Quotulatiousness

November 1, 2024

Canada – 30 protectionist marketing boards wrapped in a flag

Filed under: Bureaucracy, Cancon, Government — Tags: , , , , — Nicholas @ 05:00

In The Line, Greg Quinn points out just how blatantly hypocritical Canada’s politicians and diplomats are in any discussion with other nations when the subject turns to free trade:

Let me say this upfront, and clearly: when it comes to international trade, Canada is protectionist to an astonishing degree whilst at the same time claiming it is a supporter of global free trade. It wants every other country to open up (and complains when they don’t, or when they stand their ground) whilst ensuring access to the Canadian market is more difficult. This is a result of federal policy, inter-provincial restrictions, and vested interests. And it is flagrantly hypocritical.

When it comes to dairy, beef and the mutual recognition of professional qualifications, for example, Canada’s claim to openness is simply a lie. Agricultural groups and businesses dominate and control the local landscape and attempts to either overcome that (or bring external companies in) have failed on many occasions over the years. This could well get worse if the Liberals agree to what the Bloc Québécois has demanded — even more dairy protections — in a desperate attempt to remain in power for a little while longer.

Some of these issues are well known to Canadians — particularly the domestic ones, or the ones that touch on national unity frictions. But I’m not sure Canadians understand how this is perceived globally, including by Canada’s allies. Readers may recall that there was a mild furore a while back when the U.K. dared to pause trade negotiations as Canada refused to move on access for British cheese. There were accusations of the U.K. not playing fair and such like.

It’s bad enough that we “protect” Canadians from lower-priced foreign food, but we even manage to maintain inter-provincial trade barriers that directly harm all Canadian consumers:

Then we have interprovincial trade barriers. According to the Business Council of Alberta in a 2021 report, these barriers are tantamount to a 6.9 per cent tariff on Canadian goods. They also noted that removal of these could boost Canada’s GDP by some 3.8 per cent (or C$80 billion), increase average wages by some C$1,800 per person, and increase government revenues for social programming by some 4.4 per cent.These barriers hinder internal trade between the provinces, including the work of those companies that import goods from other countries.

A freer market, at home or globally, would not solve all the issues that exist with prices, but it would certainly increase competition and give consumers more choice. What exists at the minute is a pretense of choice.

Opening up the Canadian market would certainly benefit other countries, including my own United Kingdom, and there would be some impact on local business and producers. This is true, and acknowledged. But opening itself up to more global trade and dismantling internal trade barriers — and these are things all the politicians insist they like the sound of in theory — would be a win-win for Canadian consumers and Canadian society as a whole. Some big companies and carefully coddled special interests would be upset, but they aren’t supposed to be the ones making decisions in a democracy, or in a free market.

September 27, 2024

Bloc Québécois leader Yves-François Blanchet as “the Errol Flynn of Canadian politics”

Filed under: Cancon, Government, Politics — Tags: , , , , — Nicholas @ 05:00

In the National Post, John Ivison suggests to Justin Trudeau’s Liberals that the Bloc’s price for supporting the government are just going to keep on rising every time they’re asked to save them from a confidence vote in the Commons:

Yves-François Blanchet Portrait Officiel / Official Portrait a Ottawa, ONTARIO, Canada le 1 December, 2021.
© HOC-CDC
Credit: Bernard Thibodeau, House of Commons Photo Services

It is an indication of how desperate the Liberals are to cling to power that they are even considering a deal with Yves-François Blanchet, the Errol Flynn of Canadian politics.

As was said of the hell-raising movie star by his friend David Niven: “You always knew precisely where you stood with Errol because he always let you down.”

The Bloc Québécois leader will leave the Liberals in the lurch as soon as they refuse his extortionate demands, so best to tell him from the outset to go forth and multiply.

Blanchet has imposed an Oct. 29 deadline before his party pulls support for the government on future House of Commons confidence motions.

The Liberals must back two Bloc private member’s bills, Blanchet said, or the mood will become impossible. “And as soon as it becomes impossible, we will know what to do,” he added, ominously.

Finance Minister Chrystia Freeland said conversations are ongoing, though Blanchet said he has had no discussions with the Trudeau government.

Good, because both Bloc bills are policy madness.

Blanchet has presented them as “good for everybody”, but the truth is they benefit very narrow sections of society — older voters and some farmers — and are bad news for everyone else.

One of the bills, Bill C-319, calls on the government to extend the 10-per-cent increase in Old Age Security payments the Liberals made in 2022 for those over 75 to include the 65–74-year-old age group. The bill is at third reading in the House of Commons but requires the government’s blessing to pass because it commits Freeland to spend money. Lots of money.

