Protectionism

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Re: Protectionism

Postby ghariton » 20 Oct 2010 00:21

Meanwhile Quebec gets in on the act:


As Canada and the European Union kick off their latest round of trade talks, European officials are still fuming over Quebec's decision to lock international bidders out of a $1.2-billion contract to supply subway cars in Montreal.

Earlier this month, Quebec Premier Jean Charest announced the contract would go to a consortium led by Montreal-based aerospace firm Bombardier, without allowing foreign firms to bid. The cars will be assembled at a Bombardier plant in La Pocatiere, a town northeast of Quebec City where Charest's Liberals are vying to retain a seat in an upcoming byelection.

The Charest government has introduced legislation to fend off legal challenges under global-trade law.

But European officials say the deal sends the wrong signal on the issue that comes closest to being a deal breaker for the EU in its trade negotiations with Canada: the ability for European companies to bid on lucrative provincial and municipal contracts across Canada.

<snip>


A senior European source, speaking on condition of anonymity, said Quebec's protectionist behaviour has threatened to undermine the positive atmosphere of the negotiations.

<snip>


In a recent study, the Conference Board of Canada estimated the potential gains of a trade deal for both sides are considerably larger than expected, when sales of services are taken into account.

"We're arguing that both sides need to keep a longer-term picture in mind and not get sidetracked by issues that tend to get more air play," said Danielle Goldfarb, associate director of the think-tank's international trade and investment centre.

But a coalition of Canadian unions argues it would be foolish for Canada's provinces and territories to liberalize procurement contracts at a time when such contracts could still be needed to stimulate the flagging economic recovery.

Teresa Healy, a senior researcher with the Canadian Labour Congress, said opening the procurement market could create pressure on local governments to privatize public-service providers, such as water utilities.


The government, that champion of narrow special interests, is not my friend. Unions, those champions of privilege, are not my friend. But when government and unions join in an alliance, along with some corporations, against the vast body of ordinary Canadians...

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Re: Protectionism

Postby OhGreatGuru » 21 Oct 2010 19:17

It only took the EU 16 years to eliminate a tariff on bananas that favoured former EU colonies in the Caribbean over US owned plantations in the same area. http://online.wsj.com/article/SB126089161812692163.html

I'm a free trader in principle, and applaud the work that has been done to remove international trade barriers over the last 60 years. But even I can recognize the political dilemma of awarding a $1.2 billion subway contract to a foreign company when one of the world's biggest makers is in your own backyard.
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Re: Protectionism

Postby ghariton » 21 Oct 2010 19:28

OhGreatGuru wrote:one of the world's biggest makers is in your own backyard.


So they are. But should they be?

For all I know, Bombardier may be one of the great world-leading companies in this field. But of course I can't know. They've been coddled and cossetted by various Canadian and Quebec governments to the point that I have no idea what the company can really do. Of course, the unending stream of subsidies and protectionism does suggest that, otherwise, the company might not do so well at all.

In any case, if Bombardier is paid a higher price than necessary, the difference comes out of taxes, which could have been better spent on goods and services that can actually stand on their own and -- who knows -- might actually develop into global competitors.

Meanwhile, fuck the taxpayer. And oh yes, fuck Canadian companies who just might develop European markets for their products -- their owners and their employees.

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Re: Protectionism

Postby AltaRed » 21 Oct 2010 20:26

ghariton wrote:[Meanwhile, fuck the taxpayer. And oh yes, fuck Canadian companies who just might develop European markets for their products -- their owners and their employees.


This crap makes me seethe as well and I get to pay for some of this nonsense. At the very least, Bombardier needs to be booted out of the nest and made to fly with the rest of the flock.
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Re: Protectionism

Postby OhGreatGuru » 21 Oct 2010 20:31

ghariton wrote:
OhGreatGuru wrote:one of the world's biggest makers is in your own backyard.


So they are. But should they be?

For all I know, Bombardier may be one of the great world-leading companies in this field. But of course I can't know. They've been coddled and cossetted by various Canadian and Quebec governments to the point that I have no idea what the company can really do. Of course, the unending stream of subsidies and protectionism does suggest that, otherwise, the company might not do so well at all.

In any case, if Bombardier is paid a higher price than necessary, the difference comes out of taxes, which could have been better spent on goods and services that can actually stand on their own and -- who knows -- might actually develop into global competitors.

