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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.

 

Trade-offs

Thursday, February 05, 2009 > 14:06:40
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(Via I.E. Canada)
By: The Globe and Mail  


There should only be three issues on Stephen Harper's agenda when Barack Obama visits next week: trade, trade and trade. Protectionism is always a major threat to prosperity during an economic downturn. 

The famous story of the Smoot-Hawley Act spurring on the Great Depression got a lot of play during the 1993-94 debates about NAFTA, and began another round of rotation with this current economic downturn. 

What a lot of Canadians forget about the infamous protectionist tariffs in the bill was that actually raised tariffs preemptively, a full month before the bill had even passed. Our trade barriers started on about 30% of exports to , and after a new Conservative administration was elected in the days following the bill, that was raised to cover more than 75% of exports. At the same time, the Bennett Tories sought preferential treatment from and the Empire, a bit of a ridiculous move considering the relative proximity of 

British Columbia to

Bellingham, Washington versus

Birmingham, or  Bombay

The impact of the retaliatory tariffs of and other nations on the was immediate and deadly. American exports were just 59% of their 1929 total in 1932. Global trade more or less ceased. A serious recession turned into a global depression (with a second major recession in 1937-38). 

The challenge faces in 2009 is this: We are a hugely trade dependent jurisdiction, perhaps the most trade-dependent outside the Asian tigers.

Ontario exports 93% of its goods internationally, primarily to the .

Alberta exports most of its oil to the . Closed doors to the south will not be easily replaced, either by a faltering or a slowing ; a quiet or a resource-rich

It is imperative that we keep the trade doors to the open. The alternative is massive layoffs as our economy is forced to retool for domestic consumption, and a difficult transition away from globalization that will make the 1990-91 Free Trade recession look like a walk in the park. 

So what are we up against? 

Amusingly enough, it’s not the Republicans. While George W. Bush was prone to fits of protectionism whenever Karl Rove told him there was a demographic or congressional district that needed wooing, Senate Minority Leader (and de facto Republican leader) Mitch McConnell went out of his way to attack the recent bout of protectionism. 

No. Our opponents are Democrats. Those same wonderful Democrats that three-quarters of Canadians were rooting for in the election. The challenge is a specific and powerful brand of Democrat, named after the 2006 congressional races by Slate's Jacob Weisberg: Lou Dobbs Democrats. 

L
ou Dobbs Democrats are economic nationalists - anti-free trade, anti-immigration, anti-globalization. They are also typically pro-life and religious, although that is used more as a political shield against Republicans, rather than a sword to attack like the trade and immigration positions. 

Weisberg captured their philosophy in a single perfect line: "instead of blaming the rich at home, it focuses its energy on the poor abroad." 

The Senate is increasingly populated by these kinds of illiberal Democrats: Sherrod Brown, Jim Webb, Debbie Stabenow, Claire McCaskell. But the real exemplars of the Lou Dobbs Democrat are in the House of Representatives, typically now second-term members first elected in Republican districts in places like

Kentucky and

Kansas, Pennsylvania and

Ohio

For instance, Citizens Trade PAC - a rabidly anti-trade, anti-immigrant political action committee - endorsed 13 Democrats and just one Republican in 2006. 

Jeff Merkely, who unseated a popular and moderate Republican for a Senate seat from

Oregon last year, ran ads denouncing free trade. 

Of greater concern, the Democratic Senatorial Campaign Committee (basically, the Democratic Senate leadership) put up ads attacking trade and linking the incumbent Republicans to NAFTA, CAFTA and trade laws. 

And let's remember, 2006 was when the economy was strong. Most of the 2008 election cycle was before the economy melted down. The economy is worse today than it was on election day. 

Americans are angry and they're looking for a scapegoat. Unless Barack Obama provides them a better one than the international poor, that's who Congress - and the American people - are poised to blame. 

And the real victims will be you, me and the other 33 million Canadians who are dependent on access to American markets.

 



 


 


 


 

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