Nafta Renog...tariffs help whom?

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Ward
Nafta Renog...tariffs help whom?

Just a thought. Supposing NAFTA is scrapped by the US. Would not imposimg countervailing tariffs (or any tariffs of any sort for that matter) be such a terrible idea?

voice of the damned

Ward wrote:

Just a thought. Supposing NAFTA is scrapped by the US. Would not imposimg countervailing tariffs (or any tariffs of any sort for that matter) be such a terrible idea?

My own guess is that if Trump looks like he's actually gonna scrap NAFTA, he'll be quickly reined in by the Republicans in Congress, most of whom depend on donations from people who are very much in favour of NAFTA. They'll probably still allow him to tweet a bunch of empty populist threats against a few multinational companies, just to keep his base under the illuison that he's really taking action.

That said, if NAFTA were to be scrapped, I would assume that a lot of people on the left would favour re-introducing at least some tariffs, since preserving tariffs was one of the main arguments against "liberalized" trade.

 

NDPP

PMO Held Talks With Trump Team to Avert Trade War

http://www.theglobeandmail.com/news/politics/pmo-held-talks-with-trump-t...

"...Mr Trueau's principal secretary Gerald Butts, chief of staff Katie Telford and Canada's ambassador to the US, David MacNaughton, have met several times in Washington, in what have been described as bridge-building talks with Jared Kushner, Mr Trump's son-in-law, and Stephen Bannon, chief strategist and senior counsellor to the incoming Republican president.

'This is big stuff we are trying to navigate here,' a senior Canadian government insider said."

 

A Trade Gamble Canada Can't Win

https://www.policyalternatives.ca/publications/monitor/trade-gamble-cana...

"Canada should be prepared to walk away from the NAFTA negotiating table, even if that means Trump makes good on his threat to pull out of the agreement."

iyraste1313

Would not imposimg countervailing tariffs (or any tariffs of any sort for that matter) be such a terrible idea?

....in a sane world where regional and national self reliant ecoomies to gurarantee social development with justice and respect for the ecosystem, tariffs are a must, which would in effect finance governments instead of income and service taxes...in other words the alternative to a neoliberal new world order...but of course sanity does not prevail in Canada thanks to the ever vigilant neoliberal media and its apologists

Sean in Ottawa

Speaking about an ideal world.

I am not against free trade actually although I opposed the managed agreements. I am also not a nationalist.

In that context there is a policy I would like to see if we became free of the existing trade agreements.

I do not support flat tariffs as I do not think they help workers in general very well (the tariff increases the price of the good and so the percentage the worker gets of the final price is reduced.

So instead I would prefer a system where we had import tariffs that functioned as adjustments:

1) A minimum wage to the workers consistent with wages here (or better)-- the difference form a tariff

2) An environmental conduct comparable to the legislation here (or better)-- the difference form a tariff

 

I would support tariffs designed to make up the difference. In some cases that would be dramatic.

So if workers in source x are paid $4 below the lowest Canadian minimum wage to produce a unit of a product that product should have a $4 tariff per unit imposed. If they saved $2 by following standards below our own then I would level a tariff of $2. Otherwise I would trade openly without penalty.

In some cases this would be effectively a free trade offer to countries with comparable wages and environmental standards and with those companies in other countries who want to raise those standards and wages to be able to avoid our tariffs.

This would serve to respect not only our workers but those of other countries. It would mean a company wanting to export to Canada woudl ahve the choice to pay their workers or our government.

In the end if everyone had the same environmental standards and wages, I would have no problem with not having any tariffs. That is becuase I do actually support free trade. Just not trade with competition subsidized by workers of any country.

 

quizzical

border towns in Canada may have more jobs soon. :D

i think Trump is going to switch and target Canada for the wall building and scrap nafta too.

nexus cards will be gone too.

and what the hell are the dismal duo doing down there and not the Ministers its  job it is to do so?

kropotkin1951 kropotkin1951's picture

We would default to the WTO rules if NAFTA is rescinded. I think if Trump gives the 6 months notice to leave it will cause our chattering classes heads to explode. 