Meanwhile, fuck the taxpayer. And oh yes, fuck Canadian companies who just might develop European markets for their products -- their owners and their employees.

George


Bombardier has a French parner - Alstom. So it is not as if the EU is not getting any business out of it.

Bombardier has been a success in developing European & global markets.

In any case, if Bombardier is paid a higher price than necessary, the difference comes out of taxes, .... The counterargument is that contracts paid to CDN producers return jobs to Canadians and taxes to government. Of course we could always give the contract to the Chinese company that complained - keeping your currency artificially low and maintaining 19th century labour practices are not unfair trade practices according to China.
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Re: Protectionism

Postby parvus » 21 Oct 2010 22:32

FWIW, airplane subsidies are on the table this week, oddly, in Ottawa.
Boeing and Airbus also worry about new competition. At the moment, their biggest concern is the emergence of a new jet from Bombardier of Canada, the C-Series. This single-aisle plane, due to enter service in 2013, will be able to seat about 130 passengers, posing a direct challenge for the first time to the best-selling Boeing 737 and Airbus A320.

The current rules set separate financing standards for large airplanes and regional jets with 100 or fewer seats. But the C-Series, with its larger capacity and range, has now blurred that line, Boeing and Airbus say. This, they argue, puts them at a competitive disadvantage for sales in the single-aisle category, the most profitable segment of the market.

Bombardier said it would welcome a new arrangement where airlines could obtain financing, regardless of where they were based. “We do not support the so-called home market rule,” Marc Meloche, the senior director for structured finance at Bombardier Aerospace, said. “All customers should have access to all financing sources, based on market principles."


Hmm. In the old days, we used to argue back and forth about state monopoly capitalism, whether it was an empirically provable or a structurally assumed phenomenon.
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Re: Protectionism

Postby ghariton » 27 Oct 2010 21:37

A new study arguing that a free-trade agreement would be a disaster for Canada

The author? Jim Standford of the CAW.

The publisher? The CCPA.

Although Stanford uses a lot of words, his argument essentially reduces to this: Canada currently runs a trade deficit with the EU. If the volume of trade increases, so will the deficit. This will have negative knock-on effects, especially on the manufacturing sector, and especially especially the automobile makers (and their employees, and the union to whom they pay dues). QED.

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Re: Protectionism

Postby Shakespeare » 27 Oct 2010 22:01

Jim Standford [sic]
About as credible as the Fraser Institute. :roll:
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Re: Protectionism

Postby parvus » 27 Oct 2010 22:08

No, I like Jim. I just think he's wrong-headed and arguing valiantly in a losing battle. He's caught in a 1950s time-warp. The Fraser guys I think are just absurd -- numbers nuts with no context.
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Re: Protectionism

Postby ghariton » 27 Oct 2010 23:43

parvus wrote:numbers nuts with no context.

:lol:

Whatever happened to the notion of letting the numbers speak for themselves?

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Re: Protectionism

Postby Bylo Selhi » 28 Oct 2010 07:54

ghariton wrote:Whatever happened to the notion of letting the numbers speak for themselves?

Before or after Fraser's statisticians begin to torture them? :twisted:
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Re: Protectionism

Postby OhGreatGuru » 29 Oct 2010 16:35

ghariton wrote:
parvus wrote:numbers nuts with no context.

:lol:

Whatever happened to the notion of letting the numbers speak for themselves?

George


"There are lies, damn lies, and statistics."

A CEO is conducting a search for a new CFO. After an extensive selection process, he narrows the choice down to 3 candidates: an accountant, a statistician, and a lawyer. In a final test, he asks each of them this question: "What is 2 + 2?

The accountant replies: 4.

The statistician replies: "somewhere in the range from 3 to 5, with a 95% probability, 19 times out of 20, that it will be 4."

The lawyer gets up, looks out the door, closes it, and whispers to the CEO "What would you like it to be?"

The lawyer got the job.
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Re: Protectionism

Postby parvus » 29 Oct 2010 20:52

Indeed.

