(CC) NAFTA is a failure

[Andem]

NAFTA Is A Failure
By Ryan McGreal
Tuesday May 9, 2006

The reason [a country] chooses to [sign a treaty or join an international organization] is that the expected benefits outweigh the loss of sovereignty experienced. If the expectation is not realized, a country can terminate its membership.

-- Bill Graham, Canada at the WTO: Towards a Millennium Agenda, A Citizen's Guide to the World Trade Organization and to the Committee's June 1999 Report, The Standing Committee on Foreign Affairs and International Trade, June 1999, p. 7

The United States flat-out refuses meet its obligations under FTA and NAFTA, and Prime Minister Stephen Harper has admitted as much. Canada compromised its sovereignty for a lie.

Read the rest here on CanCon >>

 

[EastSideScotian]

RE: (CC) NAFTA is a failu

Does it make you feel smart, copying and pasteing Essays? One that are on this site to read.......I mean, really...

 

[Canucklehead]

RE: (CC) NAFTA is a failu

Eastside,

Canadian Content is a large site with considerably more information than exists on simply the forums. That information happens to include periodic commentary on current events, among other topics. If the owner of this site would like to post links in such a fashion, that is his right. Please also note that the author of the article happens to be an employee of this site as well.

We welcome members' views on the topics posted so feel free to include them.

 

[MMMike]

I used to be a big fan of NAFTA... but over the years I am less so. I believe in free trade, and believe firmly that FTA/NAFTA has contributed greatly to Canada's wealth. That said, two words: softwood lumber. This case showed clearly that agreement or not, the US would have its own way, and that Canada would bend over and take it. There is also an unacceptable loss of sovereignty with this agreement. Remember Canada trying to ban MMT from gasoline for health and environmental reasons? We had to backtrack because of NAFTA. Certain provisions of NAFTA also figure large in the healthcare debate, according to some people who say that opening the door to any private healthcare delivery would necessarily open the door fully to American-style care.

 

[athabaska]

Overall NAFTA and free trade is a positive. There are some sticking points but I don't know how 'no NAFTA' would help.

International trade, communication, etc. is all becoming more complex. I'm not a nationalist and welcome movements that do away with national borders. Hopefully one day the idea of boundaries based on nations will seem as strange as those that used to be built on religion or royal marriages.

Canada is in a quirky position. Next to the elephant. It's better to try and control the relationship pro-actively than letting the elephant roll around and inadvertantly stomp on you.

 

[Jay]

I used to be a big fan of NAFTA... but over the years I am less so. I believe in free trade, and believe firmly that FTA/NAFTA has contributed greatly to Canada's wealth. That said, two words: softwood lumber. This case showed clearly that agreement or not, the US would have its own way, and that Canada would bend over and take it. There is also an unacceptable loss of sovereignty with this agreement. Remember Canada trying to ban MMT from gasoline for health and environmental reasons? We had to backtrack because of NAFTA. Certain provisions of NAFTA also figure large in the healthcare debate, according to some people who say that opening the door to any private healthcare delivery would necessarily open the door fully to American-style care.

You have been spending too much over at "Latitude", Mike.

 

[Jersay]

Free trade. Bah. Americans and any other nation in that matter would trade freely in goods until a point in time when it becomes to costly or their is no benefit to them in any personal way.

So NAFTA is a huge failure.

 

[Jay]

Really Jersay? Is that what all the tarrifs were about?

 

[Jersay]

Absolutely. The American Industry didn't like th lumber coming from B.C and elsewhere and how inexpensive it was to American homeowners. So they got their little lobby together and they pressured the U.S government who happily stuck tarrifs.

Happened in the 1900s, happened in the Great Depression, its happened before and this is just another example of how Free trade only occurs when the more powerful nation wants it to.