The other, Bill C-282, requires the government to exempt the supply-managed farm sector (i.e., eggs, chicken and dairy) from future trade negotiations. It is mired in the Senate’s foreign affairs and international trade committee, where one hopes it will be amended beyond recognition.

September 20, 2023

How the feds could lower grocery prices without browbeating CEOs

Filed under: Business, Cancon, Food, Government — Tags: , , , — Nicholas @ 03:00

Jesse Kline has some advice for Prime Minister Jagmeet Singh Justin Trudeau on things his government could easily do to lower retail prices Canadians face on their trips to the grocery store:

What exactly the grocery executives are supposed to do to bring down prices that are largely out of their control is anyone’s guess. Do they decrease their profit margins even further, thereby driving independent retailers out of business and shedding jobs by increasing their reliance on automation? Do they stop selling high-priced name-brand products, thus decreasing their average prices while driving up profits through the sale of house-brand products?

If the government were serious about working with grocers, rather than casting them as villains in a piece of performative policy theatre, here are a number of policies the supermarket CEOs should propose that would have a meaningful effect on food prices throughout the country.

End supply management
Why do Canadians pay an average of $2.81 for a litre of milk — among the highest in the world — when our neighbours to the south can fill their cereal bowls for half the cost? Because a government-mandated cartel controls the production of dairy products in this country, while the state limits foreign competition through exorbitantly high tariffs on imports.

The same, of course, is true of our egg and poultry industries. Altogether, it’s estimated that supply managements adds between $426 and $697 a year to the average Canadian household’s grocery bill. It’s not a direct cause of inflation, but it’s a policy that, if done away with, could save Canadians up to $700 a year in fairly short order.

Yet not only have politicians been unwilling to address it, they have been fighting some of our closest trading partners to ensure that foreign food products don’t enter the Canadian market and drive down prices. Ditching supply management would be a no-brainer, if anyone in Ottawa was willing to use their brain.

Reduce regulations
The best way to decrease prices in any market is to foster competition. As the Competition Bureau noted in a report released in June, “Canada’s grocery industry is concentrated” and “tough to break into”. Worse still, “In recent years, industry concentration has increased”.

So why don’t more foreign discount grocery chains set up shop here? Perhaps it’s because they know our national policy encourages Canadian-owned oligopolies. While grocery retailers don’t face the same foreign-ownership restrictions as airlines or telecoms, the products they sell are heavily regulated, which acts as a barrier to bringing in cheaper goods from other countries.

Although it wasn’t the primary reason for the lack of foreign competition, the Competition Bureau did note that, “Laws requiring bilingual labels on packaged foods can be a difficult additional cost for international grocers to take on”.

Other ways the federal government could help Canadians afford their grocery bills include:

  • Jail thieves
  • Stop port strikes
  • Don’t tax beer
  • Axe the carbon tax

Don’t hold your breath for any of these ideas to be taken up by Trudeau’s Liberals.

February 6, 2023

Food prices going up? Destroying “excess” production? That’s Canada’s Supply Management system working at peak efficiency!

Filed under: Bureaucracy, Cancon, Economics, Food, Government, USA — Tags: , , , , — Nicholas @ 05:00

Jon Miltimore reports on recent comments about some of the weird requirements for quota-holding dairy farmers under the Canadian Supply Management system:

Canadian dairy farmer is speaking out after being forced to dump thousands of liters of milk after exceeding the government’s production quota.

In a video shared on TikTok by Travis Huigen, Ontario dairy farmer Jerry Huigen says he’s heartbroken to dump 30,000 liters of milk amid surging dairy prices.

“Right now we are over our quotum, um, it’s regulated by the government and by the DFO (Dairy Farmers of Ontario)”, says Huigen, as he stands beside a machine spewing fresh milk into a drain. “Look at this milk running away. Cause it’s the end of the month. I dump thirty thousand liters of milk, and it breaks my heart.”

Huigen says people ask him why milk prices are so high.

“This here Canadian milk is seven dollars a liter. When I go for my haircut people say, ‘Wow, seven dollars Jerry, for a little bit of milk'”, he says, as he fills a glass of the milk being dumped and drinks. “I say well, you have to go higher up. Cause we have no say anymore, as a dairy farmer on our own farm. They make us dump it.”

[…]

In the United States, the primary regulations are high-level price-fixing, bans on selling unpasteurized milk (which means farmers have to dump their product if dairy processors don’t buy it), and “price gouging” laws that prevent retailers from increasing prices when demand is low, which incentivizes hoarding.

