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Was It Practical To Kill The Negotiations Over The Sunset Clause?

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13 hours ago, bush_cheney2004 said:

Canada could have done that decades ago (higher royalties), but it lacked (and still lacks) enough domestic capital to exploit those resources.   Bitumen trades at a steep discount compared to light crude, and to make matters worse, there is regional fighting over pipeline access and terminals for export.    Then Trudeau wants to add carbon taxes. It is little wonder that the Americans dominated this sector for transport (pipelines) and refining.

Canada had/has all the domestic capital it needs, we should stop giving our resources away. If the US can borrow money from an imaginary entity why can't we?

How long do you think businesses would exist selling product at 25% discount then buying it back at retail plus refining and transportation? 

We need to stop being so dependent on foreign entities and take care of ourselves, we have all the resources we need including capital, brains, technology, labor, domestic markets, we just need to diversify and start filling our shortfalls. The US isn't our only problem with trade, at the drop of a hat China decides they are going to slap tariffs on Ag products, they decide to stop taking our garbage, We have to follow the US and other countries with sanctions against Russia, a bunch of countries are going broke and for some reason we just need to trade with countries with terrible human rights records the list goes on...

Instead of being the nine year old that wants to play with the tanagers following them everywhere we should encourage growth from within and take care of our shortcomings. The more independent we become the more the world will turn to us for leadership.

We have it all, people just don't have the vision or will power to make it work. And you know what's funny? It took me 45 years to figure it out :(

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2 minutes ago, Thinkinoutsidethebox said:

....Instead of being the nine year old that wants to play with the tanagers following them everywhere we should encourage growth from within and take care of our shortcomings. The more independent we become the more the world will turn to us for leadership.

We have it all, people just don't have the vision or will power to make it work. And you know what's funny? It took me 45 years to figure it out :(

 

I agree that Canada's biggest challenges come from within, but it will be difficult to wean economic policies from past practices:

  • Inter-provincial barriers to trade are far worse than anything Trump has contemplated.
  • Canada's consumer market is burdened by high consumption taxes.
  • North - south trade to the U.S. has been far easier that east-west within Canada.
  • Anglo & Franco language restrictions further dilute market size and opportunities
  • Ironically, anti-American tariffs over 100 years ago sent the Maritimes into an economic death spiral from which it has never recovered.
  • Banking regulation limits available domestic capital and risk taking.
  • Regional political conflicts prevent national unity for economic independence.
  • Canada lags many other OECD nations for investment in research and development (R&D).
  • Many Canadians look at government as the solution instead of the problem, further disenfranchising the private sector.
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In a small country without the benefits of economy of scale and a large domestic market, the government has an important role to play in nation building.  The national railroad and communications systems were important infrastructure that no one company could build. Exports also became essential for growth, which is why the Canadian government opted to lower export taxes and raise consumption taxes.  What’s more, reducing consumption leaves citizens with more financial room for investment.  Money that would’ve gone to another luxury item is instead directed towards investment in companies and future growth, important in a country trying to boost business investment and productivity.  Okay, if what you’re secretly hoping for is to destroy the Canadian economy through a trade war, that truly is the definition of a race to the bottom, as the U.S. would kill the markets for its potential exports.  So much for the dream of a U.S. trade surplus, which it already has with Canada.  Why take that risk?   There is no good reason for a trade war with Canada.  It’s irresponsible.  

Also, our banking regulations protected Canada from having the kind of subprime mortgage catastrophe that the U.S. had.  

Oh, and you’re not going to build national unity by alienating Quebec.  If companies can’t handle making French language labels, maybe they can’t handle exporting.

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5 minutes ago, Zeitgeist said:

 Okay, if what you’re secretly hoping for is to destroy the Canadian economy through a trade war, that truly is the definition of a race to the bottom, as the U.S. would kill the markets for its potential exports.  So much for the dream of a U.S. trade surplus, which it already has with Canada.  Why take that risk?   There is no good reason for a trade war with Canada.  It’s irresponsible. 

 

Because Canada has both tariff and non-tariff barriers to U.S. exports (e.g. supply managed dairy).   Canada cannot have it both ways when a new U.S. administration chooses to challenge existing trade agreements and trade imbalances (with many nations, not just Canada).    Why would Canada get special treatment ?

 

Quote

Also, our banking regulations protected Canada from having the kind of subprime mortgage catastrophe that the U.S. had. 

 

True, but Canada is also restricted from leveraging what little capital exists...no pain...no gain.    Hence the need for so much foreign capital (FDI).  

