NAFTA Renegotiation

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NAFTA Renegotiation

Post by Shakespeare » 18 May 2017 12:05

Trump administration sends Congress official letter triggering NAFTA renegotiation: U.S. reports - Politics - CBC News
A copy of the letter obtained by U.S. media cites the need to update chapters that "do not reflect modern standards," and mentions digital trade as being only in its infancy when NAFTA was negotiated in the early nineties.

It mentions the need for new provisions to "address intellectual property rights, regulatory practices, state-owned enterprises, services, customs procedures, sanitary and phytosanitary measures, labour, environment and small and medium enterprises."
I doubt this is positive for Canadian stocks, although what Trump wants may take a while to figure out.
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Re: NAFTA Renegotiation

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Re: NAFTA Renegotiation

Post by Shakespeare » 18 May 2017 12:49

I'd be quite happy to give up the marketing boards for a letter saying "Peace in our time".... :lol:
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Re: NAFTA Renegotiation

Post by Mordko » 18 May 2017 16:00

No idea where this is really going... One hopes people behind Trump are not dumb enough to start a trade war. Could even be positive if Canada is forced to end supply management.

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Re: NAFTA Renegotiation

Post by AltaRed » 18 May 2017 16:21

Mordko wrote:
18 May 2017 16:00
No idea where this is really going... One hopes people behind Trump are not dumb enough to start a trade war. Could even be positive if Canada is forced to end supply management.
The issue with Supply Management is an expectation from those spoiled farmers for billions of dollars in compensation. It's been an issue in the CPC Leadership campaign. The buyout numbers being thrown out are obscene and will ultimately be a tax on products that will actually raise our prices for some time to come. Regardless if we can 'win' in other areas, maybe softwood lumber once and for all (I have my doubts), it would be worth it.
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Re: NAFTA Renegotiation

Post by Mordko » 18 May 2017 17:17

AltaRed wrote:
18 May 2017 16:21
Mordko wrote:
18 May 2017 16:00
No idea where this is really going... One hopes people behind Trump are not dumb enough to start a trade war. Could even be positive if Canada is forced to end supply management.
The issue with Supply Management is an expectation from those spoiled farmers for billions of dollars in compensation. It's been an issue in the CPC Leadership campaign. The buyout numbers being thrown out are obscene and will ultimately be a tax on products that will actually raise our prices for some time to come. Regardless if we can 'win' in other areas, maybe softwood lumber once and for all (I have my doubts), it would be worth it.
Yes but the harm is bigger than simply the extra $s forced onto consumers. The system is killing small/medium farming and basically anyone without quotas. It promotes poor environmental practices and inhumane treatment of animals. Completely nuts.

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Re: NAFTA Renegotiation

Post by AltaRed » 18 May 2017 17:51

i think the small/medium farmer is hooped in any event. Corporate farming is the economy of scale required to compete on the world stage. One of my friends I went to University with some 45 years ago has co-existed with winter consulting engineering jobs but keeping and expanding the family grain farm at the same time. He can compete now because of ~20 sections (~12800 acres) of grainland and huge machiney...the tractors of which are GPS programmed to do their thing. Same thing happens with poultry and cattle farming/ranching (in the West anyway). The small(er) family farm is mostly just a lifestyle now.

I doubt dairy et al will be much different post-supply management except the riches will ultimately be less for the privileged few and there will have to be more efficiency to compete with import alternatives. We do have to start somewhere, must like we did with the original FTA.
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Re: NAFTA Renegotiation

Post by Mordko » 18 May 2017 18:54

Right; there is no way the small/medium farmers will take over. Clearly the scale will always give the big guy efficiency advantage.

Let's not talk hypothetical though. Let's take eggs. Right now small guys without quotas can sell on their properties but are not allowed to advertise (!) What the heck? They could easily fill the niche of animal-friendly high quality production (and I don't mean the so-called "free range"). If small scale farmers were to be permitted to sell their produce, the revenue won't be enough to get by but it will help.

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Re: NAFTA Renegotiation

Post by AltaRed » 18 May 2017 18:56

I agree. My parents used to do the same a long, long time ago.. We had a regular group of customers.
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Re: NAFTA Renegotiation

Post by OhGreatGuru » 18 May 2017 20:59

...
A copy of the letter obtained by U.S. media cites the need to update chapters that "do not reflect modern standards," and mentions digital trade as being only in its infancy when NAFTA was negotiated in the early nineties.

It mentions the need for new provisions to "address intellectual property rights, regulatory practices, state-owned enterprises, services, customs procedures, sanitary and phytosanitary measures, labour, environment and small and medium enterprises."
A rather long and nebulous list. It could mean just about anything they (or their lobbyists) disagree with about how we (and Mexico) govern ourselves.

