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How the Free Trade Agreement and Protectionist ideology affect the Canadian Economy

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How the Free Trade Agreement and Protectionist ideology affect the Canadian Economy

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By: Justen Harrison (100402022)

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I want to take the time to thank anyone who is reading the following information. I find it very informative and important for people to know what is going on in the Canadian Economy and how Protectionism and NAFTA affect our current economy. My Video and websites will be describing what NAFTA essentially is as well as protectionism and how this interplays with are current global situation. I will be highlighting the current issue that just passed with Steel and aluminum as well as how the Trump Administration is trying to implement American first, or “protectionist ideology” into legislation that affects all North America.

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First agreement of its kind, and still makes the largest world trade agreement. Purposed in 1992 by “Brian Mulroney, George H. W. Bush, Carlos Salinas” It was controversial due to people worried about massive jobs loss with business moving to Mexico to make production cheaper. The argument for NAFTA is that with Lower prices more people will purchase products to increase GDP, the argument against NAFTA and thus “protectionist ideas” is that Job and thus production will move to the cheaper countries. NAFTA essentially made it so that products and goods that were taxed at the border were no longer taxed thus making products cheaper to buy, but also giving incentive to produce everything with employees that can be paid less in different countries. Tariffs were greatly reduced at the start of the agreement in 1994 and were all but eliminated by 2008. Trade between the three countries has tripled by it should be noted that this has had a small effect on the American Economy since it is so much larger. A lot of people say NAFTA has affected Canada’s economy and moved jobs away, but it should be noted that the largest trade partner is Still the USA and China and NAFTA has little to do with that. Its also hard to tell if NAFTA really effected job loss since it does not take into consideration the massive increase in technology between 1992 and now.

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Even Trade Balance between Canada and the USA. Canada's Economy is much smaller then the USA and Canada has Much more to gain and lose then the USA. One of the major things traded between both companies is “energy”. This is important as energy is something that may be needed or sold with little warning and should not be tied up tariffs. It has been shown that almost 3 quarters of all Canada Exports are sent to the USA. It is important to note that it is not Canada that is going to lose with changes to NAFTA but instead re balancing and evaluating the relationship between Mexico and the USA. Opening NAFTA to changes most likely will not affect Canada but instead be more directed between the USA and Mexico.”

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How NAFTA has affected Canada-U.S. trade

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This is a video of Justin Trudeau responding to different news outlets about the possibility of the Steel and aluminum trade tariffs that the USA president trump was Proposing to introduce. If a trade tariff is imposed and free trade is pushed aside this would have major effects in Ontario has we produce the most steel in Canada. Although this video is only just a over a month old it has been shown that the USA did not impose these tariffs has a whole to Canada, but Individual States Such as New York As considered it. The important things to highlight from this video is that the USA has a 2-billion-dollar Surplus with Steel trade with Canada and the current arrangement that Canada and the USA have has created Millions of Great jobs on both sides of the borders. The Prime Minister Has stated that President trumps “protectionist ideas” are simply unacceptable and will not be agreed upon on any level of government.

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Justin Trudeau responds to Trump's proposed tariffs on steel, aluminum

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This Video describes how NAFTA works as well as where protectionist Ideas come from. It is important to remember that the world economy and by extension standards of living are very depended on international trade. As a rule of thumb countries that produce more products tend to do better. This lead to what is known as “protectionist” Attitudes where rules and laws are enforced to make buying products from other countries more expensive. This artificially increases prices of products from other countries to make domestic products more competitive. Free trade is essentially a compromise between two countries to not tax imports and exports and allow for products to move freely between them. The benefit for this is that it allows for smaller economies such as Canada to have more people to sell to and consumers pay less for products. The down fall to NAFTA is loss of jobs as it is cheaper to have manufacturing jobs in other countries and import the products as it is cheaper. One solution to keep NAFTA going is to keep rules of payment and labor the same in countries that Support NAFTA so countries can not under cut each other.

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The Secret Treaty That Could Ruin The World http://testu.be/1TtnYvN Subscribe! http://bitly.com/1iLOHml Donald Trump and Bernie Sanders have blasted free trade policies, promising to bring jobs back to the US. But is free trade really to blame?

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Beef Producers biggest winner of TPP, A wide range of Canadian industries including Cattle will be able to ship more products to other countries for less, including japan the 3rd largest economy in the world. This should increase Sales per year for GDP of about 200 million. It also helps build the foundation for further deals to help increase globalization and lower protectionism laws. There is a negative to this though and this is being heard by the Automotive industry. The issue is that Japanese Car makers can use Chinese parts to further lower the price of their cars to trade back to North America. This makes it hard for domestic cars to be competitive. There was a protest in Montreal by the Auto industry speaking about being competitive. It should be noted that the TPP is a separate deal then NAFTA and those talks are open. It should be noted that right now that 70 percent of Canada exports go to the USA so to diversify and strength economy we need to look to the west for a larger market.

