Mandos

NAFTA was a mistake

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It’s probably in the medium-term interests of most Canadians to keep as closely to the current NAFTA arrangement as possible, because the Canadian economy is locked-in to the presupposition of expanded free trade with the USA. So it makes sense to support Justin Trudeau’s posture regarding the threatened US tariffs and so on and so forth. But the fact is, Canada has made itself vulnerable by doing the easiest thing and becoming so economically dependent on the USA that it is reduced to picking out lists of drop-in-the-bucket vulnerable industries in the USA in order to “retaliate” and gain an infinitesimal amount of political traction against the Trump juggernaut. And make no mistake: the choice of dairy supply management is no accident by the Trumpians — if you’re looking at the world through “bannonistic eyes”, this is a wedge issue inside Canadian society, and I already hear whines of “We’re letting them hurt our auto industry just to appease Quebec etc etc”, as though capitulating on supply management won’t just be an excuse to further annex the rest of the Canadian economy.

But NAFTA (and its FTA predecessor) was a mistake. It was the easiest thing. It was approved by economists who operate in an airless political vacuum and become the useful idiots for the business class. The correct way to approach such an enormous, powerful neighbour is to approach it cautiously, make deals on limited strategic areas, and keep a close eye on your own policy independence — yes, at the price of nontrivial short-term economic gains. Stay open to people, much less so to goods, capital, and services. Diversify. NAFTA held off a much-needed international diversification of trade, and insofar as Canada retained any amount of economic self-sufficiency, that very self-sufficiency is what is now under a threat that was always inevitable. If it wasn’t Trump, it would eventually have happened under a less flamboyant character. Because that’s what it means to be a neighbour of the USA.

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This page contains a single entry by Mandos published on June 13, 2018 11:20 PM.

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