Canada-US Trade Relations

[Altair]

Canada's doing a great job negotiating. So great, that the US is close to a bilateral deal with Mexico before they complete any sort of deal with Canada. Probably all the GBA+ hangups.

https://business.financialpost.com/news/economy/trump-says-hes-getting-closer-to-reaching-a-bilateral-trade-deal-with-mexico

You must know the reason that the trade negotiations are currently hung up is because of the supply management issue, why would you say that it is because of the GBA+ instead?

Edit: Better?

 

[Fishbone Jones]

It's so sad that you know better than that, but stoop that low instead.

This time can't be passed off as sarcasm.

Tone Please.

Attack the point, not the person.

 

[Altair]

This time can't be passed off as sarcasm.

Tone Please.

Attack the point, not the person.

Fine, I'll try again.

 

[Altair]

https://nationalpost.com/news/national-security-hearing-in-d-c-hears-auto-tariffs-will-trigger-job-losses-higher-prices-and-more-car-thefts

They tried to be polite, to stress the long history of amity between the two countries.

But Canadian officials seemed almost astonished Thursday as they made a case for what seemed obvious to them: Canada is not a national security threat to the U.S., and shouldn’t be slapped with devastating tariffs on auto imports.

Kirsten Hillman, Ottawa’s deputy ambassador to the States, and Ontario cabinet minister Jim Wilson added to a near-unanimous chorus of opposition to President Donald Trump’s suggested defence-related tariffs on imported vehicles during a packed day of hearings on Capitol Hill.

If Canada is not, in fact, spared the trade penalty, it will respond with “proportionate” tariffs of its won, Hillman warned.

They were joined by American auto makers, business groups and think tanks that predicted such tariffs would kill thousands of jobs south of the border, make cars pricier — and even trigger a spike in auto thefts and crashes.

Wilson, the newly installed economic development minister in Ontario’s Progressive Conservative government, said that while he appreciated the chance to appear, it was “crazy” the Canadians even had to argue they should be exempted.

“We’re just trying to make sure our strong ties and friendship with the U.S. are maintained, and we’re not dragged into whatever is irritating the president,” Wilson told reporters after his presentation.

“Our workers have done nothing. They don’t deserve to be treated like this,” he added. “If he’s angry or perturbed in some way with China or with Mexico, deal with those issues. Don’t drag your best friends, your allies into this dispute.”Well, this is a pickle for some I'm sure.

Ford government against the American President. Who to side with?

 

[a_majoor]

I'm finding some of these conversations quite fascinating, and I suspect that the long term effect of people moving towards more self sufficiency by gardening/canning etc. or developing relationships with local farmers might have some very interesting long term effects on how our society works and how Canadians do politics

Don't forget Alexis de Tocqueville noted that the America he visited was a "nation of associations", where people were connected by ties of locality and solved problems at the local level. This model was largely overturned by Progressivism starting near the end of the 19th century, and Canada has also been pretty enthusiastic about centralizing things since 1968.

I will pass on an anecdote about Supply Management which demonstrates that it no longer serves the purpose it was designed for (I can't remember where I read this). An American company was looking to establish a production facility in Canada to produce and sell "Greek Style" yoghurt. The Canadian competators, despite not having that product, used the quota system to deny the American company the ability to purchase milk to produce the Greek Style yoghurt, causing the company to abandon their plans, deny Canadians a lot of jobs (building the plant and producing the yoghurt) and ultimately farmers were forced to sell their milk as animal feed at a lower price than they would have received from selling it to a commercial dairy producer.

Most dairy is now produced in factory farm outfits, not family farms, and the escalating price fo quotas has essentially driven family dairy producers out of business. Supply management is only good for the rent seekers, not consumers and sometimes not even the farmers themselves.

 

[Altair]

I'm finding some of these conversations quite fascinating, and I suspect that the long term effect of people moving towards more self sufficiency by gardening/canning etc. or developing relationships with local farmers might have some very interesting long term effects on how our society works and how Canadians do politics

Don't forget Alexis de Tocqueville noted that the America he visited was a "nation of associations", where people were connected by ties of locality and solved problems at the local level. This model was largely overturned by Progressivism starting near the end of the 19th century, and Canada has also been pretty enthusiastic about centralizing things since 1968.

