Thursday, August 25, 2005

No such thing as free trade

Another interesting commentary on NAFTA, this time from Peter Urmetzer in the Globe's web comment:
Canadians have long been aware of the American tendency to play fast and loose with the rules, so it is difficult to understand why the government of the day decided to introduce a deal that made us even more dependent on our southern neighbour. A free-trade agreement, Canadian negotiators had hoped, would tame the elephant. But those hopes have been trampled, as the elephant continues to act - quelle surprise! - like an elephant...

As the United States continues to openly ignore various rulings handed down by NAFTA and the World Trade Organization, Canada might want to reconsider its position on free trade. Retaliation by way of placing tariffs on American imports will prove futile. It is interesting to note that the only weapon we have in our arsenal in terms of compensation are more tariffs. In other words, a trade war - the very thing we tried to avoid in the first place.

I'd again disagree with the position that retaliatory tariffs can't have an effect, as surely the trade war would also be undesirable from the American point of view. And Urmetzer goes too far in seeming to criticize any focus on global trade - there's nothing inherently better about internal trade (particularly in as vast a country as Canada) than foreign. While it's probably best not to devote too much time to negotiating agreements, that doesn't mean that trade barriers themselves are desirable either.

That said, it's refreshing to see such a strong third angle taken on the free trade debate, and Urmetzer's reminder that Canada has been perfectly successful with a relatively inward-looking focus is one worth remembering.

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