 

[darkbeaver]

RE: (CC) NAFTA is a failu

I disagree, NAFTA is working as it was supposed to, the rich and corporate elite are doing fine. Since it wasn't designed to protect jobs or promote the social welfare of the people, there can be no question that it's a huge success because it certainly hasn't done that. There have been minor problems with perception and some points of contention but overall the filthy rich are quite pleased with it.

 

[Jersay]

Agreed. The filthy rich get richer. And the dirty poor get poorer.

 

[tracy]

Hey, I'm not rich and nafta has benefitted me. Without it, I'd still be stuck in Toronto.

 

[athabaska]

Me too. i was never stuck in Toronto but doing well financially and opportunities galore.

 

[Toro]

This is from a paper by Professor Daniel Tefler at the Rotman School of Management - the best business school in Canada BTW! - published in the American Economic Review in 2004.

Some highlights

In 1988, the average Canadian tariff rate against the United States was 8.1 percent. The corresponding effective tariff rate was 16 percent. Perhaps most importantly, tariffs in excess of 10 percent sheltered one in four Canadian industries. Given that these industries were almost all characterized by low wages, low capital-labour ratios, and low profit margins, the 1988 tariff wall was indeed high.

... Employment losses of 5 percent translate into 100,000 lost jobs and strike me as large, not least because only a relatively small number of industries experienced deep tariff concessions. Indeed, most of these lost jobs were concentrated in the most-impacted, import-competing industries. For this group, with its 12 percent job losses, one in eight jobs disappeared. This number points to the very large transition costs of moving out of low-end, heavily protected industries. It reflects the most obvious of the costs associated with trade liberalization.

It is difficult to be sure whether these transition costs were short-run in nature. However, two facts drawn from the most recent seasonally adjusted data suggest that they probably were short run costs. First, the FTA had no long-run effect on the Canadian employment rate which was 62 percent both in April 1988 and April 2002. Second, Canadian manufacturing employment has been more robust than in most OECD countries. For example, between April 1988 and April 2002, manufacturing employment rose by 9.1 percent in Canada, but fell by 12.9 percent in the United States and by 9.7 percent in Japan. This suggests, albeit not conclusively, that the transition costs were short run in the sense that within 10 years the lost employment was made up for by employment gains in other parts of manufacturing.

... the Canadian tariff concessions raised labour productivity by 15 percent in the most-impacted, import-competing group of industries. This translates into an enormous compound annual growth rate of 1.9 percent. The fact that the effect is smaller and statistically insignificant at the plant level suggests that much of the productivity gain is coming from market share shifts favouring high productivity plants. Such share shifting would come about from the growth of high-productivity plants and the demise and/or exit of low-productivity plants.

... The plant-level numbers indicate that the FTA raised labour productivity in manufacturing by 7.4 percent or by an annual compound growth rate of 0.93 percent. The industry-level numbers are about the same. These numbers, along with the 14-15 percent effects for the most-impacted importers and exporters, are enormous. The idea that an international trade policy could raise labour productivity so dramatically is to my mind remarkable.

... The Canadian tariff concessions raised Canadian imports from the United States by 54 percent. ... The Canadian tariff concessions lowered Canadian imports from the rest of the world by 40 percent.

...There is modest evidence ... that the FTA reduced import prices by 7 percent for the most-impacted import-competing products.

... Most commentators expected Canadian wages to fall in response to competition from lessunionized, less-educated workers in the southern United States. ...For all workers, the tariff concessions raised annual earnings. For example, the total FTA impact is a rise of 3 percent at both the industry level and the plant level. ... At the plant level, earnings rose for both production and non-production workers. At the industry level, earnings gains were concentrated among production workers. ... a 3 percent rise in earnings spread over 8 years will buy you more than a cup of coffee, but not at Starbucks. The important finding is not that earnings went up, but that earnings did not go down in response to competitive pressures from the U.S. South.

... unionization does not offer an explanation of modestly rising earnings.