In Canada, the regulations are even worse.

While the price-fixing scheme for milk in the US is incredibly complicated and leaves much to be desired — there’s an old industry adage that says “only five people in the world know how milk is priced in the US and four of them are dead” — in Canada the price is determined by a single bureaucracy: the Canadian Dairy Commission.

The Ottawa-based commission (technically a “Government of Canada Crown Corporation”), which oversees Canada’s entire dairy system (known as Supply Management), raised prices three times in 2022, citing “the rising cost of production”.

Food price inflation remains a serious issue in Canada, but the problem is particularly acute in regards to dairy products, which has seen their annual inflation rate triple over the past year, to almost 12 percent.

If the farmers were doing this sort of price-fixing themselves, it would be illegal. Instead, because it’s the government doing it, it’s mandatory. You aren’t allowed to produce any of the supply-managed products outside the system, and the government helpfully protects Canadians from being “victimized” by cheaper imports by high tariffs on anything competing with supply managed output.

As with any rigged market, the costs of “protecting” the market are diffused among all Canadian consumers, but the benefits are concentrated in the hands of the quota-holders (and the bureaucrats who oversee the system). My issues with the supply management system are one of the “hobby horses” I’ve ridden many times over my nearly 20 years of blogging.

November 27, 2021

Americans fear the power of “Big Oil” and other cartels. Canadians rejoice under the buttery thumb of “Big Dairy”

Filed under: Business, Cancon, Food, Government — Tags: , , , , — Nicholas @ 06:00

Jen Gerson hates Canada’s supply management “system” with the heat of a thousand suns. And she’s perfectly right to do so:

Former federal Conservative Party leader Andrew Scheer, paid tool of Big Dairy, chugs some milk during a Press Gallery speech in 2017. I’ve called him the “Milk Dud” ever since.
Screencapture from a CTV video uploaded to YouTube.

Many of you readers have listened to the likes of me complain about supply management over the years, but for those of you whose eyes glazed over until you started to notice your rent money disappearing into your grocery bill, here’s a very quick primer.

The supply management system insulates eggs, dairy, and poultry from the vicissitudes of the free market, assuring established farmers in these few sectors a guaranteed return to produce a pre-ordained supply of these products. The federal and provincial governments oversee the system via various dairy commissions.

Some government involvement in dairy has been a feature of our agricultural system since the late 19th century, however the system as it exists today came into effect in the ’70s. It consists, broadly, of three policy mechanisms. Prices are set internally to assure farmers receive a healthy profit for their labour, farmers are protected from competition though ruinous import tariffs, and then supply is managed via a quota system.

As one might expect, this has created extraordinary economic distortions, assuring that a container of milk in Canada is radically more expensive than an identical product south of the border. (Yes, American milk is subsidized too, although less than it once was. And from a consumer’s perspective, so what? If the Americans want to subsidize cheap milk to send north, all the better for shoppers.)

In order to keep production at a steady level, the system has to keep newer, cheaper players from entering the market, and this is accomplished via a quota system that has led to absurd economic incentives and outcomes. According to this report from the Canadian West Foundation from 2016, the quota was valued at about $28,000 per cow. That means that the value of the right to own one milk-producing cow far outweighed the actual value of the animal — and someone seeking to start a dairy farm would need to pay for millions of dollars worth of quota in addition to cows, land, food, and farm equipment.

The quotas themselves are a multi-billion dollar racket; this is roughly akin to the way a license to run a taxi costs hundreds of thousands of dollars in some cities, many multiples of the value of the car itself. When a government creates a regulatory system that imposes artificial scarcity, the value of the thing regulated radically increases.

Since the supply management system was introduced, much of the agriculture has consolidated; this, combined with the value of the quotas they possess mean that most dairy farms — far from being quaint, picturesque family homesteads — are multi-million dollar operations, with farmers themselves making six-figure profits after paying their own wages.

The system has also proved a obstacle in multiple free-trade deals, arguably making it difficult for other agriculture sectors to compete globally.

And who pays for all of this?

Well, of course, you do.

November 24, 2020

QotD: Canada’s economic Stockholm Syndrome

Filed under: Business, Cancon, Economics, Government, Quotations — Tags: , , , — Nicholas @ 01:00

Trade agreements are always about “concessions” in which foreign suppliers are grudgingly given — or, more often, indignantly denied — the right to sell Canadians goods and services at prices lower than what we pay now. Let’s be clear here: lowering the price of consumer goods and services has the exact same effect on household welfare as an increase in incomes. But I defy you to name an elected politician who will list “the ability to buy cheaper stuff” as the most compelling reason to support free trade: more than 200 years since Adam Smith wrote that paragraph, our trade agenda is still written by and for producer interests.