I will pass on an anecdote about Supply Management which demonstrates that it no longer serves the purpose it was designed for (I can't remember where I read this). An American company was looking to establish a production facility in Canada to produce and sell "Greek Style" yoghurt. The Canadian competators, despite not having that product, used the quota system to deny the American company the ability to purchase milk to produce the Greek Style yoghurt, causing the company to abandon their plans, deny Canadians a lot of jobs (building the plant and producing the yoghurt) and ultimately farmers were forced to sell their milk as animal feed at a lower price than they would have received from selling it to a commercial dairy producer.

Most dairy is now produced in factory farm outfits, not family farms, and the escalating price fo quotas has essentially driven family dairy producers out of business. Supply management is only good for the rent seekers, not consumers and sometimes not even the farmers themselves.

100% correct.

But there is only one party that wants to get rid of supply management.

https://www.libertarian.ca/making_every_canadian_richer

END SUPPLY MANAGEMENT WHICH FORCES US TO PAY TWICE THE PRICE FOR MILK, CHEESE, EGGS, CHICKEN, AND TURKEY
Supply management is an outdated system that props up cartels at the expense of every single Canadian. It keeps prices artificially high by imposing exorbitant tariffs on imported goods, like a 300% tax on butter. Daily staples like butter, milk, eggs and chicken are not luxury items, and should not be priced that way. Eliminating supply management would save the average Canadian family more than $500 each and every year. Standing up to the cartels and protecting the pocketbooks of 35 million Canadians is the right plan. We would follow the Australian model, with a gradual phase-out and compensation for farmers.

Every other party wants to keep it, so seeing as how Canadians vote these parties into power, it's fair to say Canada on a whole supports supply management to some extent

 

[a_majoor]

More likely a combination of things, Libertarians (large L) have issues in getting organized and their ability to actually carry through. The large parties are essentially used to power oligarchies (or are the conduits through with oligarchies exercise power, depending on which way you choose to look at things), so most voters are in the unenviable position of suporintg whichever rent seekers promise to kick back a few crumbs from the table to them.

If derailing supply management would mean losing out on a set of goodies that you desire, then you will likely vote for the plate of goodies and take supply management as part of the deal. Disaggregation and reducing the powers of the State to push tax dollars to rent seekers would go a long way to ending these practices and making things better for all Canadians.

 

[Cloud Cover]

Every other party wants to keep it, so seeing as how Canadians vote these parties into power, it's fair to say Canada on a whole supports supply management to some extent

Balls. Most Canadians, on the whole, haven't got a clue what supply management is in the dairy industry.  What they know is that is apparently an issue in NAFTA, therefore they feel inclined to support it but really don't have a clue why. 

This activation of system justification is not a proper motive, and is no substitute for rational analysis. 

OTOH, when in doubt and the facts are obscure, buy local  

 

[Cloud Cover]

You must know the reason that the trade negotiations are currently hung up is because of the supply management issue, why would you say that it is because of the GBA+ instead?

Edit: Better?

It is but one reason. Among others, there is the issue of enforcement of intellectual property rights, US service providers acting like they are sovereign countries that are disinclined to follow the procedural laws of the jurisdictions in which they conduct business- ranging from taxation to subpoena compliance. 

Mechanisms to deal with unfair trade complaints under the current system have also irked the US government when it throws support behind their huge companies like Boeing, mostly because they get their asses handed to them by impartial arbitration authorities, and that won't do....  We are moving towards CETA (slowly) and the EU models of governance. Google was just fined 5 Billion Euro's for its anti-trust practices, and they are about to get body slammed in Canada, the EU and Australia on copyright infringement. 

These US companies are lurking in the background of NAFTA (as are some of our own) and unlike Mexico, Canada has a lot more at stake as an knowledge based economy that goes far beyond the industrial production of milk.

 

[Altair]

Balls. Most Canadians, on the whole, haven't got a clue what supply management is in the dairy industry.  What they know is that is apparently an issue in NAFTA, therefore they feel inclined to support it but really don't have a clue why. 

This activation of system justification is not a proper motive, and is no substitute for rational analysis. 