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Re: NAFTA Renegotiation

Post by hamor » 19 May 2017 11:03

Mordko wrote:
18 May 2017 18:54
Let's take eggs. Right now small guys without quotas can sell on their properties but are not allowed to advertise (!) What the heck? They could easily fill the niche of animal-friendly high quality production
I live just north of Toronto. My farmer friend can't lay eggs fast enough ;) there's more demand, than supply.
He keeps close to the number of chickens he's allowed (can't recall what is it). Eggs are $5/dozen, they're usually huge. Everything is organic and free range. There should be more of this small business direct to consumer type of thing. Sadly, most smaller meat producers shut down, because of the gov overregulation costs them too much. Nanny government is expensive.

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Re: NAFTA Renegotiation

Post by Mordko » 19 May 2017 11:30

hamor wrote:
19 May 2017 11:03
Mordko wrote:
18 May 2017 18:54
Let's take eggs. Right now small guys without quotas can sell on their properties but are not allowed to advertise (!) What the heck? They could easily fill the niche of animal-friendly high quality production
I live just north of Toronto. My farmer friend can't lay eggs fast enough ;) there's more demand, than supply.
He keeps close to the number of chickens he's allowed (can't recall what is it). Eggs are $5/dozen, they're usually huge. Everything is organic and free range. There should be more of this small business direct to consumer type of thing. Sadly, most smaller meat producers shut down, because of the gov overregulation costs them too much. Nanny government is expensive.
You can't have more than 100 hens if you don't have a quota. Say a hen hatches 1 egg a day; that's less than $50/day revenue. Subtract costs. Your friend earns enough on his eggs for a solid lunch in Tim Hortons. Intensive producers with quotas are doing just fine, they love management supply.

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Re: NAFTA Renegotiation

Post by OhGreatGuru » 31 May 2017 19:45

"Intellectual Property Rights". Could be anything, but I'm guessing it's Big Pharma that is still unhappy that Canada extends a shorter patent protection period than the USA; that our provincial governments actively promote the use of generics to keep health care costs down; and that we are doing a booming business in mail-order prescriptions with US citizens.

"Regulatory Practices". Yes, everything would be so much better if we allowed Congress to make our Regulations. This is the Congress that is practically run by the interests of corporate lobbyists.

"State-Owned Enterprises" The "free-enterprisers" continually complain about foreign state corporations. But according to "Uneasy Lies the Head" (Walter Stewart, 1987) the USA, at that time, owned ~24,000 government enterprises counting all levels of government. They just aren't called Crown corporations.

"Services": I have no clue what the complaint is here, unless it's American companies who think they should be able to sell cross-border services without complying with labour and tax laws.

"Customs Procedures": I'm sure there are customs aggravations on both side of the border, but it is not a reason to suspend NAFTA .

"Sanitary & Phytosanitary measures". I had to look up the meaning of phytosanitary. But it seems he has some unspecified objections to measures to protect food safety on imports & exports. I have no idea what the specific beef is.

"Labour". I'm not quite sure why they would complain about our labour laws, when their minimum wage is so much lower than ours. (Maybe the complaint is aimed at Mexico?). There are American companies who don't like operating in Canada because of our Labour Laws, but that is not a reason for the US to complain about NAFTA, since our Labour standards are effectively a self-imposed barrier to our export trade.

"Environmen"t: I don't know what this has to do with NAFTA, but we all know Trump thinks Global Warming is fake news. I fear this may set back several decades of harmonizing product standards between Canada & USA.

"Small & Medium Enterprises": What's the question?
Last edited by OhGreatGuru on 01 Jun 2017 19:56, edited 1 time in total.

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Re: NAFTA Renegotiation

Post by ghariton » 31 May 2017 21:59

From the linked article:
Lighthizer's department is not required to publish its specific negotiating objectives until 30 days before the start of talks, meaning precise details about what the U.S. wants to update or add in a reworking of the agreement may not be confirmed until July.
So we have to be patient.

However, I would look to the U.S. positions in negotiating TPP as a starting point, for example for intellectual property rights.

I think that Canada is in for a rough ride. We have much less leverage than the U.S., or Mexico for that matter (they can threaten to stop cooperating in the war against drugs). Higher prices to consumers, through tariffs on Canadian goods, doesn't seem to be an issue for Trump (all good Americans should buy only U.S. products). That leaves U.S. producers who use Canadian imports as inputs. But I think that they have pretty good substitutes available. In any case, they don't seem to speak very loudly. For example, the U.S. construction industry has not blocked sanctions against Canadian softwood lumber. Why expect the situation to be any better in other sectors?