We’re stuck with a system in which producer interests — most notoriously the dairy cartel that operates under the name of “supply management” — hold the rest of us hostage. Dismantling the dairy cartel is an act that would significantly increase consumers’ buying power, but this is a measure that the Conservatives have all but ruled out under any circumstances, and the NDP has made maintaining the cartel a condition for supporting any sort of trade agreement.

Why would the [major parties] stubbornly insist on sticking to a policy that makes consumers worse off at the expense of producers? Because it’s a popular position. It’s one of the marvels of the Canadian electorate. Show Canadians a special interest group that uses its government-granted privileges to fleece consumers, and they’ll embrace it as a “national champion,” a “uniquely Canadian way of life” or some equally vapid catch-phrase.

This is from the Wikipedia entry for Stockholm Syndrome:

    Stockholm syndrome, or capture–bonding, is a psychological phenomenon in which hostages express empathy and sympathy and have positive feelings toward their captors, sometimes to the point of defending them.

What we suffer from is the economic policy equivalent. Call it “Canada Syndrome”: a tendency for consumers to identify with the producer interests that are holding them hostage.

Stephen Gordon, “Our Stockholm Syndrome about supply management”, Maclean’s, 2013-03-05.

December 14, 2019

Who will “Big Dairy” push as the next Conservative leader?

Filed under: Business, Cancon, Economics, Politics — Tags: , , , , , — Nicholas @ 03:00

The Canadian supply management system is a classic case of concentrated benefits and diffused costs … all Canadians pay more for milk, cheese, and other dairy products, but the extra profits go to those who hold the quota allotment for production. During the last federal Conservative leadership race, the “temporary conservatives” were enough to push the Milk Dud over the top to defeat Maxime Bernier — because Bernier was outspoken in his opposition to the whole supply management cartel and threatened those guaranteed profits for the insiders. The Milk Dud has announced he’s stepping down, so who will Big Dairy choose to replace him?

Andrew Scheer, paid tool of Big Dairy, chugs some milk during a Press Gallery speech in 2017. I’ve called him the “Milk Dud” ever since.
Screencapture from a CTV video uploaded to YouTube.

To my mind the defining image of Andrew Scheer’s efforts to become prime minister of Canada, which officially came to an end Thursday, comes from the 2017 Press Gallery Dinner in Ottawa. “There’s some suggestion out there that I’m beholden to a certain group within the Conservative family,” he told the crowd, grinning. And then, dimples at maximum, he took a swig from a one-litre carton of Neilson two-per-cent milk.

It’s nice when politicians can poke fun at themselves. Most are really bad at it, betraying only their own ego. Scheer’s routine, by contrast, reportedly brought the house down. The problem is that, by all the evidence, Scheer was utterly beholden to the dairy industry. And absent the effects of alcohol, that’s not really very funny.

We knew at the time that, days before, Scheer had barely beaten Maxime Bernier in the party leadership contest with help from a few thousand votes from people whom Bernier not unreasonably called “fake Conservatives” — i.e., people who had purchased memberships for the sole purpose of voting for Scheer, for the sole purpose of maintaining supply management in the dairy industry (which Bernier opposes) intact.

We came to know later, thanks to a Dairy Farmers of Canada briefing book discovered by an aggrieved delegate to the 2018 party convention in Halifax, that the dairy lobby considered Scheer a “safety net.” Regardless of any vote by the party membership that might recommend freer markets in dairy, the book alleged, the farmers had Scheer’s commitment never to undermine supply management in an election platform.

Scheer denied any such deal existed, of course. But it seemed doubtful the dairy industry’s notoriously fearsome, professional and effective lobbyists could have been so misinformed.

It ought to have been a liability from the start: Here was the self-styled middle-class alternative to Justin Trudeau, the man who knows what it’s like to plan a family budget around the breakfast table, to scrimp and save, whose parents didn’t own a car, declaring his fealty to a cartel dedicated to inflating milk prices for the benefit of wealthy businesses. Har, har, har.