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This first article is directly related to the U.S governments new steel and aluminum import tariffs for now. Premier Wynn said we are not out of the woods yet, but they are very happy with how things are going as of right now. Ontario is home to more than 70 percent of Canada’s steel-making capacity. The major cities that would be affected by this is Sault Ste. Marie and Hamilton. It should also be noted that Tariffs on this trade that supports Trumps new “Protectionist ideas” could directly affect National security. Canada and USA are key allies and partners in NORAD and NATO and are a large part in each other national security. Canada is a safe and secure supplier of steel and aluminum to the USA, and it should also be noted that Canada buys more American steel than the rest of the world combined. With NAFTA still up in the air and being decided in the coming weeks and months The Ontario and Canadian Government are committed to making sure we stay a large part of the USA economy.

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Premier's Statement on U.S. Steel and Aluminum Tariffs

Premier Kathleen Wynne released the following statement today on Canada's exemption from the U.S.'s new tariffs on steel and aluminum imports:

"We learned today that Canada has been exempted from the U.S. government's new steel and aluminum import tariffs -- for now. While it is important to recognize that we are still facing challenges, I am pleased that we got the decision we fought for -- the one that protects workers and businesses in Ontario's steel and aluminum industry. It speaks to the success of Ontario's strategy of extensive outreach to U.S. leaders during this period of uncertainty. But it also underlines the threats we still face during this uncertain time and the need for my outreach and advocacy to continue.

In a little over a year, I have met with 37 U.S. governors and dozens of senators, congress people and senior members of the U.S. administration. In my frequent and ongoing conversations with U.S. leaders on issues relating to trade and the jobs it supports, I have argued for the maintenance of a strong, integrated economy, with steel emerging as a major focus of those discussions over the past number of weeks.

Ontario is home to more than 70 per cent of Canada's steel-making capacity. The industry is a key employer, supporting good jobs in places like Sault Ste. Marie and Hamilton and in related industries across the province, including our automotive, energy and construction sectors. As such, Ontario's steel and aluminum businesses are a crucial part of North America's steel and broader manufacturing infrastructure.

As key allies and partners in NORAD and NATO, Canada and the U.S. are integral to each other's national security. Canada is a safe and secure supplier of steel and aluminum to the U.S., and it is worth noting that Canada buys more American steel than the rest of the world combined. As I made clear to our U.S. partners, the proposed tariffs would have not only harmed Ontario companies, but also U.S. companies and workers that rely on existing trade relationships with Canada.

I have been encouraged by the responses we have received from business and government leaders across the U.S., who shared our concerns over the major consequences that U.S. tariffs would have had on both sides of the border. Today's outcome confirms that we are taking the right approach when it comes to protecting Ontario workers by standing up for our interests south of the border. We have allies and we are making a strong case for our partnership. But we are not out of the woods yet.

As the NAFTA negotiations continue over the coming weeks and months, we remain committed to working alongside our neighbours in the U.S. and our federal government to protect the strong trade relationship we have built across the border and to advocate for Ontario's interests. Ontario appreciates the close working relations we have with our federal government as we navigate this challenging period. After the events of the last week, and with today's decision to exempt Canada from the U.S.'s steel and aluminium tariffs by no means a final one, it is only more apparent that we need to continue strengthening these relationships in order to get the greater certainty we need from our partner and ally to the south.

As Premier, I will continue to stand up whenever Ontario's interests are being threatened. In these uncertain times, we must remain vigilant and advocate for our workers and businesses at every opportunity. I am continuing to build on the strong relationships I have developed with U.S. government and business leaders to find new ways to continue to work together.

The decision made today by President Trump's administration to exempt Ontario and Canada from the new tariffs is a positive development and a demonstration that our U.S. engagement strategy is working. But with the tide of protectionism rising across the U.S., we have more work to do and will remain vigilant."

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premier's statement on u.s. steel and aluminum tariffs

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Premier's Statement on U.S. Steel and Aluminum Tariffs

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Premier Kathleen Wynne released the following statement today on Canada's exemption from the U.S.'s new tariffs on steel and aluminum imports: "We learned today that Canada has been exempted from the U.S. government's new steel and aluminum import tariffs -- for now.

