Canada Getting Angry at U.S. Protectionism

[KC2KFC]

I thought with the change in administration our neighbors and allies were going to like and respect us again.

Trade Wars Brewing In Economic Malaise
Outrage in Canada as U.S. Firms Sever Ties To Obey Stimulus Rules

By Anthony Faiola and Lori Montgomery
Washington Post Staff Writers
Friday, May 15, 2009

Is this what the first trade war of the global economic crisis looks like?

Ordered by Congress to "buy American" when spending money from the $787 billion stimulus package, the town of Peru, Ind., stunned its Canadian supplier by rejecting sewage pumps made outside of Toronto. After a Navy official spotted Canadian pipe fittings in a construction project at Camp Pendleton, Calif., they were hauled out of the ground and replaced with American versions. In recent weeks, other Canadian manufacturers doing business with U.S. state and local governments say they have been besieged with requests to sign affidavits pledging that they will only supply materials made in the USA.

Outrage spread in Canada, with the Toronto Star last week bemoaning "a plague of protectionist measures in the U.S." and Canadian companies openly fretting about having to shift jobs to the United States to meet made-in-the-USA requirements. This week, the Canadians fired back. A number of Ontario towns, with a collective population of nearly 500,000, retaliated with measures effectively barring U.S. companies from their municipal contracts -- the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects...More... (http://www.washingtonpost.com/wp-dyn/content/article/2009/05/14/AR2009051404241.html)

[N2RJ]

So why should we stimulate Canada's and China's economy?

[N1LAF]

So why should we stimulate Canada's and China's economy?

1. Should we be concerned with waste, buy expensive equipment, then rip it out of the ground and replaced by another piece of expensive equipment?

2. Other countries may retaliate, restricting/rejecting US made imports.

Trade protectionism (Smoot-Hawley Act) was one of the major contributors to the great depression - Do we learn from history? Repeat the same mistakes - that could be avoided?

[N2RJ]

So why should we stimulate Canada's and China's economy?

1. Should we be concerned with waste, buy expensive equipment, then rip it out of the ground and replaced by another piece of expensive equipment?

Yes. That was asinine.


2. Other countries may retaliate, restricting/rejecting US made imports.

Cue Todd - how much stuff do you guys make in the US anyway? The US has no more manufacturing left. You Republican idiots sold us all out. :lol:

In all seriousness, you also seem to forget that there are already huge restrictions on US made goods in many foreign countries, in the form of high tariffs and customs duties. A lot of countries are discouraging US imports because (surprise!) they want their own locally manufactured goods to be sold locally.

I've had to deal with this personally, paying as much as 40% duty on foreign goods imported from the US.


Trade protectionism (Smoot-Hawley Act) was one of the major contributors to the great depression - Do we learn from history? Repeat the same mistakes - that could be avoided?

Free trade is fine. However, the idea of a "stimulus" meaning money to import goods and enrich other countries while running up massive debt here seems kinda silly to me.

I would like to see a stimulus stimulating American businesses and the money going to them. If that means a little protectionism, then so be it.

[W5GA]

1. Should we be concerned with waste, buy expensive equipment, then rip it out of the ground and replaced by another piece of expensive equipment?

Gee, sounds more like a discussion about unions than trade. :shhh

[N1LAF]

We cannot preach "Free Trade", then play protectionism. Double standard.

Bush is blamed for purposely lowering the value of the dollar - to increase trade.
Of course, he received flack from Europe for doing so.

[kd6nig]

Well, it was bound to happen.

Thats the only problem with "Buy American" when we owe debt to everyone else. We do that, and they start calling in the paper, and we don't have it to cover.

We get a lot of wood from Canada too, don't we? Not like we're doing much construction at the moment, but they are going to need it to fix a lot of these trashed foreclosures we have floating around.

Probably not the time to be slamming the door.... :whistle

[N2RJ]

We cannot preach "Free Trade", then play protectionism. Double standard.

Won't be the first time we've engaged in a double standard. Definitely won't be the last.


Bush is blamed for purposely lowering the value of the dollar - to increase trade.
Of course, he received flack from Europe for doing so.

I don't think he was smart enough to do that voluntarily in all honesty. It's what you call "dumb luck" emphasis on dumb.