July 20, 2019

“Scheer is demonstrating what it actually looks like for a Canadian political leader to be utterly beholden to a special interest group”

Filed under: Bureaucracy, Cancon, Economics, Food, Politics — Tags: , , , — Nicholas @ 03:00

I wasn’t a fan of Andrew Scheer even before he bought the leadership of the Conservative party with Quebec dairy money. I think he was one of the worst possible choices for Tory leader, but we’re stuck with his ineffectual bought-and-paid-for self to attempt to beat an incumbent PM who has the undying loyalty of 95% of the mainstream media. And we know beyond a shadow of a doubt that his loyalty isn’t to Canada or to the Tories, but to his paymasters in Big Dairy. Despite this, Chris Selley says that The Milk Dud’s vassalage to a well-moneyed and legally privileged class may end up destroying the government cartel that is Supply Management:

Andrew Scheer, paid tool of Big Dairy, chugs some milk during a Press Gallery speech in 2017. I’ve called him the “Milk Dud” ever since.
Screencapture from a CTV video uploaded to YouTube.

There’s no shame in a conservative politician opposing the federal government of a gigantic country containing multitudes of lifestyles trying to create an ideal diet for all its citizens. “I’ll eat what I want, get out of my kitchen,” is a perfectly respectable position — especially since the food guide is such a joyless, under-salted slog. But that’s not Scheer’s position. Instead he’s vowing to “get it right.” This suggests consulting people other than medical and scientific experts, most of whom were relatively pleased with this edition of the food guide. It suggests bringing industry voices back into the mix. And that’s not something anyone other than Big Dairy and Big Meat should want.

The so-con comparison is somewhat facetious, of course: Abortion is a third-rail issue, or at least the media treats it as such, whereas unwavering protectionist support for our dairy farmers is an all-party consensus-cum-contest to see who can most abase themselves. The winner, by far, is Andrew Scheer. On Wednesday he excoriated the Liberal government for allegedly missing deadlines to explain how it would compensate dairy farmers for ever-so-slightly opening the Canadian market to European and Asian countries.

“(This) mistreatment is unacceptable,” he told the Saskatonian audience. His future government would “never back down from defending the (dairy) sector,” he vowed.

In a strange way, it gives me hope. Surely it’s objectively weird that a man the Liberals are trying to portray as the human embodiment of Canada’s future ruination is so cartoonishly in favour of subsidizing and coddling a given industry, thereby continuing to inflate prices for Canadian consumers, and yet his opponents’ only instinct is to find a way to agree with him. By rights it ought to be the Conservatives who bust up lactosa nostra (copyright CBC’s David Cochrane). But having rebuffed Big Dairy’s dubious dietary advice, the option is entirely open to the Liberals as well. The average Canadian grocery shopper will thank whichever party finally gets it done.

January 30, 2019

The high cost Canadians pay to support our oligopolies

Filed under: Cancon, Economics, Politics — Tags: , , , , , , — Nicholas @ 03:00

In the National Post, Andrew Coyne compares the Liberal and Conservative parties’ respective claims to lower the cost of living for Canadians, and points out some examples that neither party is willing to address:

For example, there is the notorious system of agricultural quotas known as supply management — a price-fixing ring the government not only approves but organizes and enforces, whose effect is to double or even triple the prices of such basic food items as milk, cheese, eggs and chicken. For all their pretended concern for affordability, all parties and every MP, with the sole exception of Maxime Bernier, are publicly, nay fervently in favour of it.

But while the farm cartel gets a lot of ink, there are plenty of other examples. Canadians pay among the highest wireless telephone fees in the world, for starters — maybe even the highest — as study after study has found. The latest report from Tefficient, a European consultancy, found Canada’s carriers take in more revenue per gigabyte of data than their counterparts anywhere else in the world — 23 times more than in Finland.

Similarly, Canadians pay among the highest air fares in the world. The travel website Kiwi. com recently found flights from Canada on a full-service airline cost roughly five times as much per 100 kilometres as flights from the United States. The situation was a little better for domestic flights, where costs were only twice as high as in the U.S. The makers of Hopper, the travel app, note it is typically cheaper to fly from Vancouver to Hawaii than from Vancouver to Regina, though Regina is 3,000 km closer.

Finally, there are Canadian bank fees, also — you guessed it — among the highest in the world, particularly for mutual funds. What is the common thread among these three industries? All are highly concentrated oligopolies: three big wireless carriers, two big airlines and five big banks dominate their respective markets.

Rather than compete as vigorously as they might for Canadian consumers, these quasi-cartels are permitted, in effect, to harvest them. They do so, again, not only with the tolerance but the active participation of the government. Foreigners are effectively precluded from competing in any of them, whether by foreign-ownership restrictions or outright prohibitions on competition — foreign airlines may not fly from one Canadian city to another, for example.

None of the parties currently boasting of their desire to make life more affordable for Canadians proposes to change a line of this, either. Whatever else may be in (artificially) scarce supply, in Canadian politics there’s never any shortage of rank hypocrisy.

