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Guest Editorial: Canada should be cautious with future US trade agreements

This week we feature the second part of US Consul General Philip T. Chicola’s interview with The Cascade. In part one Chicola expounded upon the possibility of expanding the scope of the North American Free Trade Agreement likening the situation to the European Union which began as a way to integrate Germany into the European economy but eventually became the all encompassing political union it is today.

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by Jed Minor (Production)

This week we feature the second part of US Consul General Philip T. Chicola’s interview with The Cascade. In part one Chicola expounded upon the possibility of expanding the scope of the North American Free Trade Agreement likening the situation to the European Union which began as a way to integrate Germany into the European economy but eventually became the all encompassing political union it is today.

There are many problems which arise when trying to use the European model to imagine a similarly structured hypothetical North American Union. First of all the European Union is comprised of many economically important countries such as England, France, Germany, Spain and Italy who exert more or less equal political power at the bargaining table.

In contrast North America is dominated politically and economically by the US, and any future union would be largely dominated by that government, thereby undermining the national interests of both Canada and Mexico. Furthermore it seems unwise to expand the scope of NAFTA seeing as how it is completely ignored when it contradicts US interests. The tariff which the US Department of Commerce put on softwood lumber from Canada in 2002 was judged to be too high by NAFTA in 2003.

Nevertheless the tariff was left in place until 2006 and is still being debated by both countries. Perhaps we should be trying to develop mechanisms to enforce the original NAFTA rather than expanding the scope of a treaty which has only been partially effective in the past.

Another concern is that certain vulnerable industries in Canada would eventually lose their protection under further revision of NAFTA. Milk production in BC for example is based on a quota system which allows family farms to stay competitive while milking smaller herds of cows. If the BC dairy market was opened up to US competition it would be summarily flooded by cheap American milk products from US factory farms and thousands of people in the Fraser Valley would lose their jobs.

Proponents of free market trade agreements say that Canada has nothing to fear from opening our markets because we are a hard working and intelligent people that should be able to compete with any country in the world on a level playing field. The problem with this argument is that the playing field is not level. No matter how hard working we Canadians are we will never be able to compete with the sheer scale of US capital and economic enterprise. Regardless of the competition Canadian companies present to our neighbors to the south, without some kind of government protection there is nothing to prevent the US companies from buying them out, or simply out waiting them in protracted trade battles like the Softwood Lumber dispute.

Canada is currently experiencing a downturn in our economy as a result of our close economic relationship to the US. As a result Canadian businesses are seeking new trade partners in Europe and Asia in order to diversify their export options and protect themselves from future downturns in the US economy. While the US will be our main trade partner for the foreseeable future it would be wise for Canada to exercise caution when opening up our markets further to US influence; as history has shown, we often have a lot more to lose than we have to gain.

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1 Comment

1 Comment

  1. armchair activist

    October 25, 2010 at 11:11 am

    Succinct and to the point. “The playing field is not level,” neither with Canada and the U.S. or globally. We need to continue to stay aware of these issues and to stand our ground economically as a country.

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