingly make little sense.

The United States, at some risk to its own economy, has essentially opened its entire market to the Chinese - not just to force global competitiveness within its own industries, or even to flood us with cheap goods, but also to bring the quasi-Communist giant back into the world community.

While Democratic leaders demand hammering the Chinese, and the Europeans erect barriers, U.S. willingness to incur trade debt and not regulate foreign investment has almost overnight jumpstarted China as a global player - dangerous of course, but perhaps less so if it has a stake in the world commercial order.

India is the same story. Tens of millions of its citizens have overnight seen a revolutionary material improvement in their standard of living. This has mostly been due once again to classical liberalism on the part of the United States, which resisted protectionism and allowed billions in capital and millions of jobs to be outsourced to the Indians - often at terrible costs in unemployment and readjustment here at home.

As a result while a socialist, subsidized, and protectionist Europe racks up trade surpluses, despite its utopian rhetoric, it does far less to bring others up to Western standards of commerce and consumerism. That might explain why, if the Germans and French do not appreciate us, the Indians and Chinese apparently do. How odd that we worry over the infantile rants of 140 million envious and ignore the begrudging admiration of 2 billion increasingly confident.

Far from being imperial, the United States, aside from its efforts to close military bases here at home - often bitterly resisted by Democratic congressmen - is trying to bring troops home from nations that quite unrealistically do not shoulder their own defense responsibilities and seek cover for that abdication through cheap shots at America for both leaving and staying. It was not the Clinton administration that began withdrawing soldiers in large numbers from Germany, took all American troops out of Saudi Arabia, and began redeploying contingents from the DMZ in Korea - with promises of much more to come.

Confusion also reigns over the American rebuke needed to reform the United Nations. Critics should ask themselves, was the U.N. of 1999 in better shape than today? Then, it was in the midst of a still covered-up, billion-dollar Oil-for-Food scandal, while the shenanigans of the Secretary-General's son went unknown, and horrific regimes served on the U.N.'s human rights commissions. Now, Kofi Annan and other U.N. bureaucrats themselves are suddenly decrying scandal and inefficiency, and calling for reform. We should ask them: why is all that happening now?

And why are troops out of Lebanon today when they were not in 1995? Why is Hosni Mubarak at least going through the motions of holding rigged elections that he would not, say, in 1992? Are the Palestinians better off with the Arafat dynasty of the Oslo days or with the semblances of a democratically elected government - and did the latter have anything to do with, first, the ostracism and, second, the ignominious death of Arafat, who once was so dearly beloved in European and American capitals?

Despite the torrent of abuse following the March 2003 invasion of Iraq, are Arab intellectuals more or less certain today (than say 1995) that the United States only cares about realpolitik - and does nothing to promote the democratic aspirations of the Arab people?

Is multilateralism an objective good in all circumstances or only a useful slogan to trash current policies in Iraq? Thus are current efforts to involve many nations to pressure North Korea bad or good? And is the outsourcing of the Iranian bomb problem for a time to the multilateral Europeans cowboyish or prudently communal? Indeed, some who last year called for US unilateral intervention to save Darfur (in the manner they had earlier demanded such steps in Mogadishu) are the first to castigate our efforts in Iraq that have won more of an allied presence than any adventure in the Sudan might.

What, then, is going on under the radar, as leftists here at home continue to fault American foreign policy, even as it is caricatured abroad by European elites?

In some sense, the United States is reverting to its isolationist past by wanting to downsize in South Korea and Europe, convinced that our presence is only resented - and that if Germany cannot be trusted after 60 years, or if after 50 South Korea cannot take care of itself, then there is not much more we can do anyway.

In other aspects, we are readjusting, taking the pulse of Japan and India and offering them closer ties if they wish - to allay their worries about radical Islam and Chinese expansionism, but in a way far more subtle than John Foster Dulles's globe-trotting.

By the same token, the United States intervened in Iraq and Afghanistan in the long-term hope that its terrorists and oil-dollar weapons would no longer be threats, and that by constitutional reform there, we could eventually lessen our military presence in the region.

Thus the odd spectacle of Iraqi and Afghan reformers worried that we will not stay long enough, even as the Pentagon is worried that we have stayed too long. The Saudis, Palestinians, and Egyptians are angry that we are too disengaged from them and too intimate with Iraqi, Afghan, and Lebanese reformers. Meanwhile, Muslim Brotherhood types and other Islamists say we are too cozy to autocrats even as they mobilize to subvert the elections we alone are promoting - while the fearful autocrats damn us as too naïve and too readily caving in to radicals masquerading as democrats.