October 24, 2018

Scheer’s campaign opening has about as much attraction as a cold bucket of sick

Filed under: Cancon, Politics — Tags: , , , — Nicholas @ 05:00

Some guy we’re supposed to believe is the leader of Her Majesty’s Loyal Opposition … Andrew Shear? Shea? No, that’s not it. Something like Scheer? Yeah, maybe it’s Scheer. He’s been in some kind of witness protection for the last year or so, I guess. Anyway, he’s finally emerged to announce the start of the Conservative Party’s year-long campaign to get Justin Trudeau re-elected and to protect our sacred Supply Management system.

No, wait. That’s not quite it. Oh, it’s to get Scheer elected? Okay, then. Got it.

In the National Post, Colby Cosh attempts to find reasons for Canadians to support the Tories next year:

Andrew Scheer meets British Prime Minister Theresa May
Photo via Wikimedia Commons

Andrew Scheer published an “open letter to Canadians” in the Toronto Sun this Saturday. “Sunday marks exactly one year until the next federal election,” the federal Conservative leader observed, proceeding thereupon to a critique of Justin Trudeau’s government. As someone who is still trying to take stock of Scheer, I read the letter hoping for clues to his plan of attack for the 2019 election. I’m afraid it merely served to emphasize how much Scheer has remained on the defensive since winning the Tory leadership almost a year and a half ago.

That is part of the issue here: does it seem to you like a year and a half since Scheer became leader? Forgive me a very subjective observation, but I found myself hardly believing that we are much closer in time to the next election than we are to the choosing of an opposition leader who still seems like the enigmatic new guy. What are his signature issues? I am afraid the first answer that springs to mind is “dairy supply management” — which is a continuing controversy that has exposed Scheer to embarrassment, and has helped to split his party, albeit in what is likely to be an electorally insignificant way. (Maxime Bernier won’t be the next Prime Minister of Canada, but party morale is a thing in elections.)

The other major issues that have presented themselves to Scheer as opportunities haven’t proved much more helpful. When it comes to the federalization of carbon taxation, Scheer still has no good answers when he is called upon to reconcile his hypothetical support for emissions reductions with his opposition to the Trudeau plan. He doesn’t like carbon taxes, period, which will play well with climate skeptics who have three-SUV garages; I do not underestimate the impetus of that voting bloc, but the Conservatives own those voters already. Scheer also cornered himself into a lame position on the campus free-speech wars, and he is pulling sour faces about marijuana legalization, even though he is one of the few Canadian politicians who will admit to having smoked the stuff personally.

October 3, 2018

USMCA (aka son-of-NAFTA) – what’s the damage after all?

Filed under: Business, Cancon, Economics, USA — Tags: , , , , , — Nicholas @ 03:00

The most common sentiment from Canadian comments appears to be “meh, it could have been much worse”. That doesn’t mean it’s particularly good, either:

All that cross-border yelling, a solid year of bluster and petulance, dire rhetoric about “stabs in the back” and “special places in hell,” fake deadlines and all-night negotiations, and we end up with pretty much the agreement we started with? All that was required to fix NAFTA, that destroyer of American jobs and pox on its prosperity, the deal Donald Trump memorably complained was “the worst agreement in history,” was to change its name — from North American Free Trade Agreement to US-Mexico-Canada Agreement? Seriously?

Not quite. The result is certainly a far heave from some of the more apocalyptic scenarios we had been entertaining ourselves with. But neither is it the largely unaltered “NAFTA 2.0” of much initial comment. There are substantive changes in there, most of them bad, and not all of them imposed by an overbearing U.S. on an unwilling Canada.

Still, it’s not quite the conflagration we’d been banking on, is it? Trump is the bully in middle school who threatens to take your lunch money, only to settle for a half a slice of your pizza. Or, in this case, 3.6 per cent of it.

That’s the share of the Canadian dairy market to which the U.S. will now have tariff-free access, a slight advance on the 3.25 per cent market share the U.S. had negotiated under the Trans Pacific Partnership — before Trump withdrew from it. (Oh, and “milk price classes 6 and 7” are eliminated, for fans of that dispute. It involves skim milk solids.) There are also some minor increases in tariff-free imports in the other supply-managed sectors: eggs, chicken, cheese and so on. Everything else will face the same triple-digit tariffs, as before.