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This article discusses Prime Ministers Justin Trudeaus trip to US to decide the fate of NAFTA negotiations. He also found himself in a situation where he must counter misinformation from President trumps administration saying that the USA has a huge “Trade deficit” with Canada and this is simply not true. Basically, in a simplified form the USA is counting some good twice, for example a Chinese washing machine that passes through the port of Vancouver on it way to the United states is being counted in both the US trade deficit with China and Canada.

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Prime Minister Justin Trudeau is on a trip this week to the U.S. meant to drum up support on trade issues - the NAFTA negotiations in particular.

But he also may find himself countering misinformation about the U.S.-Canada trade relationship being spread by the Trump administration's own chief NAFTA negotiator.

U.S. Trade Representative Robert Lighthizer has been including goods that pass through Canada but don't originate here as Canadian exports in his export calculations, artificially inflating the United States' trade deficit in goods with Canada.

That explains why the trade deficit figure cited last week by Lighthizer is so out of line with reality, Canadian government sources say.

Basically, the USTR is counting the same goods twice. For example, a Chinese washing machine that passes through the port of Vancouver on its way to the United States is being counted in both the U.S. trade deficit with China and in the U.S. goods deficit with Canada.

And while Lighthizer is counting that washing machine as part of Canada's surplus with the U.S., the product is already paying tariffs as a Chinese import.

The volume of pass-through goods being added to real Canadian exports in the USTR's math is about US$75 billion. That's roughly equal to the entire GDP of Kenya.

A ballooning surplus

The last round of NAFTA talks that ended last week in Montreal provided Canada with more evidence that Lighthizer and the Trump administration don't feel bound by the rules of good-faith negotiations.

Lighthizer couched his statement last week in words more diplomatic than those he used at his meeting with his U.S. and Canadian counterparts in October.

But once again, jaws dropped in the room when Lighthizer began to criticize what he claimed was Canada's enormous surplus in goods with the United States.

Is it wilful intent, or is it sloppiness? I think it can be both. - Susan Aaronson, Elliot School of International Affairs

"Using Canadian statistics," he said, "Canada has an over $87 billion U.S.-dollar surplus with the United States. To put this in perspective, that figure is equal to approximately 5.7 per cent of Canada's GDP.

"Now, I ask Canadians, because we're in Canada, is it not fair for us to wonder whether this imbalance could in part be caused by the rules of NAFTA? Would Canada not ask this same question if the situation were reversed?"

Lighthizer went on to argue that the solution should be to "rebalance" the trading relationship in the United States' favour.

False numbers

Foreign Affairs Minister Chrystia Freeland was quick to correct him.

"Canada does not consider trade deficits and surpluses to be the ultimate arbiter of whether trade is good or bad," she said. "But it is worth noting than in overall trade in goods and services, Canada had a trade deficit with the United States of nearly US$8 billion.

"And let me say, these aren't Canadian numbers. They are from the U.S. Bureau of Economic Analysis in the Dept of Commerce."

Freeland cited the numbers for goods and services combined, which produce a relatively small U.S. surplus. For goods only, the U.S. Department of Commerce and the government of Canada both recorded a small Canadian surplus. Neither side's numbers come close to those cited by Lighthizer.

Lighthizer's numbers do come from a Canadian source: Statistics Canada's website. But they're selected and presented in a misleading way.

Unlike other figures published by the government of Canada - which count genuinely Canadian exports - Statistics Canada's spreadsheet counts re-exports of goods from third countries together with Canadian goods.

The website clearly explains, however, that this methodology differs from the one used by the U.S. itself: "For trade in goods, imports in the U.S. accounts would be affected because the United States attributes Canadian re-exports to the country of origin rather than to Canada, the last country of shipment."

Which explains why the USTR's own website contradicts Lighthizer:

"Canada is currently our 2nd largest goods trading partner with $544.0 billion in total (two-way) goods trade during 2016. Goods exports totalled $266.0 billion; goods imports totalled $278.1 billion. The U.S. goods trade deficit with Canada was $12.1 billion in 2016."

The figure for the goods trade deficit cited by Lighthizer in Montreal was more than seven times higher.

No answers from USTR

CBC News spoke with a person in Lighthizer's office who said a spokesperson would call about the discrepancy. That hasn't happened; repeated calls to USTR spokesperson Emily K. Davis went unanswered.

Canadian officials said they don't believe Lighthizer is genuinely confused about the balance of trade and suggest that U.S. officials may be reacting in annoyance to having official U.S. statistics used against them in NAFTA talks.

Susan Aaronson, a research professor at the Elliot School of International Affairs at George Washington University, said she thinks political appointees may be behind the USTR's use of bogus numbers.