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Re: NAFTA Renegotiation

Post by Shakespeare » 31 May 2017 22:59

I think that Canada is in for a rough ride.
Trump is taking a 'screw everybody else' approach that I doubt will do the US good in the long run.
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Re: NAFTA Renegotiation

Post by bcjmmac » 21 Jun 2017 16:59

https://www.theglobeandmail.com/report- ... e35410404/

Contradictions in the article - Liberal party will defend supply management, but will likely negotiate since we've already agreed to let more dairy products via CETA & now suspended TPP. IMO, Sounds like a bit of posturing in order to gain political points back home.
Quotes, “We’re the government that put supply management in place and we’re the government that’s going to defend it,”
Bobby Seeber, a former trade advisor to the Ontario government, noted Canada made concessions to allow more dairy imports in free trade talks with Europe and the Trans-Pacific Partnership. The dairy industry’s protections are no longer “sacrosanct,” he said in a recent speech to members of Ontario’s food and beverage industry.

In related news - grew up on a dairy farm but glad I'm not a dairy farmer//catch 22 - do you take the increased quota, increase your herd, only to have it cut within a short while (increased outlay with uncertain future return)? Gamble that any government compensation will cover losses??
http://www.cbc.ca/news/canada/prince-ed ... -1.4171397

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Re: NAFTA Renegotiation

Post by AltaRed » 21 Jun 2017 17:16

Personally, I don't think there should be any government compensation if supply management is slowly dismantled. Supply management has already provided the producers with a long term gravy train funded by consumers. To ask for more from the taxpayer is kind of insulting. That said, I think graft was paid to tobacco farmers (and who knows who else) iin the past so I suppose we should not be surprised.

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Re: NAFTA Renegotiation

Post by bcjmmac » 21 Jun 2017 17:47

IIRC, the previous government had allocated $$ to compensate the dairy sector for "adjustments" associated with TPP. Liberals are likely to match, or increase, that amount.

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Re: NAFTA Renegotiation

Post by ghariton » 21 Jun 2017 21:37

As a compromise, I suggest government buy back all quotas at the price originally paid by current farmers, i.e. book value (without goodwill). Randomly call in 10% of the quotas each year, and allow imports to replace double that amount each year.

No other compensation.

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Re: NAFTA Renegotiation

Post by brucecohen » 17 Jul 2017 20:24

Trump administration today released its NAFTA negotiating objectives. Axios, which covers US national politics, just posted an upbeat assessment.
Trade advocates in Washington who Donald Trump would've mocked as "globalists" on the campaign trail are breathing sighs of relief at his far more conventional turn on NAFTA.

Today, the Trump administration released its statement of negotiating objectives for the trade agreement. It's the first step in renegotiating the trade deal and there's nothing in there that terrifies establishment Republicans on Capitol Hill or the Mexicans and Canadians who'll ultimately be sitting across the negotiating table.

Why this matters: This document is a far cry from a couple of months ago when Trump was on the verge of withdrawing from NAFTA. (He had to be talked off a cliff by moderates in his administration, with Agriculture Secretary Sonny Perdue famously convincing Trump by showing him a map of the "Trump country" states that would be hit hardest by the decision.)
I've not yet read anybody else's coverage.

Added: WaPo has published a much longer, more nuanced piece.
The document contained a broad list of objectives, including some goals that have been specifically championed by President Trump, as well as numerous provisions that echo the Trans Pacific Partnership, an Obama-era trade agreement that Trump has disparaged.

"You can say everybody’s objectives are in here," said Doreen Edelman, co-chair of the global business team at the law firm Baker Donelson. "I think the people that wrote the objectives wrote them in a way that will allow everybody to find a win."
Globe's report is behind a paywall.

HuffPo offers a much less rosy Canadian perspective from Canadian Press. Predicts long, potentially tense talks.
The U.S. says it wants more exports of its dairy products, wine and grains; freer trade in telecommunications and online purchases; new rules on currency manipulation; an overhaul of the dispute-settlement system; and more access for U.S. banks abroad.

A Washington-based trade expert who advises the Canadian government didn't flinch when asked what this means for NAFTA talks, which are scheduled to start next month: "Longer, rather than shorter,'' said Eric Miller, a consultant at Rideau Potomac who advises Industry Canada.

