Everyone Loses in a Trade War
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Appeared in the Saint John Telegraph-Journal and the New Brunswick Telegraph-Journal
Our nationalists constantly complain that trade agreements weaken Canadas power to protect Canadian workers and interests. So, Canadian nationalists should support the United States decision to toss out the international rulebook to protect its domestic workers and interests.
Never mind that US action on softwood lumber threw thousands of British Columbians out of work, or that new steel barriers could mean economic devastation for hundreds of thousands of steel workers in poor nations.
Canadian nationalists want Canada to follow the same path in protecting our national sovereign interests. Yet, protecting sovereign interests usually translates into favours for influential special interests.
The US steel industry and its unions remain politically powerful. Steel workers are among the best-paid, best-pensioned workers in the United States and they dont mind the fact that US steel tariffs will cost thousands of other Americans jobs in manufacturing because of increased steel costs.
Trade barriers hurt average citizens in a number of ways. Americans pay more for their homes because of softwood tariffs. Many will see the dream of home ownership evaporate because of additional costs. Thousands of construction workers wont be working. Even if Canada subsidizes lumber exports, as the United States claims, such barriers do American citizens more harm than good.
Tariffs on steel will smash into the US manufacturing sector, particularly automobiles. Most economists believe that more jobs will be lost in manufacturing than are saved in the steel sector. Meanwhile, average Americans who earn much less than steelworkers will pay more for everything which contains steel.
Canadas hardly saintly. For years, Ottawa has been pumping taxpayer money into jet-maker Bombardier, undercutting thousands of jobs in Brazil, home to Bombardiers key competitor, Embraer. Canadian taxpayers and Brazilian workers both lose in this exercise of Canadian sovereignty. The World Trade Organization has ruled against Canada, so the ball is back in our court.
The Canadian and Ontario governments recently joined forces in a sneaky subsidy program for tottering Algoma Steel. They absorbed some of Algomas pension obligations. Taxpayers across Canada will get stuck with the bill. Ontario taxpayers will get stuck twice, one through federal taxes and again through provincial taxes. Trade actions typically hurt almost everyone except for the special interests that demand them.
Yet, in view of recent United States actions, Canadian nationalists may well step up their demands that Canada exercise its sovereignty, raise new trade barriers, particularly against the United States, and, in general, ignore international agreements. Thats about the silliest thing we could, something that would spell economic ruin for hundreds of thousands of Canadian workers.
We no more want to get into a trade war with the United States than a shooting war with the United States. Wed lose big time in either. It is true that the United States is willing to throw its weight around in trade disputes and will win more often than smaller nations. However, studies of trade disputes show that the United States wins a lot less under trade agreements than its raw economic power would suggest. In other words, trade agreements protect small nations from big ones.
Canada, instead of playing its own inside game in areas like aircraft and steel, should respect Canadian obligations and work to make trade agreements more effective. Nations do enter into trade agreements to protect their citizens against trade threats from other nations, in other words, for much the same reasons nations negotiate peace treaties and international alliances.
Its a good use of our sovereign power to enter into agreements with other nations that protect Canadians and Canadian jobs. Most everyone loses in a trade war.
Never mind that US action on softwood lumber threw thousands of British Columbians out of work, or that new steel barriers could mean economic devastation for hundreds of thousands of steel workers in poor nations.
Canadian nationalists want Canada to follow the same path in protecting our national sovereign interests. Yet, protecting sovereign interests usually translates into favours for influential special interests.
The US steel industry and its unions remain politically powerful. Steel workers are among the best-paid, best-pensioned workers in the United States and they dont mind the fact that US steel tariffs will cost thousands of other Americans jobs in manufacturing because of increased steel costs.
Trade barriers hurt average citizens in a number of ways. Americans pay more for their homes because of softwood tariffs. Many will see the dream of home ownership evaporate because of additional costs. Thousands of construction workers wont be working. Even if Canada subsidizes lumber exports, as the United States claims, such barriers do American citizens more harm than good.
Tariffs on steel will smash into the US manufacturing sector, particularly automobiles. Most economists believe that more jobs will be lost in manufacturing than are saved in the steel sector. Meanwhile, average Americans who earn much less than steelworkers will pay more for everything which contains steel.
Canadas hardly saintly. For years, Ottawa has been pumping taxpayer money into jet-maker Bombardier, undercutting thousands of jobs in Brazil, home to Bombardiers key competitor, Embraer. Canadian taxpayers and Brazilian workers both lose in this exercise of Canadian sovereignty. The World Trade Organization has ruled against Canada, so the ball is back in our court.
The Canadian and Ontario governments recently joined forces in a sneaky subsidy program for tottering Algoma Steel. They absorbed some of Algomas pension obligations. Taxpayers across Canada will get stuck with the bill. Ontario taxpayers will get stuck twice, one through federal taxes and again through provincial taxes. Trade actions typically hurt almost everyone except for the special interests that demand them.
Yet, in view of recent United States actions, Canadian nationalists may well step up their demands that Canada exercise its sovereignty, raise new trade barriers, particularly against the United States, and, in general, ignore international agreements. Thats about the silliest thing we could, something that would spell economic ruin for hundreds of thousands of Canadian workers.
We no more want to get into a trade war with the United States than a shooting war with the United States. Wed lose big time in either. It is true that the United States is willing to throw its weight around in trade disputes and will win more often than smaller nations. However, studies of trade disputes show that the United States wins a lot less under trade agreements than its raw economic power would suggest. In other words, trade agreements protect small nations from big ones.
Canada, instead of playing its own inside game in areas like aircraft and steel, should respect Canadian obligations and work to make trade agreements more effective. Nations do enter into trade agreements to protect their citizens against trade threats from other nations, in other words, for much the same reasons nations negotiate peace treaties and international alliances.
Its a good use of our sovereign power to enter into agreements with other nations that protect Canadians and Canadian jobs. Most everyone loses in a trade war.
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