I don't know what we should call all of this. But so far, no foreign-policy expert has come up with a non-partisan and intellectually honest diagnosis.

Perhaps it is a Zen-like mood we are in, of gradually allowing others to come to the fore, albeit with a warning "Go ahead, make my day, and see if you can do any better on your own."

With the smoke of gunfire yet in the air, the marshal is backing slowly out of the crowded and creepy saloon, but staring down outlaws and with six-guns still drawn.

- Victor Davis Hanson is a senior fellow at the Hoover Institution and a teaching fellow at Hillsdale College for the month of September. His book A War Like No Other. How the Athenians and Spartans Fought the Peloponnesian War appears this month.
 
  http://www.nationalreview.com/hanson/hanson200509090832.asp

       

 

[Spr.Earl]

Either fix NFTA our tear it up and start again but all in public, not like before;all done in the back room.

 

[Gunnar]

Sounds like our Manifest Destiny.  ;-)

 

[Edward Campbell]

I say get rid of all tarrifs between Canada and the US.   That way only the most versatile will survive and do a better job of providing for the consumer, and allow CDNs or Americans to work in either country.   Finally redeploy the guards to the southern border and international ports.

I agree with S_Baker but I would, were I da boss, go father:

While negotiating complete reciprocity with the USA I would, as a matter of survival, insist that, as part of the deal, the US Congress (because the President and his administration are paper tigers - toothless fairies, all bluster, no power - in trade matters) amend all US trade laws to make Canada domestic.  Without a real, significant change in the pork-barrel, all politics is local, principle which guides the US Congress free trade is impossible; US legislators will, again and again and again - just like their Canadian counterparts - dump principle and law as they genuflect at the alter of reelection.

While negotiating complete reciprocity with the USA I would, also start cutting tariffs - unilaterally, if necessary, with Argentina, Australia, Brazil, Brunei, Chile, China, the Caribbean nations, Fiji, Iceland, India, Indonesia, Japan, Malaysia, Philippines, New Zealand, Norway, Singapore, South Korea and Thailand.  I would hope, but not insist, that they would, reciprocally, lower their tariffs on Canadian goods and services.  I would also try to negotiate the free flow of people and capital with some of those countries, specifically: Australia, Fiji, Iceland, New Zealand, Norway and Singapore - countries which are:

"¢ Unlikely to swamp us with unskilled immigrants; and

"¢ Likely to provide the sort of immigrant who integrates easily into Canada.

(Parenthetically, I would, as da boss, redirect our immigration efforts away, totally, from Africa, the Middle East and Latin America and the Caribbean and, mostly, from Europe, too.  I would try to increase immigration - to double it - from China and India, both of which have surpluses of well educated, sophisticated, entrepreneurial people who have proved well able to adapt to and prosper in Canada.)

Cutting tariffs with developing countries means that I am also cutting well paid, unionized but extraordinarily unproductive jobs at home.  This means angry demonstrations on Parliament Hill, maybe even riots in Québec.  Given that 99% of Liberal and 98% of Tory politicians are cowards they will have to be whipped into line to bribe Canadians with other Canadians' money - which always works.

We can, actually, do the secure perimeter bit without real free trade.  There is, I believe solid support within the senior levels of the bureaucracy on both sides of the border; there is equally solid opposition from the Carolyn Parrish and Lew Dobbs schools in both countries.  Politicians, being venal, listen to Lew Dobbs and Maude Barlow far more often than they listen to smart people - like the Assistant Secretary of this in the USA and Deputy Minister of that in Canada.

 

[Zio]

I have read through this thread and believe that a vital point is being bypassed in this discussion.  Although Free Trade can (and has) been criticized on many fronts particularly during election campaigns, 2004 U.S for example, I do believe that a general consensus genuinely exists in both countries that Free Trade has been beneficial to all parties concerned. However a ineffective dispute resolution procedure may undermine support for NAFTA in the U.S.

Before going on I think sometimes the basic nature of the panel process gets overlooked.  A NAFTA panel does not decide issues, they examine whether the issue in question has been dealt with properly according to the laws of the nation in question.  In essence it becomes a case of the panel telling the nation that it is not applying its own regulations correctly.

Canadians look at the dispute resolution process as essentially a rule of law issue: â Å“Our two countries, however, do maintain key differences in economic policy, and respond in different ways to world economic conditions and the global free trade agenda. In cases where we have not been able to resolve our differences through consultation, we have relied on WTO and NAFTA dispute settlement procedures. Canada believes very strongly in a rules-based trading system with clear procedures for solving disputes. â Å“FAC 2004.

