John Chuckman

EXPANSION OF COMMENT POSTED TO AN ARTICLE IN CBC NEWS

 

“’Nowhere near close:’ U.S. rebuffs Trudeau hope for quick NAFTA deal

“U.S. trade czar Robert Lighthizer cites ‘gaping differences’ after Trudeau says a ‘good deal’ is on the table”

 

This development really makes Trudeau and Freeland sound rather clueless.

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Response to another comment:

There is the important point of keeping good and happy neighbors on your major borders.

I think that was unquestionably at work on the American side when the Agreement was first negotiated. America certainly was not giving stuff away, but Canada may just have received some degree of economic benefit in some of the Agreement’s terms to “buy” good will and security.

But America is a much-changed place since that time.

It is a far, far meaner place, and that is not just the effect of Trump, although he sure adds a great deal to the ugly tone.

Just look at America’s aggressive behavior all over the world. Against Russia. Against China. And the U.S. has burned down a good part of the Middle East. All of this new aggression goes back at least through three Presidents. It isn’t the individuals in office creating it, it is the power establishment they serve.

The old, sentimental U.S. of Jimmy Stewart movies is long gone. It was in fact always an illusion, but now America has stopped acting and pretending. Its power establishment, all of it, has grown quite openly ugly over the accurate perception of America’s relative economic decline in the world and over the country’s self-created financial and economic woes.

America is using the military and financial muscle that it has to bully its way to a more controlling position in the world, hoping to better control events for the future.

It is an extremely unfortunate time in which to be negotiating any kind of trade agreement with America. And I think all bets are off as to whether Canada can even succeed.

In general, big trade agreements concern more than just economics, otherwise there would be no need for elaborated negotiations and documents.

Indeed, no such agreements are true free trade.

If the parties wanted free trade, they’d just throw open the borders.

Formal “free trade” agreements create not free trade but an administered trade guided by sets of rules.

The administration of such ‘free trade” cannot escape the larger social and political environment of a country.

For example, there were a number of arbitrary American behaviors under NAFTA concerning such matters as softwood lumber and pork.

Even though the quasi-judicial mechanism of the Agreement’s administration, more often than not, found such American behavior was a violation, the U.S. often just ignored it. The behavior reflected domestic political pressure, and America responded by breaking the spirit and the letter of the Agreement a number of times.

In such a situation, there isn’t a lot you can do. Of course, either party, with proper notice, is free to withdraw from the Agreement. But accepting some loss owing to the other party’s violations would always seem better to a country like Canada than losing the entire Agreement.

A smaller country such as Canada can never really be totally secure from such actions by a much larger partner.

And now the larger partner isn’t pretending to be nice to anyone.

This, in my view, is a grave error for America’s own long-term interests, to say nothing of the world’s interests, but it nevertheless is the reality we face.

If Canada does manage to secure a new agreement, it will, to a certainty, be much diminished from the existing one. Good will in today’s America gets you a cup of coffee, if you also have two dollars.

 

 

 

JOHN CHUCKMAN

POSTED RESPONSES TO A COLUMN BY JOHN IBBITSON IN TORONTO’S GLOBE AND MAIL

If this is true, why is creepy Harper pursuing the nightmare of perimeter security with the U.S.?

The column is little more than reverse-psychology Harper boosterism.
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A reader writes:
“Free trade isn’t so great when one partner is WAY bigger than the other.”

In economics we know that the smaller partner in a free-trade deal gains disproportionately compared to the larger one.

That is why all free-trade deals with the U.S. are complex: the U.S. tries to gain maximum advantage out of that known starting point.

In fact, many U.S. free trade deals are little more than enticements to small countries to sign on to voluntary American involvement and interference.

Such deals mean the U.S. only has to threaten to abrogate the treaty to hold a genuine hammer over the head of a small country.

All of the deals with places in South America and Central America are of precisely that nature.

And what has Harper done in these matters?

Dutifully run down to Central America to sign parallel agreements in keeping with American policy – these deals have all been virtually economically worthless to Canada and represent zero Canadian initiative.

I haven’t seen a sign of what Ibbitson is blubbering about.

In fact, Harper’s is the most cringing and servile government in our history with regard to America and its interests.
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“Free-trade is a myth.”

That statement is certainly true.

True free trade exists only in theory, just as the form of economic organization we call perfect competition exists only in theory.

All free-trade agreements are forms of managed trade, managed according to some negotiated set of rules.

The free trade of classical economics is beneficial to all partners, however the smaller and less sophisticated economy – the one making the greatest economic gains – has to make the largest adjustments.

That means that while the economy as a whole gains, individual regions and industries can suffer badly in the transition. Canada certainly experienced this under North American free trade.

Keenly aware of the vast size of its markets and their attraction to smaller countries, the United States never, never signs a free-trade agreement without squeezing maximum geo-political advantage out of it.

The geo-political price may in fact outweigh the economic gains to the smaller partner in the view of many citizens of the smaller country.

You do not get anything for free, and certainly not in free trade agreements.