[N2RJ]

Well, it was bound to happen.

Thats the only problem with "Buy American" when we owe debt to everyone else. We do that, and they start calling in the paper, and we don't have it to cover.

We get a lot of wood from Canada too, don't we? Not like we're doing much construction at the moment, but they are going to need it to fix a lot of these trashed foreclosures we have floating around.

Probably not the time to be slamming the door.... :whistle

Do you really think so? Do you think Canada can really survive without the US as a trading partner? Don't think so.

[KG4CGC]

Well, it was bound to happen.

Thats the only problem with "Buy American" when we owe debt to everyone else. We do that, and they start calling in the paper, and we don't have it to cover.

We get a lot of wood from Canada too, don't we? Not like we're doing much construction at the moment, but they are going to need it to fix a lot of these trashed foreclosures we have floating around.

Probably not the time to be slamming the door.... :whistle

Do you really think so? Do you think Canada can really survive without the US as a trading partner? Don't think so.
I don't think that is what he is saying.

[M0GLO]

No need to repeat that again Ryan, we know it already even if you don't.
Your trade deficit tells the facts.

[KB1QBZ]

Trade protectionism (Smoot-Hawley Act) was one of the major contributors to the great depression - Do we learn from history? Repeat the same mistakes - that could be avoided?

That was a case of countries that were essentially equal trading partners retaliating against each other.

Given the U.S. balance of trade deficits, the question is what can the other countries do in retaliation -- stop buying the stuff from us that they're already not buying from us???

[N1LAF]

The Census Bureau reports:

[T]otal January exports of $124.9 billion and imports of $160.9 billion resulted in a goods and services deficit of $36.0 billion, down from $39.9 billion in December, revised. January exports were $7.6 billion less than December exports of $132.5 billion. January imports were $11.5 billion less than December imports of $172.4 billion..

http://www.calculatedriskblog.com/2009/ ... cline.html (http://www.calculatedriskblog.com/2009/03/us-trade-exports-and-imports-decline.html)

[N4VGB]

The Census Bureau reports:

[T]otal January exports of $124.9 billion and imports of $160.9 billion resulted in a goods and services deficit of $36.0 billion, down from $39.9 billion in December, revised. January exports were $7.6 billion less than December exports of $132.5 billion. January imports were $11.5 billion less than December imports of $172.4 billion..

http://www.calculatedriskblog.com/2009/ ... cline.html (http://www.calculatedriskblog.com/2009/03/us-trade-exports-and-imports-decline.html)

Of course imports are down, nobody is buying anything. :twisted:

[KB1QBZ]

The Census Bureau reports:

January ... deficit of $36.0 billion ... $39.9 billion in December

As I said, what are they going to do, stop buying the stuff from us that they're already not buying from us?

[KA5PIU]

Hello.

This is just the beginning.
Canada and Mexico are working on a trade deal.
And, Mexico is already in cahoots with China.
Remember the people China had rounded up, the Mexicans?
Fact of the matter is that Mexico chartered aircraft so China would not look bad.
The added bonus? Mexico has a nuclear power plant.
http://www.cfe.gob.mx/es/LaEmpresa/gene ... virtuales/ (http://www.cfe.gob.mx/es/LaEmpresa/generacionelectricidad/visitasvirtuales/)
Take the tour! See the sites!
Name any country that has nuclear power that did not produce nuclear weapons.
Both Canada and Mexico have been very silent about nuclear weapons.
China, on the other hand, has been on the forefront in propaganda, pointing out that it was only after Russia offered a nuclear reactor to Mexico did the US provide one.
And, it is also pointed out that Canada is tops in both heavy water production and raw material for the nuclear industry.
So, what does this have to do with trade?
Simple, China is calling the shots, and the US is in the middle.

[M0GLO]

More to the point Paul:

http://www.census.gov/foreign-trade/bal ... .html#2008 (http://www.census.gov/foreign-trade/balance/c1220.html#2008)

So what exactly is it you are selling to CA again?
Whatever it is you are buying more of it than you are selling, 22.2% more to be precise.

[N1LAF]

You are missing the point...

[T]otal January exports of $124.9 billion.

Extrapolate over a year, is well over a trillion.

[M0GLO]

You are missing the point...