 

Quote

Oh, and you’re not going to build national unity by alienating Quebec.  If companies can’t handle making French language labels, maybe they can’t handle exporting.

 

It's an additional cost and compliance for what is already a relatively smaller market, with spillover tensions and other cultural friction for commerce.

 

 

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21 hours ago, Centerpiece said:

Why not negotiate the sunset clause instead of dismissing it outright. I could live with a 10 year sunset clause. Or perhaps include an agreed method of evaluating the Trade Balance so that if the balance is plus or minus 10% (or whatever) - it triggers a review. Perhaps both. Point is - negotiate to address the concern - whatever that may be.

That's exactly what I thought. Sunset clause at some point, not 5 years it's a little too soon. Can't really assess the impact of economics in that short a time anyway. But it does make sense to review and make corrections at some interval, in line with changes to the global economy. I think there was opportunity to keep the dialogue going but it seems like our PM lost his cool.

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3 hours ago, OftenWrong said:

That's exactly what I thought. Sunset clause at some point, not 5 years it's a little too soon. Can't really assess the impact of economics in that short a time anyway. But it does make sense to review and make corrections at some interval, in line with changes to the global economy. I think there was opportunity to keep the dialogue going but it seems like our PM lost his cool.

Often Wrong - Slightly Right (I got the Right part BTW) - good handle.......reminds me of women, specifically my wife.......they might not always be right, but they're never wrong. Good rule to live by.

Edited by Centerpiece

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16 hours ago, bush_cheney2004 said:

 

I agree that Canada's biggest challenges come from within, but it will be difficult to wean economic policies from past practices:

  • Inter-provincial barriers to trade are far worse than anything Trump has contemplated.
  • Canada's consumer market is burdened by high consumption taxes.
  • North - south trade to the U.S. has been far easier that east-west within Canada.
  • Anglo & Franco language restrictions further dilute market size and opportunities
  • Ironically, anti-American tariffs over 100 years ago sent the Maritimes into an economic death spiral from which it has never recovered.
  • Banking regulation limits available domestic capital and risk taking.
  • Regional political conflicts prevent national unity for economic independence.
  • Canada lags many other OECD nations for investment in research and development (R&D).
  • Many Canadians look at government as the solution instead of the problem, further disenfranchising the private sector.

This is a good list.  I would add that Canadians don't appreciate the precariousness of our economic situation.  Looking at our collective attitudes towards free trade from the 1980s to today is informative.  

Productivity is another factor:

https://www.conferenceboard.ca/hcp/Details/Economy/measuring-productivity-canada.aspx?AspxAutoDetectCookieSupport=1

Quote

Canada’s labour productivity growth has been lower than that of the top countries for many decades, hurting its international competitiveness. Canada’s relative performance on this indicator improved in 2012, earning a “B” grade and ranking 5th among the 16 countries. However, Canada’s labour productivity growth rate in 2012 was only 0.8 per cent, not an impressive number by historical standards. Canada's ranking improved only because other countries did relatively worse.

 

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I'm not convinced by all the anxiety over the probable demise of the NAFTA arrangement. As has been pointed out by many observers, including economists, much of the impact of regional trading pacts has been diminished by the emergence of a stronger WTO regime. Not that the WTO model is perfect, but it is much less likely to be subject to American dictates as it includes countries that comprise most of the world's large economies. In the NAFTA context, Canada and Mexico are mere minnows in an American economic sea. If the NAFTA dies (or withers away), the already hollowed out Canadian economy will adapt. Currency differentials can compensate for the tariffs permitted under WTO rules. In fact, $100+ oil during the Harper era, which drove the value of the CDN $ up against its U.S. counterpart, probably did more harm than will the collapse of the NAFTA. And what good does the NAFTA do anyway when the U.S. can (and does) blatantly ignore it with the imposition of sectoral tariffs and/or "Buy America" laws, as has regularly been the case - even before Trump? 

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Very true.  The U.S. does violate its own trade agreements regularly.  They’re not fair traders.  They’ve eroded trust by ignoring the rulings of the WTO and NAFTA tribunals.  

With regard to supply management, that was never targeted to international trade, but was rather a means of preventing the kinds of massive price fluctuations that would sink small farmers.  It’s a stabilizing force in an often volatile sector, farming.  Losing the farm is a well known expression for a reason, because it used to happen all the time due to crop failures or oversupply.  

