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AMERICA’S GOT WALLS FOR US?, (CANADA)? TOO?

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FP COMMENT

JACK MINTZ

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With the votes in for the “Super Tuesday 2″ pri­maries, we are closer than ever than narrowing which candidates will be competing in Novem­ber to make life worse for Canadians. Because, regardless of who is ultimately elected, the current trend in the U.S. is for a much different coalition of interests in both parties each one threatening to make our lives here less comfortable than the past.

 

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Post-election, expect the U.S. to be more protectionist, in­ward looking and disquieted by global developments. Both parties now have a majority in their respective primaries supporting politicians who argue in favour of “wall building” trade barriers and border security. Even though the U.S. econ­omy is healing, with even are bound in manufacturing, Amer­ican politicians play to lingering memories of job losses an stagnant middle-class incomes.

On the Democratic side, Bernie Sanders is dead set against the Trans-Pacific Partnership Agreement, arguing that the deal is a Wall Street plot to take advantage of low wages in countries like Vietnam, where labourers earn a minimum US $0.56 an hour. During the Michigan primary, he ar d that Detroit’s death has been due to disastrous trade policies (translation: NAFTA).

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Hillary Clinton has pirouetted from a pro-TPP position to now being against “ObamaTrade,” as a Donald Trump      ad­viser has slyly dubbed it. This week, Clinton made clear that she wants the “rules of origin” terms of the TPP made stricter because American autoworker jobs are unprotected by rules that eliminate tariffs on cars made with just 45 per cent of their value from a member country (meaning the rest could be made in China). This sticking point could effectively kill the agreement.

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Neither are the two leading Republican candidates strong supporters of free trade. Arguing that the American worker is being crushed, Donald Trump has made it clear he wants no part of the TPP. He has also lamented job losses Mexico under NAFTA and criticizes China’s most-favoured nation status, and demands a renegotiation of both. Although Ted Cruz says he generally supports free trade, he wrote an article for the conservative Breitbart magazine, opposing the TPP as a backroom deal by politicians that should be stopped.    

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So, with majorities in both the Democrat and Republican primaries opposed to the TPP, consider the deal as good as  dead in the U.S.  And if Americans now see trade through the dim lens of lost jobs, rather than income gains and lower con­sumer prices, imagine how they will look at other trade issues in the future such as foreign currency devaluations, anti­ dumping actions and U.S. non-tariff barriers erected in the name of ”fair trade:’

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Other protectionist policies are in the making. During the Florida debate, Donald Trump was asked why he proposed  building a wall along Mexico but not Canada. While he grant­ed that security issues with Canada are not a ”big problem” (for now), his bigger point was that the northern border’s too big, not that it was unwise in principle. At least that’s progress over the position of Wisconsin governor Scott Walker who, be­fore dropping his bid for the Republican candidacy, supported building a Canadian wall because 16 years ago, an Algerian from Montreal tried driving to the U.S. to blow up the Los Angeles airport. So don’t think that Canada is home-free in reassuring Americans about maintaining a thin border. Both parties’ leading candidates argue in favour of tougher border security (mostly the Mexican, but not exclusively) including Hillary Clinton and Bernie Sanders, despite their support for helping illegal immigrants gain American citizenship.

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After Sept. 11, 2001, Canada made some progress on NAFTA-related issues as a quid pro quo for stronger North American border-security arrangements. Since President Obama’s election in 2008, Canada’s been caught up in  vari­ous border-wall policies: The “Buy American” procurement plan, country-of-origin meat labelling, foot-dragging on a new Windsor – Detroit Bridge, and the prohibition of Keystone XL, which now apparently applies to all future Canadian pipe­ lines, judging by comments from John Kerry last week.

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The now deepened inward-looking nature of American exceptionalism does not spell good news for Canada. When our prime minister opined recently that he wanted the U.S. to understand Canada more, he may forget that there are bene­ fits to staying under the radar. Out of mind, we have not be­come a target, like Mexico and China are.

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If Americans did understand us more, it might not help our case. Canada has plenty of its own “wall-building” poli­cies that any populist U.S. politician could easily point to as proof of our trade hypocrisy. For example, as we head into renegotiating the softwood lumber agreement, Americans might notice our own trade restrictions on log exports to the U.S. that, by forcing down prices here, effectively subsidize Canadian producers of lumber, pulp and paper. Our market­ing boards in dairy, poultry and eggs, not only put a virtual excise tax on Canadian consumers but also restrict U.S.  ex­ports to Canada. We restrict foreign investment in banking and telecommunications. Our provinces strictly control beer and wine imports. The list goes on.

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The prime minister’s visit to Washington last week surely helped contribute to a better relationship with the outgoing administration. But as far as putting us on course to tear down walls between the two countries, little was accomplished. Given the currently jaded view among American voters of the world outside their borders, there is little reason to expect things will get any better for us with a new president and Con­gress.

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Financial Post

 

 

 

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