Friday, August 31, 2018

Trudeau and the Schoolyard Bully - Who Will Get Canada's Lunch Money?

I spent some of the afternoon mulling over Maude Barlow's contention that the loss of a formal trade treaty with America or, for that matter, America and Mexico, would be a very reasonable price to pay for restoring Canadian sovereignty.

Then I read this headline for a piece in Foreign Policy. The article is by someone I don't particularly like, Jonathan Kay, but I had to agree with the headline, "
Justin Trudeau Can’t Take Any More Humiliation 
Unless Canada’s prime minister strikes a trade deal on his own terms, Donald Trump’s bullying won't stop.
Trump wants either a trade war or trade capitulation. Even he doesn't hide that. He positively glories in it. America and the world, even America's best friends, are engaged in an endless net sum game in which America can only prevail by diminishing even its very best friends (out of a rapidly growing breadth of enemies).

I listened to Trump at some rally or appearance self-glorifying for his mastery, and his ability to quell (humiliate) the young, boyish and pretty Justin. Seriously, folks. Trump is on some sadosexual mindbender these days.

Jonathan Kay focuses on the most vexing problem in negotiating with today's American government, the inveterate bully in the White House who will jettison his nation's goodwill and support for his self-gratification with the Gullibillies.

While Freeland and her team have shown admirable professionalism in the face of Trump’s erratic outbursts and shifting bargaining positions, Trudeau himself sometimes has sought to co-opt the trade issue to signal fashionable social justice positions. At a glitzy 2017 women’s rights conference in Toronto, for instance, he told journalist Tina Brown that any new iteration of NAFTA must include blanket guarantees of gender equality. Shortly thereafter, it was reported that Canadian negotiators were pushing for a what they called a “groundbreaking” new NAFTA chapter on indigenous rights. The idea that Trump’s administration would say yes to either of these proposals belongs in the realm of satire. 
News of the U.S.-Mexican deal has created a sense of crisis in Canada. It’s not just that the draft agreement includes nuts-and-bolts provisions that Canadian negotiators have opposed, such as an increase in the required level of domestically sourced content in manufactured cars, which will disadvantage Canadian suppliers whose parts are used in U.S. assembly plants. More fundamentally, the sight of Canadian trade officials submissively signing on to an agreement negotiated entirely by two other countries would represent a humiliation for Canada—and for Trudeau himself, who followed his 2015 election win with the bold claim that “Canada is back.” 
And yet, this sense of crisis hasn’t led to anything resembling panic. The Canadian benchmark TSX Composite Index has been largely flat over the last week. And the Canadian dollar is worth about 77 American cents—just where it was a month ago. Perhaps that’s because there are many reasons to expect that Trudeau—and, more importantly, the country he leads—will come out of this crisis in good shape, with both dignity and economy fully intact. Here are three of them. 
First, while Friday is being touted as a “deadline” for Canadian buy-in on the U.S.-Mexico agreement, there isn’t as much urgency as some might think. The U.S. Congress would have to approve any new trade pact, a process that could take months—or even become stalled indefinitely. (And although any U.S. president could unilaterally withdraw from NAFTA after giving Canada and Mexico six months’ notice, Congress can use legislative means to revoke or modify that power.) The fact of congressional involvement plays massively to Trudeau’s advantage because, from the moment Trump was elected, the prime minister and his team have been playing the long game in Washington, assembling a powerful network of pro-trade allies among legislators, business lobbyists, and governors. Already, some of these players are pushing back at the U.S.-Mexico deal and the associated ultimatum to Ottawa. “The administration … must reach an agreement with Canada,” Republican Sen. Pat Toomey warned Trump this week. “NAFTA was a tri-party agreement.” 
Second, for all the talk of “replacing” NAFTA, the new template seems, from what we know, a lot like the agreement it could replace. Moreover, at least one of the few proposed big-ticket changes to the status quo—a provision requiring at least 40 to 45 percent of a vehicle to be produced by workers earning at least $16 per hour—would actually play to Canada’s advantage, because it likely would encourage a shift in production from low-labor-cost Mexico to high-labor-cost Canada. As Catherine Porter of the New York Times notes, the deepest concerns Canada has with the U.S.-Mexico agreement are meta-issues: dispute resolution mechanisms (which Canada wants, but the United States doesn’t) and the addition of sunset provisions (vice versa). In both cases, the new model would provide less long-term assurance to Canada’s foreign investors than the incumbent NAFTA regime. But there would likely be no immediate effect on the economy. 
Third, Trudeau has a trump card he could play that would allow his negotiators to gain critical leverage on some or all of the above-listed issues—without hurting Canada’s bottom line. Just the opposite: Trump’s brinkmanship allows Trudeau political cover to end an outdated and inefficient protectionist program that impoverishes Canadian consumers even as it (properly) irks American competitors and trade negotiators. 
That program, of course, is Canada’s dairy cartel, which rigs the domestic market for eggs and milk products through a combination of price controls, production quotas, and tariffs. As I wrote in Foreign Policy several months ago, it’s a naked racket that drives windfall profits to the corporate farm operations that have steadily bought up most of Canada’s family farms (much of which is shoveled back into sentimental propaganda campaigns aimed at shoring up political support for the scheme). According to one authoritative 2012 study, the cartel costs the average Canadian family about 200 Canadian dollars (more than $150) per year. For decades, it has been taken as political gospel in Canada that no government could break up this scheme without suffering electoral catastrophe. But as polls show, every crisis creates opportunity. And if Canadians knew that ending the dairy cartel was the price they paid for the effective survival of NAFTA, few would object.
You see what I mean? J-Kay makes the case for standing up to the schoolyard bully - sort of, a bit - while yielding on the critical concessions, especially on dairy. There's still a lot of NatPo in Mr. Kay. When I heard Trump discussing this at some Gullibilly gathering, his voice was dripping with sado-sexual triumphalism. It was dripping off his words about how those Canadian pussies had even come to all the way to Washington to receive Trump's marching orders and how, any day now, the Canadians will fold.