[T]otal January exports of $124.9 billion.

Extrapolate over a year, is well over a trillion.
Your missing that point, you import 31 Billion more than you send out.

[N1LAF]

You are missing the point...

[T]otal January exports of $124.9 billion.

Extrapolate over a year, is well over a trillion.
Your missing that point, you import 31 Billion more than you send out.

Only if you believe Zero Sum really matters. You do know what zero sum means, don't you?
We have had trade deficits forever, did not stop economic good times, did it?

[M0GLO]

Here you go, 2008 for you purusal by top 15 countries.
http://www.census.gov/foreign-trade/sta ... 812yr.html (http://www.census.gov/foreign-trade/statistics/highlights/top/top0812yr.html)
Your numbers aren't good.

I wonder how much of your exports are really re-exports of previously imported goods. Probably quite a bit of it.

[N1LAF]

How about Mercantilism, know what that means?
Are you an advocate for Mercantilism?

How about Adam Smith? David Ricardo? David Hume? Are they right in their views as opposed to mercantilism?

[M0GLO]

No Mercantilism has been pretty damn ugly throughout it's history as a catalyst for imperialism and resource theft.


One notion mercantilists widely agreed upon was the need for economic oppression of the working population; laborers and farmers were to live at the "margins of subsistence". The goal was to maximize production, with no concern for consumption. Extra money, free time, or education for the "lower classes" was seen to inevitably lead to vice and laziness, and would result in harm to the economy

Pretty much sums up that noise.

Why, are you all about oppressing the workers, making them live at the edge of poverty ot make the mercantile class rich?

[N1LAF]

No Mercantilism has been pretty damn ugly throughout it's history as a catalyst for imperialism and resource theft.


One notion mercantilists widely agreed upon was the need for economic oppression of the working population; laborers and farmers were to live at the "margins of subsistence". The goal was to maximize production, with no concern for consumption. Extra money, free time, or education for the "lower classes" was seen to inevitably lead to vice and laziness, and would result in harm to the economy

Pretty much sums up that noise.

Why, are you all about oppressing the workers, making them live at the edge of poverty ot make the mercantile class rich?
Mercantilism is about zero sum, so they would be concerned about trade deficits. Since I am a worker myself, and so are you, we are not on the edge of poverty, are we...

[M0GLO]

It would seem you don't really know anything about mercantilism then.

Read:


Today, mercantilism (as a whole) is rejected by economists, though some elements are looked upon favorably by non-economists.
http://en.wikipedia.org/wiki/Mercantilism



Between 1600 and 1800 most of the states of western Europe were heavily influenced by a policy usually known as mercantilism. This was essentially an effort to achieve economic unity and political control. No general definition of mercantilism is entirely satisfactory, but it may be thought of as a collection of policies designed to keep the state prosperous by economic regulation. These policies may or may not have been applied simultaneously at any given time or place.

I. Definition of Mercantilism

The following ideas, then, lumped together, may be called mercantilism.

(1) Bullionism was the belief that the economic health of a nation could be measured by the amount of precious metal, gold, or silver, which it possessed. The rise of a money economy, the stimulation produced by the influx of bullion from America, the fact that taxes were collected in money, all seemed to support the view that hard money was the source of prosperity, prestige, and strength.

(2) Bullionism dictated a favorable balance of trade. That is, for a nation to have gold on hand at he end oft he year, it must export more than it imports. Exports were later defined to include money spent on freight, or insurance, or travel.

(3) Each nation tried to achieve economic self-sufficiency. Those who founded new industries should be rewarded by the state.

(4) Thriving agriculture should be carefully encouraged. Domestic production not only precluded imports of food, but farmers also provided a base for taxation.

(5) Regulated commerce could produce a favorable balance of trade. In general, tariffs should be high on imported manufactured goods and low on imported raw material.

(6) Sea power was necessary to control foreign markets. A powerful merchant fleet would obviate the necessity of using the ships of another nation and becoming dependent on foreign assistance. In addition, a fleet in being could add to a nation's prestige and military power.

(7) Colonies could provide captive markets for manufactured goods and sources of raw material.

(8) A large population was needed to provide a domestic labor force to people colonies.

(9) Luxury items were to be avoided because they took money out of the economy unnecessarily.