OTOH, when in doubt and the facts are obscure, buy local

Canadians could vote for the party that opposes supply management, Politicians who oppose it can leave traditional parties that do support it. None of these things happen.(I'm looking at Bernier, who was offered the leadership of the Libertarian party of Canada)

But if Canadians don't vote against those parties who support it, the LPC, the NDP, the CPC, the Greens and the Bloc, then they are, even if indirectly, supporting it.

 

[Cloud Cover]

oh come on, in those instances, they haven't got a clue what they are voting for.  the fact that one party or another prevails is a question of a lucky shot, or unlucky miss, depending on the outcome.

 

[Altair]

oh come on, in those instances, they haven't got a clue what they are voting for.  the fact that one party or another prevails is a question of a lucky shot, or unlucky miss, depending on the outcome.

If Canadians cared enough about it, they would oppose it. If they opposed it, they would vote against it. If they vote against it, they wouldn't vote for the LPC, CPC, NDP BQ, or Grn parties.

So again, either supply management doesn't bother Canadians, or it doesn't bother them enough to vote against them. Taken the unanimous support for it among the federal political parties, and the people who do vote for them, it can only be considered that Canadians are either indifferent to it, or support it to some extent.

 

[FJAG]

Balls. Most Canadians, on the whole, haven't got a clue what supply management is in the dairy industry.  What they know is that is apparently an issue in NAFTA, therefore they feel inclined to support it but really don't have a clue why. 

This activation of system justification is not a proper motive, and is no substitute for rational analysis. 

OTOH, when in doubt and the facts are obscure, buy local

General ignorance of the issues is an electorate trait not simply confined to supply management.

What I can't understand is why the Conservative leadership is so insistent on keeping it against all odds? I think the issue was in large part behind the Scheer-Bernier debacle last month. There is clearly a schism between those Conservatives who philosophically favour a free marketplace and those who feel that their rural support depends on retaining it (I tend to think that there aren't enough supply management producers out there to make enough of a difference)

:cheers:

 

[Cloud Cover]

there is, no doubt, a rural-urban-metro divide in the CPC. This is not something the current leader seems to be able to "control", in a Stephen Harper sort of way...

 

[Fishbone Jones]

General ignorance of the issues is an electorate trait not simply confined to supply management.

What I can't understand is why the Conservative leadership is so insistent on keeping it against all odds? I think the issue was in large part behind the Scheer-Bernier debacle last month. There is clearly a schism between those Conservatives who philosophically favour a free marketplace and those who feel that their rural support depends on retaining it (I tend to think that there aren't enough supply management producers out there to make enough of a difference)

:cheers:

They want Quebec. I'll be some pissed if they do a Trudeau. Lie through the campaign and then do the opposite.

 

[Cloud Cover]

If Canadians cared enough about it, they would oppose it. If they opposed it, they would vote against it. If they vote against it, they wouldn't vote for the LPC, CPC, NDP BQ, or Grn parties.

So again, either supply management doesn't bother Canadians, or it doesn't bother them enough to vote against them. Taken the unanimous support for it among the federal political parties, and the people who do vote for them, it can only be considered that Canadians are either indifferent to it, or support it to some extent.

Unfortunately, I think this is more of a case of "my country, right or wrong". 
In my lonely view, we require supply management in the entire food production industry as a matter of national security on the basis that preserving our ability to feed the population outweighs the free market analysis.  If another country comes about to take control of another's food supply, things get ugly real quick. Again, in my lonely view, the basics of life - food-shelter-medicine-winter heating-etc. ought to supplied within our borders.
We do not need our cereal made in a Chinese dog food plant, or cheese and milk made in the United States.

 

[Altair]

Unfortunately, I think this is more of a case of "my country, right or wrong". 
In my lonely view, we require supply management in the entire food production industry as a matter of national security on the basis that preserving our ability to feed the population outweighs the free market analysis.  If another country comes about to take control of another's food supply, things get ugly real quick. Again, in my lonely view, the basics of life - food-shelter-medicine-winter heating-etc. ought to supplied within our borders.
We do not need our cereal made in a Chinese dog food plant, or cheese and milk made in the United States.

that could be the issue.  I don't know why canadians support the system to be honest.

What I do know is that its only in cases of national tragedy and supply management that can get canadian politicians of every stripe to unite together in one voice,  and here,  in the case of supply management, they consistently do that.

