Canada-EU Free Trade

[Michael Hardner]

3. Trade is not zero-sum, when done right it is win-win.

Ok, carepov - you seem to have a least a somewhat nuanced view of this - can you provide us with some touchpoints with which we could evaluate a trade deal ?

[carepov]

Ok, carepov - you seem to have a least a somewhat nuanced view of this - can you provide us with some touchpoints with which we could evaluate a trade deal ?

IMO, there should be very few tariffs or restrictions on trade between countries. There should also be minimal amount of subsidies or "corporate welfare".

My understanding is that there is a strong positive correlation between exports and real income per capita - and therefore standard of living. A trade deal is generally successful if exports increase.

Greater exports=greater wealth (GDP)=potentially greater inequality. If excessive, inequality within a country can spoil the benefits of increased trade. IMO, inequality should be addressed by domestic policies (taxation, social programs, etc...).

[Michael Hardner]

A trade deal is generally successful if exports increase.

Ok, so the various trade deals Canada was involved in, in the 1990s, seemed to be good for the country according to this:

http://www.tradingeconomics.com/canada/exports

If excessive, inequality within a country can spoil the benefits of increased trade. IMO, inequality should be addressed by domestic policies (taxation, social programs, etc...).

I think inequality can happen regardless, if the country's policies are more geared to help those who are already doing well.

[Wilber]

It seems to me that an agreement with the EU could be a good fit considering there is a similar philosophy regarding social programs etc. The issue of subsidies in some areas would need to be adequately addressed.

[carepov]

Ok, so the various trade deals Canada was involved in, in the 1990s, seemed to be good for the country according to this:

http://www.tradingeconomics.com/canada/exports

Yes, Canadians have greatly benefitted from free trade with the USA.

http://www.tradingeconomics.com/canada/wages

http://www.tradingeconomics.com/canada/disposable-personal-income

I think inequality can happen regardless, if the country's policies are more geared to help those who are already doing well.

Yes, I agree.

[dre]

Yes, Canadians have greatly benefitted from free trade with the USA.

http://www.tradingec...om/canada/wages

http://www.tradingec...personal-income

Well hold on... Those just show a correlation. Why would you attribute those numbers to trade with the US?

Non US trade has grown at a much faster pace during the same period, and we have had a glut of high paying jobs created as a result of the IT boom that started a year or so before Nafta took effect, and a glut of high paying jobs created as a result of the increasing price of oil.

Im not saying nafta hasnt played a part in increasing wages. But nobody that thinks about stuff, is ever going to just accept the conclusion you are making.

[dre]

Ok, so the various trade deals Canada was involved in, in the 1990s, seemed to be good for the country according to this:

http://www.tradingeconomics.com/canada/exports

It looks to me like the trade started increasing at a faster rate 3 or 4 years before nafta even came into effect. Your making a bunch of questionable assumptions, and ignoring a lot of factors.

And its quite possible that trade liberalization might eventually result in LESS trade because Americans trade deficit with Canada and the rest of the world is putting downward pressure on its currency and causing swings in exchange rates. Because of this our exports have basically been flat for the last 12 years. If we get to the point where a Canadian dollar is worth 2 American dollars they wont be buying very much stuff from us at all.

And this goes back to the danger of these sort of boolean ideologies... Trade Good VS Trade Bad.

[Topaz]

As Canadian we don't have to be concern of the winners of a trade deal but shouldn't we concern of the losers and how much they lose. These global trade deals may be good for a country and the huge corporations as a whole, but within the country, workers or even some businesses lose out and if as the Tories say they will throw cash the losers way, then doesn't that say maybe it wasn't such a good deal if we(taxpayers) have to pay?

[carepov]

Well hold on... Those just show a correlation. Why would you attribute those numbers to trade with the US?

Non US trade has grown at a much faster pace during the same period, and we have had a glut of high paying jobs created as a result of the IT boom that started a year or so before Nafta took effect, and a glut of high paying jobs created as a result of the increasing price of oil.

Im not saying nafta hasnt played a part in increasing wages. But nobody that thinks about stuff, is ever going to just accept the conclusion you are making.

Yes you are right, I should be more careful with my words. Increased exports coincide with new free trade agreements. Increased exports are positively correlated to increased wages and other measures of standard of living. These correlations support the theory that free trade agreements increase standards of living.

A great example of this relationship is Mexico that joined GATT in 1986 and NAFTA in 1994.

