Point of View

Free trade with Europe could lead to a $12 billion a year boost to Canada’s $1.8 trillion economy. It could also lead to job losses of 150,000.

Free trade leads to a fairer economy

Buy Canadian sounds like a patriotic slogan. Buy local sounds even better. But they are deceptive. Where would Canadians get their orange juice from?

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It is almost axiomatic that economists believe in free trade. Better to do the best with the things we are good at – to make the utmost of our comparative advantage – and import the goods we’re not really good at producing.

A free trade pact with Europe benefits Canada. We can produce beef and pork more cheaply, thanks to lower land costs. We may be able to produce auto parts more cheaply as well, thanks to companies like Magna, founded by a European immigrant. With greater exports, our workers benefit from more jobs.

To be sure, less competitive industries may be affected. A rise in cheese quotas may lead to losses for dairy farmers, as their quotas sink in value. High-end cheese producers may not be affected, if their product is of sufficient quality. Commoditized products, such as cheddar and mozzarella, may be. This is to the consumer benefit. Why should we single out farmers in one industry, but not others? Down that path lies the American imbroglio, where subsidized cotton and rice undermine the ability of African countries to reach liftoff.

Protectionism, whether through tariff walls or regulations, doesn’t protect the consumer, but instead protects entrenched groups who are able to pass on higher prices to consumers with impunity. Look at the telecommunica-
tions industry. While the price of computing power declines every year, the price of online access increases.

Free trade is like a cold shower that shocks the body. In this case, it shocks the economy along a more productive and fairer path.

Free trade is not fair trade

There was a time when conservatives in Canada supported working people. Just look at Sir John A. Macdonald, who courted the workingman’s vote by supporting tariffs against the predatory American industry.

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Free trade is part of the neo-liberal agenda. It aims to set markets free, but at the cost of more social dysfunction and economic disruption, ratcheting us back to the 19th century, the first era of economic liberalism that Dickens so compelling described.

Just look at the financial crisis. Federal Reserve Chairman Alan Greenspan thought that in a deregulated environment, major financial actors would take prudent risks. Instead, they got a government bailout, while millions lost their houses.

While the auto pact may look like a free trade agreement, it was a fair trade agreement: the big three automakers had to commit to producing as many cars in Canada as Canadians had previously bought, even if the ones they now bought were made in the U.S.A.

Then consider NAFTA, which gutted our garment industries and destroyed well-paying unionized jobs. Now, in a race to the bottom, Joe Fresh and Loblaws source garments from jerry-built factories in Bangladesh, with workers earning $36 a month; factories where exploitation is the daily rule. The consumer may see a temporary benefit, but that consumer is also a worker, and cheap imports mean job losses.

Who wins here?

Free trade puts Canadian jobs at risk, with no guarantee of a gain for Canadians.



Originally published on Advisor.ca