Hell,  we have scheer attacking trudeau for being flexible on the issue. So right on wrong,  its clear canada speaks in one voice on this issue,  and we aren't about to budge,  NAFTA be damned.

 

[pbi]

More likely a combination of things...If derailing supply management would mean losing out on a set of goodies that you desire, then you will likely vote for the plate of goodies and take supply management as part of the deal. Disaggregation and reducing the powers of the State to push tax dollars to rent seekers would go a long way to ending these practices and making things better for all Canadians.

Well, maybe. But if you look at the massive direct and indirect subsidies the US Govt historically pays under several different Acts to its farmers of various stripes, but particularly to dairy farmers, and how quickly those farmers will rise to defend those subsidies, in my opinion there is another issue here that has nothing to do with great big nasty mysterious rentier entities lurking about.

Farmers are mostly in rural ridings (or Congressional Districts). Given the first past the post system that both countries use federally, it's very important for parties to win rural ridings/districts, or states/provinces with a higher percentage of such ridings/districts. The US two-party system and its Electoral College system, as I understand them, both serve to magnify this effect.

You don't win rural votes by pissing off farmers, farm suppliers, or the people who trade with farmers such as the local gas station, Co-op, machinery shop or grocery store. These aren't big nasty rentiers: these are just local people, many of whom IMHO are likely quite conservative in their outlook and expect that in exchange for their votes, right-leaning parties will protect their interests.

This, I think, is why neither the free-trading, free-enterrprise GOP, nor its approximate equivalent the CPC, have done much to dismantle the systems on either side of the border.

 

[Edward Campbell]

Agricultural subsidies are a HUGE fact of life in almost every country. Even Australia and New Zealand, which always claim to be in favour of no tariffs on food and who claim to have low subsidies, have tax systems that provide indirect, legal (under WTO rules) subsidies that are quite generous.

The USA and the EU are amongst the 'worst' ~ by which I mean biggest ~ subsidizers.

Personally I like the AUS/NZ model which aims to achieve 'food security' by using the tax system, rather than direct subsidies, to pay farmers to stay in business. I think tariffs are little more than a tax which consumers pay ~ as our American friends will soon start discovering when the prices go up in WalMart. I think direct subsidies are inefficient because, too often, you end up paying people to grown nothing. Using the tex system to let the farmer 'write off' almost every reasonable expense, including interest on loans, makes more sense to me and it is 'legal and proper' under the WTO's rules.

I think we should follow that example and get rid of supply management and many, even most direct subsidies ~ some indirect subsidies, like underwriting food transport and providing water supply infrastructure should remain in place.

 

[Retired AF Guy]

Agricultural subsidies are a HUGE fact of life in almost every country. Even Australia and New Zealand, which always claim to be in favour of no tariffs on food and who claim to have low subsidies, have tax systems that provide indirect, legal (under WTO rules) subsidies that are quite generous.

The USA and the EU are amongst the 'worst' ~ by which I mean biggest ~ subsidizers.

Personally I like the AUS/NZ model which aims to achieve 'food security' by using the tax system, rather than direct subsidies, to pay farmers to stay in business. I think tariffs are little more than a tax which consumers pay ~ as our American friends will soon start discovering when the prices go up in WalMart. I think direct subsidies are inefficient because, too often, you end up paying people to grown nothing. Using the tex system to let the farmer 'write off' almost every reasonable expense, including interest on loans, makes more sense to me and it is 'legal and proper' under the WTO's rules.

I think we should follow that example and get rid of supply management and many, even most direct subsidies ~ some indirect subsidies, like underwriting food transport and providing water supply infrastructure should remain in place.

Article from today's Financial Post that compares subsidies between Canada and United States and shows that in many cases the US government subsidizes there there industries just as much as Canada does and in some cases (sugar!) even more so.

First of four installments about protectionism in Canada and around the world.

Hey Mr. Trump, when it comes to trade, even America has its sacred cows
If you are going to call another country out on its trade policies, you’d better be ready to defend your own

Naomi Powell July 20, 2018 7:17 PM EDT

In 2002, a former Brazilian engineer born into a family of cattle ranchers and sugar farmers took on the United States government. Pedro Camargo, who had joined Brazil’s Department of Agriculture following a mid-life career change, believed the U.S. was unfairly subsidizing its cotton industry. At his urging, the Brazilian government lodged a complaint at the World Trade Organization and a dispute panel in 2005 ruled in its favour.