As Bylo notes, numbers are voiceless -- until you waterboard them. Then again, it could be that:
no one will any longer believe that he has to torture himself in order to get behind some profound piece of wisdom where the husked kernel of the abstruse things reveals at best the features of ordinary theories if not of absolute commonplaces.
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Re: Protectionism

Postby ghariton » 29 Oct 2010 22:26

OhGreatGuru wrote:A CEO is conducting a search for a new CFO. After an extensive selection process, he narrows the choice down to 3 candidates: an accountant, a statistician, and a lawyer. In a final test, he asks each of them this question: "What is 2 + 2?

The accountant replies: 4.

The statistician replies: "somewhere in the range from 3 to 5, with a 95% probability, 19 times out of 20, that it will be 4."

The lawyer gets up, looks out the door, closes it, and whispers to the CEO "What would you like it to be?"

The lawyer got the job.


A computer scientist would have asked, "What base are we working in?"

And a mathematician would have said, "It depends:

2 + 2 (mod 2) = 0

2 + 2 (mod 3) = 1

2 + 2 (mod 4) = 0

George

(Not an accountant or a computer scientist)
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Re: Protectionism

Postby parvus » 29 Oct 2010 22:32

And 10-10-10, an auspicious wedding date, apparently yields the meaning of life: 42
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Re: Protectionism

Postby Bylo Selhi » 29 Oct 2010 23:11

What is 2 + 2?

A computer programmer would answer, "3.99999999..." (If using a Pentium processor would answer, "3.987654321...")

An engineer would answer, "5, for sufficiently large values of 2."
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Re: Protectionism

Postby Peculiar_Investor » 01 Nov 2010 16:00

If Potash were RIM, the outcry would be much louder - The Globe and Mail. An interesting viewpoint, particularly given the occasional rumours that Microsoft or Cisco has enough cash on hand to finance the purchase of RIM.
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Re: Protectionism

Postby ghariton » 01 Nov 2010 23:55

Charles Vallerand writing in today's Le Devoir comments on the free trade negotiations between Canada and the EU (my rough translation):

Canada must first insist that its European partner include, in the agreement, the largest possible exemption for cultural matters. All culture must be exempt, not only the audiovisual sector. If we must negotiate an agreement on cultural cooperation between Canada and the European Union, it must be clear that the negotiation of such an agreement must be done separately from a commercial agreement. The mandate for such a negotiation must be given to bureaucrats in charge of culture, taking good care for them to collaborate closely with the professional associations of the cultural sector.


I.e. things like books, movies, TV shows, magazines, performing arts, and presumably photocopying (which is characterized by Ottawa as a form of printing, which in turn is a form of publishing, hence a literary endeavour), should be off the table.

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Re: Protectionism

Postby ghariton » 07 Nov 2010 18:46

From the Financial Times:

Though classic trade protectionism has been muted, the parochial political forces powering it are not far below the surface. When they emerge, they often take subtler forms than the crude tariff barriers of old. A recent manifestation is Canada’s decision to block BHP Billiton’s takeover of PotashCorp. Another is China’s tight grip on exports of rare earth metals.


I understand why the Harper government abandoned its principles and blocked the sale of Potash corporation. The move is very bad economics. It also betrays the government's supposed commitment to free markets and indeed a free society. But popular sentiment being what it is -- uninformed knee-jerk reactions -- and minority government, I guess they had little choice but to jettison their principles, once again.

Of course, this is only the latest in a series of protectionist moves by our governments. If trade wars break out and we suffer -- and we will suffer more than most -- it will be morally difficult to complain.

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Re: Protectionism

Postby Shakespeare » 07 Nov 2010 19:08

If trade wars break out and we suffer -- and we will suffer more than most -- it will be morally difficult to complain.
As long as we have marketing boards it will be morally difficult to complain.
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Re: Protectionism

Postby Bylo Selhi » 07 Nov 2010 19:21

Sometimes we have to say no to foreign investment
Every other western industrialized country exercises the right to prohibit foreign takeovers of its key companies. Most have a screening apparatus like the Investment Canada Act. The United States, for example, has its Committee on Foreign Investment. Britain has a Takeover Panel...

BHP Billiton, the firm trying to take over Potash Corp., is based in Australia, which also has a track record of blocking foreign takeovers of its strategic businesses. In widely quoted remarks, former BHP chairman Don Argus pleaded with his countrymen not to allow Australian resources to fall into “overseas hands.” Otherwise, he said, “We will become a branch office, just like Canada.”