Okay so does the U.S, so where is the problem.  It arises because of what we each think the purpose of the NAFTA panels should be.  Canadians need access to the U.S market and more importantly for us we need procedures to safeguard this access.  Both during CUFTA negotiations and NAFTA negotiations we argued for strong dispute resolution processes.  This is required so that our goods do not become subject to any sort of arbitrary (read political) sanctions.  The U.S on the other hand requires different assurances; they look at the panels as a means of protecting their right to set their own domestic trade remedy laws.  A sort of mechanism to prevent outside interference in American businesses Constitutional rights.

Two points then;

1.  Both Canada and the U.S have won favorable rulings in regards to the determination of the U.S ITC.  We can continue to challenge ourselves around in circles or as unpatriotic as it sounds we can agree with the U.S that a negotiated settlement is the only solution.  Canadians walked away from the negotiating table without even responding to the most recent U.S proposals so let's answer it and come up with a solution.

2.  A dispute resolution process, which can only handle small or routine problems, is not adequate.  If we continue to see remand after remand resentment will grow within Canada and the U.S over NAFTA.  And in the long run a shift in U.S policy away from trade liberalization will hurt us the Canadian citizen.


In response to some of the points made by Edward Campbell, Canada indeed does have free trade agreements with some of the countries you mentioned.  Specifically we have Free Trade agreements in place with Chile, Costa Rica, Israel and of course the U.S and Mexico.  Canada is currently in negotiation with many of the other countries you speak including the FTAA, EFTA, Korea and Singapore.

 

[Edward Campbell]

There are differences between free trade and free trade agreements â “ the latter are, too often, mere window dressing aimed to disguise entrenched protectionism.

Steady tariff reduction â “ preferably reciprocally â “ is the best solution.  The WTO is the best mechanism, but unilateral tariff reduction is good enough if that is all that is available.  Doing nothing â “ which is the policy of the government of the day in Canada â “ is not an acceptable choice.  We have a city about three quarters full of cheap, ward heeling politicians and lazy, politically sensitive bureaucrats who are making the unacceptable choice, day after day, year-in and year-out.

We can and should be bold â “ even if Québec textile workers turf out a Liberal or two â “ and try to start a small fire in the protectionist forest by cutting tariffs on goods from countries which might respond in kind; then reducing more tariffs and cutting tariffs with other countries.  Rome may not have been built in a day but there was a day when one Roman started piling stones.

We do need to negotiate, with great care, on some issues: movement and protection of capital, foreign ownership rules, national security exemptions and, above all, free movement of workers and their immediate families.

Free trade is easy â “ it requires only a bit of will; starting with the will to fire venal politicians and idle bureaucrats.

 

[Zio]

Okay Edward Campbell your position as I understand it, is that Canada should pursue bilateral FTAs with specific countries.  Let me be clear about one thing, I fully support the elimination of tariff and other trade impediments, what I disagree with you on is the manner that it should and is being done.

Bilateral FTAs have a number of advantages and the ITC has been actively pursuing them for a number of years now.  Bilateral FTAs can confer many positives similar to those you have stated, as well they can be achieved relatively easily.  And seeing how Trade and international politics will always be meshed this type of FTA also delivers a political benefit.

What is damaging however is the impact on the global free trade negotiations that is occurring from concluding these bilateral agreements.  A marked shift from MFN trading to a more discriminatory system of FTAs is slowing unnecessarily the world's march to global free trade. 

1. Major issues, which stall the WTO Doha talks, such as agriculture subsidies, are unable to be addressed in bilateral FTAs.  For example agri- subsidies cannot be reduced in order to address other nations requests each and every time we sign a new FTA.

2. Separate FTAs also contain different provisions, different rules and as I mentioned earlier the bane of all FTAs different dispute resolution processes.  These all contribute to burgeoning bureaucracy, misunderstanding between non favored countries and difficulty negotiating comprehensive global free trade agreements.

3. Lastly the WTO believes that MFN is the most important article in international trade.  Taking ourselves out of this and becoming single sate negotiators as opposed to wholesalers of trade complicates WTO talks and along with the U.S (who is a worse offender) and other similar nations are helping to grind Global free trade talks into the ground. 

It is my opinion that the type of Free Trade you are advocating does not in fact promote global free trade.  To the contrary it pushes us farther from the goal and further from even seeing the goal line.  There is much to be done on the Doha development agenda lets have our representatives apply themselves to the negotiations and make a real effort at trade liberalization.