"It will be pretty intense and hard-fought. ... Don't expect it to be finished in less than eight months,'' Miller said. "And expect Canada to have to fight hard for issues it cares about.''
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Re: NAFTA Renegotiation

Post by ghariton » 17 Jul 2017 21:50

Read the document itself. Once you get past the cover, introduction and table of contents, it's only 14 pages long, and an easy read.

First, this is very high level. The devil will be in the details, which will likely only come out during the negotiations. We must be patient.

Second, at this high level, the document seems a pleasant surprise. Many of the requests are positive (assuming they are applied symmetrically). Greater transparence, streamlining of processes, consultation and coordination, all are good. So is integrating labor and environmental standards into the main text, rather than side agreements.

Third, most of the more specific measures seem aimed at Mexico rather than Canada. Of greatest concern to Canada would be adopting U.S. intellectual property law (in effect) and reform of trade dispute mechanisms. While agriculture is mentioned in very general terms, supply management is not singled out. At least, not yet. I can always hope that, if we don't reform it ourselves, the Americans will do it for us.

Fourth, the document makes clear that protectionist measures would continue at the state and local level government procurement, and certain exceptions at the federal level. I find this the most disturbing element.

In other words, stay tuned.

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Re: NAFTA Renegotiation

Post by kumquat » 28 Jul 2017 20:05

ghariton wrote:
21 Jun 2017 21:37
As a compromise, I suggest government buy back all quotas at the price originally paid by current farmers, i.e. book value (without goodwill). Randomly call in 10% of the quotas each year, and allow imports to replace double that amount each year.

No other compensation.

George
Why not, as a compromise, let the government buy back any quota at the price they received for it, multiplied by inflation factors since it was "sold".
I don't intend to offend anyone, that part is just a bonus.

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Re: NAFTA Renegotiation

Post by ghariton » 29 Jul 2017 00:38

kumquat wrote:
28 Jul 2017 20:05
ghariton wrote:
21 Jun 2017 21:37
As a compromise, I suggest government buy back all quotas at the price originally paid by current farmers, i.e. book value (without goodwill). Randomly call in 10% of the quotas each year, and allow imports to replace double that amount each year.

No other compensation.

George
Why not, as a compromise, let the government buy back any quota at the price they received for it, multiplied by inflation factors since it was "sold".
Given that the government never sold any milk quotas, but rather gave them away to the original recipients, that would be zero compensation, even after indexing for inflation.

I think that's a bit harsh. I would like to tax back the profits made by the original grantees, when they sold their quotas to the present holders, but that's infeasible. But as for the present holders, they purchased quotas in good faith, without notice that government actions would render the quotas much worse (if only the government would act). Give them their money back, indexed for inflation if you must.

George
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Re: NAFTA Renegotiation

Post by OhGreatGuru » 29 Jul 2017 09:46

BTW, in the great free enterprise nation south of us, Congress forks out billions of dollars in farm subsidies. That's so much better then supply management, because they can then dump their subsidized surpluses on our market at below cost. :roll:

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Re: NAFTA Renegotiation

Post by ghariton » 29 Jul 2017 13:44

OhGreatGuru wrote:
29 Jul 2017 09:46
BTW, in the great free enterprise nation south of us, Congress forks out billions of dollars in farm subsidies. That's so much better then supply management, because they can then dump their subsidized surpluses on our market at below cost. :roll:
I don't support the U.S. system of subsidy either. (Most government subsidies are pure pork barrelling -- helping special interests benefit at the expense of the general public. There are some subsidies that are justifiable, but mudch fewer than people generally think.)

Nevertheless I think that the U.S. system of subsidies is much less harmful than our highly closed and protected market, for two reasons:

(1) The U.S. system is consistent with new entry, including from imports, and hence with vigorous competition. In turn, that leads to greater efficiency, greater product innovation, greater process innovation, and incentives to export. By contrast, the Canadian system deliberately tries to suppress competition on the part of dairy producers.

Another way of seeing this is that the U.S. system increases consumer and producer choice, while the Canadian system deliberately restricts it.

(2) The U.S. system is funded from taxes, and thus is as progressive as the system is designed to be. At least it is not regressive. By contrast, the Canadian system is funded from higher prices for milk and dairy products. In turn, these prices are disproportionally paid by parents of young children, who tend to have incomes at the lower end of the distribution. So the Canadian system is highly regressive, distributing money from the single mther of three young children (for example) to the dairy farmer worth millions, or to the shareholders of the agribusiness who also tend to be stinking rich and well connected.

The dairy farmer lobby in Canada is one of the most harmful. But they do a superb job playing on Canadians' emotions, rather than reason. If I were cynical (which of course I'm not) I would say that they are a very strong argument against democracy as a form of government.

George
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