"The staff of USTR has remained and they are competent and many of them are deeply concerned by this sort of manipulation of statistics," she said.

"Is it wilful intent, or is it sloppiness? I think it can be both. While Ambassador Lighthizer is no amateur, many of his appointees are in over their heads and don't know what they're doing."

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U.S. claims on trade deficit with Canada inflated by misleading numbers | CBC News

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Prime Minister Justin Trudeau is on a trip this week to the U.S. meant to drum up support on trade issues - the NAFTA negotiations in particular. But he also may find himself countering misinformation about the U.S.-Canada trade relationship being spread by the Trump administration's own chief NAFTA negotiator.

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This article dives into the importance of free trade and how trumps protectionist attitude towards us is not correct and is very misleading. While it is true that Canada does have a Trade “surplus” with the USA when it comes to imported goods, Canada has a Trade Deficit with the states when it comes to Services imported. The United States generate more GDP from us then we do from them in the long when taking into consideration all movement of money. A lot of economics also say that a deficit or surplus is note the best way to measure the success of a trade relationship since it does not take into consideration what is being traded and if the United States can make the product more effectively then another country.  President Trump Likes to present information in the sense of winning or losing but it is much more complicated then that.

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WASHINGTON-U.S. President Donald Trump has said over and over that the U.S. has a trade deficit with Canada. Over and over, Prime Minister Justin Trudeau and other Canadian officials have said he's incorrect.

Now Trump's own economic advisers have revealed that they also think Trump has it wrong.

This week, Trump's White House released the Annual Report of the Council of Economic Advisers. The council is a group of three economists appointed by Trump to give him economic advice; its annual report offers an analysis of the performance of the U.S. economy.

And it simply says, in passing, that the U.S. has a surplus with Canada.

"The United States has free trade agreements (FTAs) with a number of countries - some of which represent net trade surpluses for the United States (Canada and Singapore), and some of which represent deficits (Mexico and South Korea)," the report says.

Why is there a U.S. surplus with Canada? The advisers - chairman Kevin Hassett, University of Chicago professor Tomas Philipson and Cornell University emeritus professor Richard Burkhauser - explain that the U.S. has a surplus in the trade of services. While the U.S. has a deficit in the trade of goods, the surplus in services is more than big enough to offset it.

The question of the trade balance may seem academic and irrelevant, but it has emerged as a frequent subject of public and private debate between top officials from two countries, including Trump and Trudeau themselves.

The reason is Trump's vehement insistence that deficits must be eradicated. While most economists say a deficit or surplus is not the best way to measure the success of a trade relationship, the president views the figures as key evidence of which country is "winning" or "losing."

Almost every time Trump has mentioned trade with Canada, he has alleged that the U.S. has a major deficit - usually citing a "$17 billion" figure.

"We have a trade deficit with Canada. We have a big imbalance of at least $17 billion," he said on Feb. 13.

"We lose a lot of money with Canada," he said on Feb 12.

"Seventeen billion with Canada - Canada says we broke even. But they don't include lumber and they don't include oil. Oh, that's not . . . . My friend Justin, he says, "No, no, we break even." I said, 'Yeah, but you're not including oil, and you're not including lumber." When you do, you lose $17 billion," he said on Dec. 28.
Read more: Analysis | The complete list of all 1175 false things Donald Trump has said as U.S. president If Trump kills NAFTA, he could lock out thousands of Canadian investors - and the American jobs they create Analysis | Say Donald Trump kills NAFTA. Here's what experts say will happen to Canada
Taking cues from the president, his U.S. Trade Representative Robert Lighthizer, said after a NAFTA negotiating session in October: "For us, trade deficits do matter. And we intend to reduce them." After a negotiating session last month, he claimed that, using Canadian statistics, "Canada has an over $87 billion U.S. dollar surplus with the United States. "

There is no indication, of course, that a president unenthusiastic about policy details and numerical accuracy will be swayed by a sentence in a lengthy official report he is unlikely to read.

The top U.S. trade negotiator, Robert Lighthizer, says on Aug. 16 that the United States won't settle for cosmetic changes to the North American Free Trade Agreement as negotiations to rework terms of the pact began. (The Associated Press)

Trump has paid no heed to the data that appears on the website of Lighthizer's department, which says: "The U.S. goods and services trade surplus with Canada was $12.5 billion in 2016." And it is not clear whether Trump allows the Council of Economic Advisers any role in making trade policy.

But the report at least gives Canada additional ammunition to support its accurate argument. Using a different method of calculating the trade balance than other government departments use, it said, "In 2016, the United States ran a trade surplus of $2.6 billion with Canada."