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40 minutes ago, Zeitgeist said:

Very true.  The U.S. does violate its own trade agreements regularly.  They’re not fair traders.  They’ve eroded trust by ignoring the rulings of the WTO and NAFTA tribunals. 

 

If this be the case, then why does Canada insist upon continuing trade and lopsided dependence on the U.S. export market ?

 

 

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Because it makes sense to trade with neighbors.  It’s in both of our interests to take advantage of proximity, but it works best when neighbors are neighbourly.  Canada is left with no choice but to supplement trade with other partners given this new U.S. protectionism.  

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9 minutes ago, Zeitgeist said:

Because it makes sense to trade with neighbors.  It’s in both of our interests to take advantage of proximity, but it works best when neighbors are neighbourly.  Canada is left with no choice but to supplement trade with other partners given this new U.S. protectionism.  

 

Agreed...and Canada should have done so decades ago.

Canada's American "neighbours" sure have, with only 18% of exports going to Canada, not 75% !!!

https://www.census.gov/foreign-trade/statistics/highlights/toppartners.html#exports

Edited by bush_cheney2004

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And yet the U.S. exports more to Canada than Canada exports to the U.S., giving the U.S. a rare trade surplus among its trading partners.  Good deal for Americans. 

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1 minute ago, Zeitgeist said:

And yet the U.S. exports more to Canada than Canada exports to the U.S., giving the U.S. a rare trade surplus among its trading partners.  Good deal for Americans. 

 

Bad deal for Americans....Americans had to pump a lot of capital into Canada to support the manufacturing base.   Canada has not and cannot reciprocate equally.

Still waiting for the first Canadian auto assembly plant in the USA.

Edited by bush_cheney2004

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That’s just untrue.  The U.S. is doing very well by the Canadian market.  This new protectionism towards Canada is unfair and selfish.  The world knows it.  The U.S, emperor is wearing no clothes.  Why can’t his own party inform him of the fact?

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4 minutes ago, Zeitgeist said:

That’s just untrue.  The U.S. is doing very well by the Canadian market.  This new protectionism towards Canada is unfair and selfish.  The world knows it.  The U.S, emperor is wearing no clothes.  Why can’t his own party inform him of the fact?

 

Because they don't want to....Canada and Mexico took American jobs and maintain protectionist tariff and non-tariff barriers to U.S. exports.

Trump is not the first U.S. president to impose tariffs or an "America First" policy....remember Obama ?

Canada should seek true love elsewhere.

... still waiting for the first Canadian auto assembly plant in the USA.

 

Edited by bush_cheney2004

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You’re missing the fact that some of these auto plants have Canadian roots.  This nonsense about Canadians taking American jobs represents a complete misunderstanding of how integrated our economies are and have always been.  Canada is a major parts supplier to the auto sector.  Canada was a major producer of aircraft and ships in the world wars. It continues to produce passenger aircraft. Canada was the third country to launch a satellite into space.  Canada is still a major producer of small aircraft, now with European ownership.  Aerospace tech is still a major strength. Companies like McDonnell Douglas and Bombardier have contributed hugely to rail and air infrastructure.  The smart phone was invented in Canada by Blackberry.  Do your homework.  Repeating the same lies over and over won’t make them true.  You seem to be taking a page out of Trump the propagandist’s book. 

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1 minute ago, Zeitgeist said:

You’re missing the fact that some of these auto plants have Canadian roots.  This nonsense about Canadians taking American jobs represents a complete misunderstanding of how integrated our economies are and have always been.  Canada is a major parts supplier to the auto sector.  Canada was a major producer of aircraft and ships in the world wars. It continues to produce passenger aircraft. Canada was the third country to launch a satellite into space.  Canada is still a major producer of small aircraft, now with European ownership.  Aerospace tech is still a major strength. Companies like McDonnell Douglas and Bombardier have contributed hugely to rail and air infrastructure.  The smart phone was invented in Canada by Blackberry.  Do your homework.  Repeating the same lies over and over won’t make them true.  You seem to be taking a page out of Trump the propagandist’s book. 

 

Save your nostalgia for another thread.   Canada must compete in today's global marketplace, not the glory years of yesterday.   Living on easy American foreign direct investment means dying by the same sword.     Canada was....Canada use to be....blaming Trump won't work.

Stop being so dependent on the U.S. export market so close to home...leave mom's basement.