Quote:

Principles of the trading system

The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of the trade policy games. Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO:

  1. Non-discrimination. It has two major components: the most favoured nation (MFN) rule, and the national treatment policy. Both are embedded in the main WTO rules on goods, services, and intellectual property, but their precise scope and nature differ across these areas. The MFN rule requires that a WTO member must apply the same conditions on all trade with other WTO members, i.e. a WTO member has to grant the most favourable conditions under which it allows trade in a certain product type to all other WTO members. "Grant someone a special favour and you have to do the same for all other WTO members." National treatment means that imported goods should be treated no less favourably than domestically produced goods (at least after the foreign goods have entered the market) and was introduced to tackle non-tariff barriers to trade (e.g. technical standards, security standards et al. discriminating against imported goods).
  2. Reciprocity. It reflects both a desire to limit the scope of free-riding that may arise because of the MFN rule, and a desire to obtain better access to foreign markets. A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from unilateral liberalization; reciprocal concessions intend to ensure that such gains will materialise.
  3. Binding and enforceable commitments. The tariff commitments made by WTO members in a multilateral trade negotiation and on accession are enumerated in a schedule (list) of concessions. These schedules establish "ceiling bindings": a country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade. If satisfaction is not obtained, the complaining country may invoke the WTO dispute settlement procedures.
  4. Transparency. The WTO members are required to publish their trade regulations, to maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO. These internal transparency requirements are supplemented and facilitated by periodic country-specific reports (trade policy reviews) through the Trade Policy Review Mechanism (TPRM). The WTO system tries also to improve predictability and stability, discouraging the use of quotas and other measures used to set limits on quantities of imports.
  5. Safety values. In specific circumstances, governments are able to restrict trade. The WTO's agreements permit members to take measures to protect not only the environment but also public health, animal health and plant health.

There are three types of provision in this direction:

  1. articles allowing for the use of trade measures to attain non-economic objectives;
  2. articles aimed at ensuring "fair competition"; members must not use environmental protection measures as a means of disguising protectionist policies.
  3. provisions permitting intervention in trade for economic reasons.

Exceptions to the MFN principle also allow for preferential treatment of developing countries, regional free trade areas and customs unions.

https://en.wikipedia.org/wiki/World_Trade_Organization

Sean in Ottawa

And a worker and environment friendly trading dynamic I suggested above is not likely to show up as the will does not exist in Canada or the US -- and really little evidence elsewhere.

kropotkin1951 kropotkin1951's picture

Here is a good example of a bad investment by the government potentially leading to a tariff war with another country.

Quote:

The Canadian government’s $372.5-million cash injection for Bombardier has triggered a backlash from Brazil – headquarters of rival aircraft maker Embraer – and accusations from the Official Opposition in Parliament that the money constitutes an unnecessary bailout of a major company.

Brazil announced Wednesday it has filed a complaint over Canadian aid to Bombardier with the World Trade Organization, the referee for international trade, charging the aid amounts to subsidies that are illegal under WTO rules or distort the global market for airplanes. This challenge, if successful, could produce a ruling that allows Brasilia to slap retaliatory tariffs on Canada.

 

 

sherpa-finn

iyraste1313 wrote:

Would not imposimg countervailing tariffs (or any tariffs of any sort for that matter) be such a terrible idea?

....in a sane world where regional and national self reliant ecoomies to gurarantee social development with justice and respect for the ecosystem, tariffs are a must, which would in effect finance governments instead of income and service taxes...in other words the alternative to a neoliberal new world order...but of course sanity does not prevail in Canada thanks to the ever vigilant neoliberal media and its apologists

Screwed up as our economy may be, poor Canadians would be completely fucked if this sort of magical thinking was put in place.

Tariffs are basically a tax on imported goods. All evidence shows that tariffs impose a heavier burden on low-income households than high-income households, as poor households generally spend more on traded goods (as a share of income).

In other words, tariffs generally function as a regressive tax that weighs most heavily on the poor. To propose replacing income tax (which is relatively progressive) with tariffs (which are hugely regressive) is little more than a Trumpian wet dream.  

abnormal

Ward wrote:

Just a thought. Supposing NAFTA is scrapped by the US. Would not imposimg countervailing tariffs (or any tariffs of any sort for that matter) be such a terrible idea?

My understanding is that if NAFTA is scrapped we'd go back to the system that was in place prior to NAFTA.  Under that, Mexico imposed far higher tariffs on US goods than the US imposed on Mexican goods.

As an observation - suppose Trump does manage to impose tariffs on Mexican goods - that's going to depress the peso making Mexican goods even cheaper which is going to offset much of the impact of the tariff.