That’s unfortunate. Supply management is a blight on the Canadian political and economic landscape we could well do without. The NAFTA re-negotiations were an ideal opportunity to bargain it away, as it should have been in the original NAFTA. That it remains more or less intact — even the dairy lobby could manage only a half-hearted jeremiad of imminent lacto-doom in response — is one of the chief disappointments in this agreement.

Still, what did you expect? There was never any chance of these negotiations resulting in a deepening and broadening of NAFTA — not with protectionists on both sides of the table. The only question was whether the status quo protectionists on this side — who wished to preserve all of NAFTA’s existing exemptions — could hold out against the expansionist protectionists on the other, who wished to cut NAFTA into little mercantilist pieces. As it turns out the answer is: surprisingly well.

A quick summary of the winners and losers in this agreement:

Is this a free trade agreement?

No. Unlike NAFTA, this latest agreement makes no pretense to be about free trade (or even freer trade). It’s a protectionist agreement imposed by the U.S. on the other two countries.

Who benefits from the agreement?

The primary beneficiaries of the agreement are labor unions, U.S. dairy farmers, U.S. drug manufacturers, and companies that provide automation for manufacturers (e.g., robot makers).

The agreement will require at least 30 percent of cars (rising to 40 percent by 2023) to be made by workers earning $16 an hour. This will force more cars to be produced in the U.S. and Canada since the typical manufacturing wage in Mexico is only about $5 per hour. The agreement also requires Mexico to make it easier for workers to form unions, which will make them less competitive against more productive unionized workers in the U.S. and Canada.

U.S. dairy farmers will also gain greater access to the Canadian market. Because of new restrictions on how much dairy Canada can export, there is the potential for U.S. dairy to gain a greater market share in foreign countries.

U.S. drug companies will also be able to sell pharmaceuticals in Canada for 10 years (rather than eight) before facing generic competition.

Because the agreement makes human labor in the three countries somewhat more costly, companies that create robots and other automation will likely be the long-term beneficiaries.

Who are the biggest losers in this agreement?

As with almost all protectionist trade agreements, consumers are the ones who will be hurt the most.

As the Washington Post notes, economists and auto experts think USMCA is going to cause car prices in the U.S. to “rise and the selection to go down, especially on small cars that used to be produced in Mexico but may not be able to be brought across the border duty-free anymore.”

Because the restrictions on Canadian steel and aluminum also remain in place, businesses that use those materials in manufacturing will pay inflated prices, and their products will be less competitive on the global market.

August 29, 2018

The Conservative convention, bought and paid for by the friends of supply management

Filed under: Business, Cancon, Economics, Politics — Tags: , , , — Nicholas @ 03:00

Colby Cosh relates the details of how well stage-managed the Conservative convention in Halifax was … from the point of view of the beneficiaries of supply management:

A copy of a “briefing binder” that the Dairy Farmers of Canada had given to representatives of supply-managed agriculture was carelessly discarded, found by a Calgary delegate named Matthew Bexte, and splattered onto the internet. The contents of the binder describe the strategy and outline the available forces of the supply-management squad. The resolutions being discussed by the convention included one favouring the repeal of expensive tariff protection for Canada’s egg, dairy, and poultry cartels, and the binder lists the particular responses and tactics to be used depending on how far the offending free-trade resolution advanced in the debate.

Which it didn’t. The motion in favour of letting Canadian suckers buy foreign cheese in dangerous unregulated quantities died noisily in a “breakout session,” never even reaching a vote, much less the plenary session of the convention. As the National Post’s uncannily versatile Marie-Danielle Smith documented before the briefing book was leaked, free-trade delegates had already caught the scent of a rat, complaining that the motion had been suppressed through strategic delay by operatives working for party leader Andrew Scheer.

The Dairy Farmers of Canada briefing describes this motion-suppression tactic as “Scenario 2,” calling it a “sub-optimal” outcome: “It buys us (supply-managed farmers) a reprieve, but doesn’t put the issue to rest.” According to the briefing notes, if the motion had passed in the Friday breakout session, that would plunge the world into “Scenario 3.” Under Scenario 3, a Friday evening reception at an Irish pub, with free food and potables, would come into play: quota-sucking farmers and their public-relations goons would have been given a chance to mingle with well-lubricated CPC delegates, with “infographics on a slideshow” pulsing subliminally in the background.

The hope here would be to prevent a devastating “Scenario 5,” in which the destruction of supply management came before the whole CPC assembly for a vote and won it. The prospective talking points accompanying Scenario 5 warn that “Members of the Conservative Party of Canada have sent a clear signal that they do not support Canadian farmers” and they hiss menacingly that “Canadians will remember the position taken by Conservatives today.”