... There is a presumption in the popular press that anything to do with globalization will worsen income inequality. It is thus reassuring that there is absolutely no evidence that the FTA worsened income inequality.

... Several strong conclusions emerged from the analysis. First, the FTA was associated with substantial employment losses: 12 percent for the most-impacted, import competing group of industries and 5 percent for manufacturing as a whole. These effects appear in both the industry- and plant-level analyses. Second, the FTA led to large labour productivity gains. For the most-impacted, export-oriented group of industries, labour productivity rose by 14 percent at the plant level. For the most-impacted, import-competing group of industries, labour productivity rose by 15 percent with at least half of this coming from the exit and/or contraction of low-productivity plants. For manufacturing as a whole, labour productivity rose by about 6 percent which is remarkable given that much of manufacturing was duty free before implementation of the FTA. Third, the FTA created more trade than it diverted and possibly lowered import prices. Thus, the FTA likely raised aggregate welfare.

Link

 

[MMMike]

I used to be a big fan of NAFTA... but over the years I am less so. I believe in free trade, and believe firmly that FTA/NAFTA has contributed greatly to Canada's wealth. That said, two words: softwood lumber. This case showed clearly that agreement or not, the US would have its own way, and that Canada would bend over and take it. There is also an unacceptable loss of sovereignty with this agreement. Remember Canada trying to ban MMT from gasoline for health and environmental reasons? We had to backtrack because of NAFTA. Certain provisions of NAFTA also figure large in the healthcare debate, according to some people who say that opening the door to any private healthcare delivery would necessarily open the door fully to American-style care.

You have been spending too much over at "Latitude", Mike.

That hurts Jay...sniff... that really hurts. So what about softwood lumber - what lesson did you draw from that? Are you not worried that action taken by our government to protect our health can be undermined by our "trade agreement"? Free trade should be just that: free trade of goods without taxes or tariffs. Nothing more, nothing less.

 

[Toro]

RE: (CC) NAFTA is a failu

The point about softwood lumber is valid Mike, but you must remember that there is no way Canada would have gotten anywhere as good of a deal without NAFTA. Also, there would be more softwood lumber-type actions without NAFTA.

As for not protecting healthcare, you want to give us an example?

 

[BitWhys]

RE: (CC) NAFTA is a failu

Some 97% of our trade with the US is trouble-free. I suspect whatever agreements need to be enforced in those areas are covered quite well under the spawn of GATT. NAFTA has way too much baggage and is, for the most part, redundant.

 

[MMMike]

Re: RE: (CC) NAFTA is a failu

The point about softwood lumber is valid Mike, but you must remember that there is no way Canada would have gotten anywhere as good of a deal without NAFTA. Also, there would be more softwood lumber-type actions without NAFTA.

As for not protecting healthcare, you want to give us an example?

The softwood lumber dispute has just underlined the fact that the US will act in their own best interest, regardless of any agreements or treaties. Their willingness to completely ignore NAFTA shows its worth. I can't see things changing overnight if this worthless piece of paper were to disappear.

The other case I referred to was the attempted ban on MMT. Most countries have banned this additive for health reasons, and there were studies that raised a concern in this country. But when Canada tried to ban it for use in this country, Ethyl Corp sued and we had to drop the ban.

 

[athabaska]

I work in the energy industry and NAFTA is a positive. We bring in pipe, exchangers, compressor stations and a thousand diverse items from around N. america and the point of origin is irrelevant except for customs work. A lot of goods are also shipped from Alberta into the American oilpatch and tariffs and the ensuing hastle is a non-issue.

Perhaps NAFTA is less of a benefit in areas of mono products such as lumber, vehicles and so on. One on one arrangenment could be arranged. Our industry, however, is run seat of the pants and a lot of dynamic wheeling and dealing happens on a North American scale that enables efficiencies.

 

[MMMike]

I'm all for free trade & globalization. I just think NAFTA is not worth the paper its written on if push comes to shove.