Mexican Human Development Data[1]

Human development index

1985: 0.755

2003: 0.814

Human development index

1995: 0.782

2003: 0.814

Life expectancy at birth (years)

1975: 62

2005: 75

Infant mortality rate (per 1,000 live births)

1970: 73

2003: 23

Under-five mortality rate (per 1,000 live births)

1970: 110

2003: 28

Population with sustainable access to improved sanitation (%)

1990: 66

2002: 77

Population with sustainable access to an improved water source (%)

1990: 80

2002: 91

Population undernourished (% total)

1991: 5

2001: 5

Public expenditure on education (as % of GDP)

1990: 3.6

2000: 5.3

Adult literacy rate (% ages 15 and above)

1990: 87

2003: 90

Children reaching grade 5 (%)

1990: 80

2001: 93

[1] http://hdr.undp.org/statistics/data/countries.cfm

Edited October 31, 2013 by carepov

[dre]

Yes you are right, I should be more careful with my words. Increased exports coincide with new free trade agreements. Increased exports are positively correlated to increased wages and other measures of standard of living. These correlations support the theory that free trade agreements increase standards of living.

Fair enough! And for the most part I agree.

[Moonlight Graham]

The overall cost or benefit of huge trade deals like this are very hard to determine. There are winners and losers in this, and NAFTA, for sure. There will be different impacts to consumers vs businesses, business owners vs employees, large business owners/corporations vs small businesses etc., and of course different impacts to different industries.

[dre]

The overall cost or benefit of huge trade deals like this are very hard to determine. There are winners and losers in this, and NAFTA, for sure. There will be different impacts to consumers vs businesses, business owners vs employees, large business owners/corporations vs small businesses etc., and of course different impacts to different industries.

Truth can really be a thread killer.

[Big Guy]

Our federal government has announced (for the third time) that the Canada – EU trade deal is a “done deal”. There are rumblings that Germany will not ratify it because of the “investor protection” clause. Since this agreement is planned as the template for the US EU agreement it appears that the problem is not going away.

http://www.reuters.com/article/2014/09/27/us-eu-usa-trade-idUSKCN0HM0JR20140927

I am no economist and my expertise lies in finding some exceptional financial managers who understand economics.

Is this Canada/EU trade deal a “done deal”?

Is it a good thing or a bad thing for Canada in its present form?

Why is the investor protection provision so important?

[Derek 2.0]

Why is the investor protection provision so important?

As the name implies, it protects foreign investors from a Government nationalising, expropriating, interference with patents etc……

For example, say you invent, patent and start producing a ground-breaking widget. I, from a different country, see the potential in said widget and wish to invest in your widget production with the expectation of a return on investment…….Now let’s say after times goes by, you and I are making money hand over fist on the sale of widgets worldwide, but then with a change of Government within your country, the new leader decides widget production is in the nation’s interest and nationalizes widget production…..and we’re left out in the cold.

Now why would I invest money in another country without some form of protection? These provisions have been in place with NAFTA since its inception, and are an expectation of such international deals…..and have greatly benefited Canada through direct foreign investment in various industries.

[On Guard for Thee]

As usual Harper keeps on popping champagne corks announcing "done deals" that are not yet done at all. Of course he didn't do that with FIPA. No he snuck that one in before going back to the hill. I'd be suspicious of anything he is willing to sign on our "behalf"

[overthere]

Are the Liberals going to campaign on a promise to repeal this free trade deal? Is Sheila Copps going to ..... sorry, flashback there....

[Big Guy]

As the name implies, it protects foreign investors from a Government nationalising, expropriating, interference with patents etc……

For example, say you invent, patent and start producing a ground-breaking widget. I, from a different country, see the potential in said widget and wish to invest in your widget production with the expectation of a return on investment…….Now let’s say after times goes by, you and I are making money hand over fist on the sale of widgets worldwide, but then with a change of Government within your country, the new leader decides widget production is in the nation’s interest and nationalizes widget production…..and we’re left out in the cold.

Now why would I invest money in another country without some form of protection? These provisions have been in place with NAFTA since its inception, and are an expectation of such international deals…..and have greatly benefited Canada through direct foreign investment in various industries.

Thank you very much for that concise, informative and simple (simple enough for me to understand) explanation.

[Derek 2.0]

Thank you very much for that concise, informative and simple (simple enough for me to understand) explanation.

No problem.....such provisions have been boiler plate in various treaties along the Pacific Rim, but are alien to some in Europe.......namely those that have/had various state owned or heavily subsidized industries........or have nationalized industries in the past.