 

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Canada is a major player in the new economy.  I’m not sure the current U.S. leader and his minions understand the new economy, even as the U.S. plays a major role in it. I only mention the past to give context that the discussion lacks.  Exports to the U.S. as a percentage of total exports are 7-8% lower than they were 40 years ago.  What great recent American direct investment are you referencing?  China, Europe and India have arrived and will represent a greater chunk of the pie. Also, I prefer the idea of Canada nationalizing the oil sands to selling them to multinational companies who may not care about the environmental impacts or how these extractions benefit Canadians. 

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1 hour ago, Zeitgeist said:

 What great recent American direct investment are you referencing? 

 

American corps own 50% of Canada's manufacturing base (autos, defense, consumer goods, steel, paper mills, etc.), and 70% of Canada's oil/bitumen production is foreign owned (lots of Americans there too).   American media "content" dominates Canada to the point of CRTC CanCon rules and government funding to survive.

Here is a Global Affairs Canada summary of foreign direct investment (FDI) into Canada by recent years....USA dominates at 49% !

http://www.international.gc.ca/economist-economiste/statistics-statistiques/outward_inward-actifs_passif.aspx?lang=eng

Fortunately, that is changing, especially in the energy sector.   Energy development capital is leaving Canada for the USA.

 

Quote

fp0402_foreign_direct_investment.png?w=6

http://business.financialpost.com/news/economy/investment-outflow-from-canada-already-underway-in-real-time-rbc-head

Edited by bush_cheney2004

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On 6/4/2018 at 1:26 PM, bush_cheney2004 said:

 

I agree that Canada's biggest challenges come from within, but it will be difficult to wean economic policies from past practices:

  • Inter-provincial barriers to trade are far worse than anything Trump has contemplated.
  • Canada's consumer market is burdened by high consumption taxes.
  • North - south trade to the U.S. has been far easier that east-west within Canada.
  • Anglo & Franco language restrictions further dilute market size and opportunities
  • Ironically, anti-American tariffs over 100 years ago sent the Maritimes into an economic death spiral from which it has never recovered.
  • Banking regulation limits available domestic capital and risk taking.
  • Regional political conflicts prevent national unity for economic independence.
  • Canada lags many other OECD nations for investment in research and development (R&D).
  • Many Canadians look at government as the solution instead of the problem, further disenfranchising the private sector.

Ah, we can't fix our domestic issues so let's go international, play with the big boys and really get bent over. 

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1 hour ago, Thinkinoutsidethebox said:

Ah, we can't fix our domestic issues so let's go international, play with the big boys and really get bent over. 

This is backwards thinking.  The idea is that a more open market will drive domestic companies to improve.  Tariffs and protections take away the incentive to improve in the same way social welfare payouts do.  There is a sweet spot in between where you are supporting individuals and corporate entities with a hand-up, not a hand-out.  Disabled and disadvantaged individuals need permanent support.  Disabled and disadvantaged companies need to die off.

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The oil reserves in the U.S. are much smaller than the Canadian reserves.  There's a party going on as the U.S. accesses shale oil through fracking, but that's a short-term boom.  Canada's a long-term secure energy source for the world.  It should NOT put all its eggs in the U.S. export basket, especially in terms of refining.  Canada can do its own refining.  We need Energy East to ensure that our domestic oil market is priority one.  If the U.S. wants to treat Canadian resources as though they are domestic resources, they have to treat their market as our domestic market, period.  That will eternally be the deal. 

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11 minutes ago, Zeitgeist said:

The oil reserves in the U.S. are much smaller than the Canadian reserves. 

 

The investment capital reserves in Canada are much smaller than in the U.S.

For several reasons, Canada has not built more east-west pipeline or refining capacity, preferring to go south (USA) instead.

It is a struggle to get anything done.

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22 hours ago, Michael Hardner said:

This is backwards thinking.  The idea is that a more open market will drive domestic companies to improve.  Tariffs and protections take away the incentive to improve in the same way social welfare payouts do.  There is a sweet spot in between where you are supporting individuals and corporate entities with a hand-up, not a hand-out.  Disabled and disadvantaged individuals need permanent support.  Disabled and disadvantaged companies need to die off.

Maybe the thinking needs to be revised...

Selling companies off to foreign interests can't be good for Canada in the long term. The second things don't go their way they pack up and either take the work elseware or shut it down. Domesticly owned they at least put some effort into keeping it going. 

This capital argument is interesting, you say foreign investment is required for capital but after that all profits leave the country. Do economists consider that side of the equation? Maybe it's the reason Canada doesn't have enough capital in the first place. 

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