What followed is one of the more outlandish entries in the annals of global trade. After a long string of failed appeals, the U.S. was told to eliminate all subsidies for its politically influential cotton growers. Congress balked.

Brazil threatened retaliatory tariffs on a laundry list of U.S. goods: tires, intellectual property, pharmaceuticals and cars. American industry balked.

The U.S. government then made an offer: it would pay $147.3 million per year to Brazilian farmers if Brazil dropped its complaint.

“It was very bizarre because (the U.S.) only had about 5,000 farmers then,” Camargo said in an interview. “It was a payoff and they were paying, basically, to get out of the rules.”

The cotton dispute, while unusual, is a good illustration of just how far countries will go to support politically sensitive industries. It’s also proof of what every trade negotiator knows: almost every country, including Canada and the U.S., has a contentious policy or two, not necessarily hidden, but largely unnoticed until another country wags an accusatory finger.

Of the $900 billion in annual trade flowing between Canada and the U.S., the vast majority of it is tariff free under the North American Free Trade Agreement. Dig a little deeper, though, and you’ll find the aberrations, the policies that aggravate, frustrate or otherwise irk relations between the trading partners and, on occasion, prompt accusations of protectionism.

In Canada, it might be courier services or telecommunications, where restrictions are among the toughest in the developed world. In the U.S., it might be the heavily regulated maritime transport industry or insurance services. Both countries might have a bone to pick with each other — and others — on agricultural policy.

“There’s certainly no clear case to be made that Canada is more protectionist than the United States,” said Alan Deardorff, a professor of international economics at the University of Michigan. “That’s just nonsense. That doesn’t mean individual tariffs are the same, not at all. Each country has particular objectives and sectors it protects more than other sectors.”

In tweets, U.S. President Donald Trump has accused Canada of having “all sorts of trade barriers on our Agricultural products,” treating U.S. agricultural businesses and farmers “very poorly,” and being “highly restrictive on Trade!”

Some form of government aid, be it subsidies, tariffs, price supports or other interventions, contributes 9.6 cents of every dollar that goes to Canadian agricultural producers, according to 2017 data compiled by the Organisation of Economic Co-operation and Development. That’s just slightly below the U.S. at 9.9 cents per dollar.

Both countries’ rates are below the OECD average, though Canada’s share of aid delivered through market price supports — one of the policies considered most “distortive to trade” — is higher.

The main recipient of that largesse: Dairy.

Between 2015 and 2017, the government contributed 44.7 cents of every dollar going to Canadian dairy producers, almost all of it coming from market price supports, according to the OECD’s measure of single commodity transfers (STCs), which provides an estimate of the total dollar value transferred via government policy from taxpayers and consumers to agricultural producers.

Dairy farmers receive the most support of any Canadian agricultural sector, through a complex supply management system that employs production quotas, fixed prices and hefty import duties, said Jared Greenville, senior agricultural policy analyst at the OECD. After dairy, support for most other Canadian food, including soybeans, barley, oats and rapeseed, drops to a few pennies at most.

“If it weren’t for dairy, Canada would be, I guess, one of the champions of better access and freer access in world agricultural markets,” he said, noting that Canada is a member of the Cairns group of 19 countries seeking to liberalize global trade in agriculture. “In fact, if you were to take dairy out of it, Canada provides less distortionary support to agriculture than the U.S.”

Yet Canada isn’t the only country whose support for the dairy industry — one of the most protected group of commodities globally — has been called out by other countries. Between 2015 and 2017, 19 cents out of every dollar that went to U.S. dairy producers came from government support, all of it via market distorting measures, according to the OECD.

If it weren’t for dairy, Canada would be, I guess, one of the champions of better access and freer access in world agricultural markets,

New Zealand and Australia, which demanded greater access to Canadian markets during talks to form the Trans-Pacific Partnership, also took issue with the U.S.

“This was a big issue for the U.S., too, in the TPP,” said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics in Washington, D.C.

Rest of article can be found here.