Yes this is from an editorial in The "Red" Star, but
1. Is anything that I've quoted factually false?
2. Why should Canada be any different on this issue than the rest of the developed world?
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Re: Protectionism

Postby ghariton » 07 Nov 2010 19:43

Bylo Selhi wrote:is anything that I've quoted factually false?


I believe that the facts are correct. Indeed, the EU in its push for open markets has nevertheless carved out exceptions for issues of fundamental national importance, with the examples being public health and national security, but admittedly open ended. Similarly the WTO allows a very narrow range of exceptions, although wider than the EU, for "strategic" issues.

Recall that Ottawa blocked the sate of MacDonald-Detweiler on issues of national security. That was legitimate, even if rather tenuous.

Moving from there to more general acts of economic nationalsim seems to require some justification, it seems to me. Block the sale of Potash if there are market failures or externalities that won't be recognized by the participants to the transaction. In particular, if the transaction went through, what would the harm to Canada have been? What were the exceptional circumstances that required blocking the deal?

In passing, I note that two of Canada's largest pension funds have just acquired control of the Channel Tunnel. If anything is strategic, isn't that strategic? How come Britan and France allowed that?

I was listening to an economist whose first name was Jim on Cross-Country check-up. I can only surmise his last name was Stanford. He argued that, if Potash were sold, dividends and taxes would flow out of Canada to foreigners and their governments. But what he didn't bother to mention was that the money to be paid for the shares would flow into Canada (or wherever the investors are situated), where presumably it would be invested in other, more profittable ventures. More profitable, because if Potash were the most profitable use of those funds, why would the shareholders want to sell?

Anyway, my understanding is that Potash ios already 51% foreign owned -- not that that should matter one way or the other.

Head office? It's in Chicago now.

R & D? Why not perform R % D (is there any in the fertilizer industry?) where the best researchers are -- wherever that is?

Monopoly power and anticompetitive behaviour? We have laws about that. They are just as effective -- or ineffective -- whether the owners are Canadian or foreigners.

Corporate social responsibility? Surely a Canadian corporation would be better for Canadian society? Well, Bell and TELUS and Rogers are all Canadian, as is Air Canada. How happy is the average Canadian with them?

Finally, to return to the point that other countries are doing it. I fail to see why this is a justification for doing something stupid. Surely we should be trying to convince them to stop, not joining them.

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Re: Protectionism

Postby Shakespeare » 07 Nov 2010 20:04

Why not perform R % D (is there any in the fertilizer industry?)
You often have to modify the mill circuit for different ore bodies (the mill does a crude separation of the product from, uh, rock: the mining process isn't highly selective - I've seen a truck heading for a uranium mill that contained a load consisting of one big rock). The mill modifications would be tested out in an R&D facility. However, that function can be contracted out, say to SRC.
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Re: Protectionism

Postby ghariton » 20 Feb 2011 20:32

Globe and Mail:

Industry Minister Tony Clement has promised that the federal government will take the auto industry’s concerns about free trade with South Korea and the European Union into account before signing any deals.

“We will not sign a trade agreement unless it’s in Canada’s interest,” Mr. Clement said on Friday after a meeting of the Canadian Automotive Partnership Council (CAPC), an industry-labour-government group that examines issues affecting the auto sector.

I dunno. For decades our leaders have decried our trade dependence on the U.S. It's just too risky to have all your eggs in one basket, they said. And it seems to me that they were right.

So now we have an opportunity to diversify -- first the European Union and now South Korea.

Except we can't. The country as a whole is being held hostage by special interests. First it was the dairy and other farmers defending their gouging of the Canadian public through agricultural marketing boards. Now it's the automobile manufacturers and the unions. It turns out that the bailout of the automobile industry may have some unexpected costs after all -- continued protection to the detriment of the rest of the economy.

Let's hope that Steve Harper's secret agenda includes turning down this kind of industrial policy. But I'm afraid that WYSIWYG. Votes beat principles every time, or so it seems.

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Re: Protectionism

Postby ghariton » 31 Mar 2011 16:24

Nice to hear Stephen Harper today, announcing his continuing commitment to free trade with the EU and with India. I know it's only an intention, but I find it reassuring.

I hope Ignatieff feels the same way, and says so.

I have absolutely no expectation that either Layton or Duceppe would support any free trade deal.

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