(10) state action was needed to regulate and enforce the above policies. One might add that there was nothing logical or consistent about mercantilism, and that it displayed, in fact, enormous variation.
http://mars.wnec.edu/~grempel/courses/w ... ilism.html (http://mars.wnec.edu/~grempel/courses/wc2/lectures/mercantilism.html)


The most important economic rationale for mercantilism in the sixteenth century was the consolidation of the regional power centers of the feudal era by large, competitive nation-states.
http://www.econlib.org/library/Enc/Mercantilism.html

[KB1QBZ]

We have had trade deficits forever, did not stop economic good times, did it?

Ahhhh, so you have demonstrated that Mike Huckabee is wrong. One is Republican because one wants to remember so-called "good times" while ignoring consequences. Sort of like the drunk driver who remembers the "good times" he had in the bar and not the fifteen people he killed afterwards while driving the wrong way on the freeway.

Technically speaking, the U.S. started running trade deficits in the late 1960s. However, that was primarly due to increasing energy imports. For all other goods and services we were a net exporter. In the late 60s and early 70s, one could travel all over Europe and Asia and hear people advertising goods that were "Made In America". Not just advertising them, but touting them as the best in the world.

The situation worsened dramatically during the George H. W. Bush administration, with a tripling of the trade imbalance as companies started moving more and more production overseas. Yeah, they were such good times that Bill Clinton was able to make Bush a one-termer because of the bad economy. During the GHWBush years, the national debt doubled and personal net wealth started declining as people went into debt to buy foreign-made stuff. In other words, the "good times" were actually a massive expansion in debt.

Clinton kept things under control for most of his presidency, but the balance of trade tripled starting around 1997 as NAFTA and other free-trade agreements (negotiated by Republican George H.W. Bush and passed into law by a heavily Republican Congress) started removing massive numbers of manufacturing jobs from the American landscape. At least Clinton was able to keep national debt under control. At least there was real growth in GDP under Clinton, which helped offset the balance of trade deficit (real growth meaning actual increases in domestically produced goods and services).

Everything went all to hell under george the Worst. The trade imbalance ballooned dramatically as the U.S. more than doubled its national debt (from about $5 trillion to over $10 trillion) and consumers went into such massive levels of debt that the majority of Americans had negative equity in their homes and negative equity in their finances (owed more than their total assets). In fact, about 110% of the GDP growth under george the Worst was growth in debt, not growth in production of goods and services. Really really "good times" as both the government and its citizens spent like drunken sailors. But they were "good times" -- sort of like the guy with a massive heart blockage who has a nice ruddy tanned complexion because the blood isn't circulating and he has a 105 degree fever.

Those "good times" were a disaster for this country. Our standard of living will be dramatically reduced as will those of our children and their children.

[N1LAF]

It would seem you don't really know anything about mercantilism then.

Actually, its the other way around, I thought you were taking the Mercantilist view.

But I could be mistaken.

[M0GLO]

It would seem you don't really know anything about mercantilism then.

Actually, its the other way around, I thought you were taking the Mercantilist view.

But I could be mistaken.
Why would I do that?
I actually know what it is.

[N1LAF]

Good. Glad we got that straightened out. It is fresh in my memory since we have covered this in my present class, Management of Global Markets.

[KG4CGC]

Whatever happened to all the hollering about the North American Union that the Right™ said is a done deal? I was looking forward to exchanging my Confederate script for Ameros.

[kb2vxa]

Not surprisingly just the latest chapter in the NAFTA Wars. The US has embraced Mexico and shunned Canada all along, Washington just stepped it up another notch. Nixon opened the door to China too now didn't he? We always jump on the latest developments while ignoring how the groundwork was laid, we ignored it then and see where it got us?

"A man hears what he wants to hear and disregards the rest, mmmmmmm."
Paul Simon, The Boxer

[KA5PIU]

Hello.

Whatever happened to a united america?
The "berlin wall" on the southern half for one.
And, the US could not push Canada the way Mexico gets treated.
Come June 1st, both Canada and Mexico enter into a new treaty that has yet to actually be published.
But, whatever it is, both China and Saudi Arabia agree with it.
Only Isreal has objected, if for no other reason than Saudi involvement.