The advisers also used the report to challenge some of Trump's other primary claims about trade. Scott Lincicome, an adjunct scholar at the pro-trade Cato Institute in Washington, called it a "stunning rebuke" of Trump and his trade officials.

For example, Trump attributes trade deficits solely to trade agreements he says are unfair, and he claims that fixing the deals will eradicate the deficits. The report said, "Fiscal and monetary policies may be more important than trade policies in determining the magnitude of trade balances."

And Trump speaks exclusively about trade in goods. The report said, "Focusing only on the trade in goods alone ignores the United States' comparative advantage in services."

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Trump's economic advisers say he's wrong: The U.S. has a trade surplus with Canada, not a deficit | The Star

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WASHINGTON-U.S. President Donald Trump has said over and over that the U.S. has a trade deficit with Canada. Over and over, Prime Minister Justin Trudeau and other Canadian officials have said he's incorrect. Now Trump's own economic advisers have revealed that they also think Trump has it wrong.

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This article describes the fundamental issues with Protectionism and how it escalates trade traffic and can cause a trade war. New your state made the decision to implement “Buy American” legislation for its state that requires the use of American-made Iron in specific government surface road and bridge construction. Wynn the current leader of Ontario is not implementing legislation saying that Government outfits will no longer accept procurement contracts with suppliers from New York. Premiere Wynn was very clear that this is only a response to New York’s laws and can be reversed but is a great demonstration of how things can Escalate when considering protectionist laws.

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Ontario is putting up trade barriers in response to "Buy American" legislation out of New York state, Premier Kathleen Wynne says.

Government outfits will no longer accept procurement contracts with suppliers from New York and will restrict suppliers' use of structural iron from that state.

In a statement Monday, Wynne said that move is a response to New York's legislation that requires the use of American-made iron in specific government surface road and bridge construction projections.

"I will not let New York, or any other state, tilt the field in their favour without taking appropriate action," Wynne said.

The tit-for-tat move follows the implementation on April 1 of "Buy American" legislation that, according to a statement by New York state, mandates that steel or iron used in government road and bridge projects be completely or substantially produced in the United States.

"Buy American will help us invest directly in our greatest asset, our workforce, to support economic development and job growth for generations to come," New York Gov. Andrew Cuomo said on signing the legislation in December.

"I am proud to sign this legislation to support hardworking men and women, revitalize infrastructure across the state, bolster the strength of our manufacturing industries, and cement our status as a global economic leader."

Texas has drafted similar legislation, but Ontario is of the opinion that it does not apply to Canada, Wynne said.

The Ontario legislature passed the Fairness in Procurement Act to give the province the ability to respond to these types of "unfair" trade tactics, and on April 1 passed the first regulation under the law for New York state, Wynne said.

"At this time of economic uncertainty, Ontario workers and businesses need to know that I am their No. 1 advocate," Wynne said. "In the face of unfair U.S. actions, I will stand up for the people of Ontario in every way possible, every time."
aartuso@postmedia.com

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Ontario puts up trade barriers in response to New York 'Buy American' move

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Ontario is putting up trade barriers in response to “Buy American” legislation out of New York state, Premier Kathleen Wynne says.Government outfits will no longer accept procurement contracts with suppliers from New York and will restrict suppliers’ use of structural iron from tha...

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The first picture I want to Link demonstrates how I believe the outside world sees the State of North America. Canada, The United states, has been seen as a unified front of Economic success and power from all other parts of the world. With NAFTA being renegotiated and Trump pushing for America first Protectionist laws it looks like we are being divided and “sent away”. It is important to keep a unified front for both economic reasons as well as Military reasons. With China being the worlds second largest economy, the USA needs to keep everything in there benefit to maintain their lead.

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This second photo describes what most Economists see when discussing and studying what is important for NAFTAs negotiation. It is apparent that Trumps attitude towards Protectionism and America first is going to harm successful renegotiation of NAFTA. It is not disputed that NAFTA maybe renegotiated as the document is approximately 24 years old and Technology has changed the landscape for many countries but adding in protectionist ideology into the legislation will not help anyone.

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The final photo that I am showing shows how Donald Trump does not fully understand how Tariffs work and which countries would be the most effected by them. A great of example of this would be how he is increasing tariffs on items that are mostly sold to the USA by Canada while publicly saying its directed at China. As of right now China already received high Tariffs when importing and raising them will make little difference while greatly impacting the Canadian market. More information and rethought needs to be put into his economic action to make sure that the right countries are being affected by his policy.

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Free Trade Agreement and Protectionism.docx