Owen Gray said...

I get the impression that Trump's take on Canada is intensely personal. He hates Justin Trudeau -- for all kinds of reasons.

Anonymous said...

Well, we all have an opinion, so mine is I prefer dairy products from cows that haven't been fed synthetic growth hormone. This apparently makes a Hereford produce milk in prodigiously unnatural quantities and of course that's what those Yankee cows get dosed with. Ours don't.

In addition, the dairy industry here gets zero subsidies, while the US is rife with them on agricultural products. Sure the price of what they call "milk" in the US is less, but taxes are higher to pay the subsidies hidden from consumers and brainy deep-thinking geniuses like Kay. It is not the simple black and white issue he portrays. In addition, my quick search on Google suggests US dairy farm herds are on average almost 3 times larger than ours; you know, so they can claim more government subsidies by having more head of cattle - then US trade officials rummage around the world to sell off the ridiculously huge surplus. Hey, there's Soviet Canuckistan! Let's flood their market! Government subsidies are free market Ayn Rand-Approved legitimate non-commie ways of gerrymandering the system.

If one goes back to 1994 and the onset of NAFTA, the US dumped hundreds of thousands of tons of surplus subsidized corn on the Mexican market at super-cheapo prices, and kept on doing it. Then they still had too much and make ethanol from it that requires huge energy inputs for the conversion - capitalism and subsidization run wild plus extra CO2. What could be better? So, the average Mexican peon farmer could not compete on price for their staple, and your local rural society collapsed in but a few years. Look at the place now, essentially ruined and lawless. Easy to read up on with a bit of a search. A few well-paid autoworkers won't change Mexican society.

Now don the cap of imagination and think what it would do to rural areas here if cheap dumped milk flooded our market. Nova Scotia's rural areas are already hanging on by the skin of their teeth, and now you dump the presently solvent dairy farmers. A dumber social approach would be hard to come up with.

But - the average Canadian consumer, oblivious of the hormones would welcome cheap prices. Milk is milk, right, duh, they say.

