Thursday, June 06, 2013

The Myth of Free Trade

There is no such thing as free trade.  Real free trade would be the free flow of goods within and across borders with restrictions that only deal with health and safety. 

Instead what we get is what is known as managed trade where countries negotiate what goods can cross their borders.  In other words, countries negotiate deals that codify protectionism and then trumpet to those who have to live with the consequences that they achieved a great deal.

Although free trade proponents will claim that free trade agreements are good for the economies of the signing countries the empirical evidence to back that up is rather lacking.  However, the evidence that such deals can do harm to sectors of an economy or even the whole economy of a signatory is more compelling.  We only need to look at the hollowing out of the industrial capacity of North America to see that at work.

This line of thought came up because I read earlier this week that the Harper government has ordered its negotiators for the Canada-EU free trade talks to have a deal this month.  These talks have been stumbling along for months without a conclusion being close but now Mr. Harper would like to a deal in three weeks.

The reason for this, according to several commentators that I have read, is Mr. Harper is desperate to find something to change the channel on the Senate Expense Scandal.

If this is true I cannot think of anything more at odds with the interests of Canadians.  You have to wonder just what parts of the Canadian economy Canadian negotiators are selling out in order to provide Mr. Harper a way out of the mess created by his Senate appointees. 

Free Trade deals are usually not worth the paper they are written on but this next one presented by our government, I am certain with great fanfare, will require a greater than usual level of scrutiny than other deals of this nature.

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