Those are the same unthinking people who happily send 40% of their Uber fare to San Francisco, hollowing out local taxi drivers and firms who used to spend their money mostly locally. Why concentrate ever more money in the hands of the well-off, and worse, in a foreign country? Face it, people cannot think beyond their noses. You can't get a single Con squawker espousing the "free market" mantra, or even the average dolt, to do anything about carbon dioxide emissions. It's lip service only, egged on by those intellectual Con-infested "Institutes" run by the super-rich writing dumbshit nonsense like Kay and railing about carbon taxes. Pickup trucks dominate the Canadian market.The gullibillies of Ontario elected Doug Ford. Nobody really gives a ratsass about anyone but themselves.

You rail endlessly about the pollution problem, and I agree with you. So let's not surrender to idiocy and shovel everything else into the toilet and flush it away due to one-dimensional "what's in it for my boss?" thinking. Fair makes me blood boil at the stupidity rampant all around me. JT and his dispute resolution clause insistence is another example of the "aristocrats" of this country blindly following the dictates of business, but the logic behind it entirely evades me. That could be given up in a heartbeat. Let foreign companies operating here obey our laws and no jiving and shucking about. Trump can sneer all he wants, but I'm with Maude Barlow on this one. If "disaster" strikes with no trade deal, maybe our complacent fellow citizens would wake up and get serious about our country. And JT could tapdance all the way to oblivion for all I care, taking Morneau and Freeland with him. We have been very badly served by that crew and they need a comeuppance.


The Mound of Sound said...

Trump's take on everything is intensely personal, Owen. That's part and parcel of his narcissism. I'm convinced it's sado-sexual in his case. Sort of like the way he stalked Hillary during the debates.

The Mound of Sound said...

BM, I share your cynicism about the masses and their unwillingness to voluntarily part with the price of a bag of potato chips if the benefit might accrue to others, especially future others.

A recent op-ed from Maude Barlow made a persuasive case for Canada extricating itself from NAFTA. She suggests a drop in GDP of 1.5% would be a reasonable cost to recover important incidents of our national sovereignty.

And I do agree with you on BGH (bovine growth hormone) in American dairy products.

Anonymous said...

Apparently Trump has said ("privately") that he will not budge in the NAFTA trade talks. And, he holds up a picture of a Chevrolet Impala (assembled in Oshawa, Ontario) as a further threat to auto tariffs. Of course, the Impala has 70% US/Canadian parts and 18% Mexican - more than he's asking in his "trade deal with Mexico". He's just such an a$$!


Jay Farquharson said...

Bloomberg @ business
Where we are on Nafta now:
➡️No deal reached with Canada today
➡️Talks restart next week
➡️Trump intends to notify Congress of a deal despite postponed talks

Jay Farquharson said...

"In remarks Trump wanted to be “off the record,” Trump told Bloomberg News reporters on Thursday, according to a source, that he is not making any compromises at all in the talks with Canada — but that he cannot say this publicly because “it’s going to be so insulting they’re not going to be able to make a deal.”

“Here’s the problem. If I say no — the answer’s no. If I say no, then you’re going to put that, and it’s going to be so insulting they’re not going to be able to make a deal ... I can’t kill these people,” he said of the Canadian government.

In another remark he did not want published, Trump said, according to the source, that the possible deal with Canada would be “totally on our terms.” He suggested he was scaring the Canadians into submission by repeatedly threatening to impose tariffs.

“Off the record, Canada’s working their ass off. And every time we have a problem with a point, I just put up a picture of a Chevrolet Impala,” Trump said, according to the source. The Impala is produced at the General Motors plant in Oshawa, Ontario."

So Putin's Butt Boy is pretending he's at the negotiations, and involved.


John B. said...

Chapter 19 covers the handling of disputes between the parties to the agreement - Canada, Mexico and the US. Chapter 20 involves the I-SDS, the process for settling disputes between a party and an investor of another party to the agreement (a "NAFTA investor"). I think the Canadian stand involves Chapter 19.