Fortunately, even in the event of a flat-out Scenario 5, there would still be what the book calls the “Safety Net.” The safety net is that annual party conventions are meaningless, expensive balderdash anyway. Or, as the Dairy Farmers of Canada (DFC) book puts it: “The powers of the Leader are far-reaching in preventing a policy from being in the party platform. DFC has been told by the Leader’s office that he will exercise this power … regardless of the outcome at convention.”

Good old Andrew … he knows who put him in his current position and has signalled in advance that he’ll “stay bought”. Too bad for Canadian consumers, but great news for the leeches who benefit from the market distortions of supply management.

August 7, 2018

“[Trudeau’s] ideology is jeopardizing 20% of the Canadian economy”

Filed under: Business, Cancon, Economics, Politics, USA — Tags: , , , , , — Nicholas @ 05:00

Brandon Kirby on Prime Minister Justin Trudeau’s failing efforts to negotiate with the United States on trade:

Trade with Canada constitutes 2% of America’s GDP and trade with America constitutes a whopping 20% of Canada’s GDP. My home province of New Brunswick finds 50% of its private sector exporting to the U.S. – NAFTA is of vital importance to our economy.

The dwindling efforts of Trudeau’s cabinet to negotiate a deal with the Americans could become his government’s greatest failure. With tariffs already being imposed on steel and aluminum, NAFTA is potentially unraveling before our eyes and along with it, the Canadian economy.

Trudeau’s American counterpart isn’t known for his vocal support of trade and yet he handed Canada everything on a silver platter at the recent G7 summit. He offered to remove all tariffs and subsidies on imports and exports, provided Canada did the same. This is about as fair an offer as one could expect. Trudeau retaliated by insisting Canada had been insulted.

The trouble with Trudeau is precisely that. He was given a talking point. He developed rhetoric rather than substance. Akin to Marco Rubio’s disaster of a debate performance, who refused to go off script even when he was being called out for scripted answers, Trudeau had a talking point. It was a good one, Canadians and Americans died together in the mountains of Afghanistan to bring justice for Americans who died on September 11th. Trump alluded to our tariffs on their dairy farmers as a national security threat. But when Trump acquiesced, Trudeau kept to his talking points and refused to go off script, even when his talking points no longer made sense.

The initial renegotiation began with Trudeau’s government attempting to include a chapter on gender. The Americans weren’t enthusiastic about devoting a significant portion of their time at the negotiations to discussing an unenforceable chapter of the deal, but Trudeau pressed on.

The liberal rationale in the briefing notes was leaked, “Think back 20 years and remember the early discussions of labour and environment in the context of trade agreements.”

Environmental and labour standards were included in the negotiations of decades past because a country that has humane labour standards is at a trade disadvantage to countries that neglect their workers and their environment. Gender doesn’t have any bearing on trade. His ideology is jeopardizing 20% of the Canadian economy.

July 20, 2018

No end in sight for our national fake poutine crisis

Filed under: Cancon, Economics, Food, Humour — Tags: , — Nicholas @ 06:00

A few key posts from the Twitters to illustrate the problem:







June 17, 2018

Conrad Black – Trump’s not bluffing

Filed under: Business, Cancon, Economics, Government, Politics, USA — Tags: , , , , , , — Nicholas @ 03:00

In the National Post (but linked from his personal website), Conrad Black warns of the danger of assuming that Trump is just blustering on his trade threats:

Justin Trudeau struck just the right Canadian note of our gentle nature but refusal “to be pushed around,” and he predictably will reap the short-term reward for standing up for the country opposite the ideal American bogeyman, the blustering billionaire president who has been a Garry Trudeau caricature of the Ugly American for 25 years. (It is a very incomplete picture, like most caricatures, but it works for Trump and he often cultivates it.) The boycotts of American goods and holidays will be a bonus to Canada economically and the anti-Trump American media will be along within two weeks to lionize doughty Canada like “Gallant little Belgium” in 1914 and “Plucky Israel” in 1947, and it will strengthen Canada’s always fragile self-regard opposite the United States.

On the other hand, Trump isn’t just a blowhard; all his career he has known how to go for the jugular and his reference to 270-per-cent Canadian tariffs on butter is a valid complaint that threatens to tear the scab off this egregious payoff to the comparatively small number of Quebec dairy farmers who mainly profit from it. The same issue was hammered hard by Martha Hall Findlay when she ran for the federal Liberal leadership in 2013 and by Maxime Bernier when he ran narrowly behind Andrew Scheer for the Conservative federal leadership last year. The issue died down after their unsuccessful campaigns, but if Donald Trump is incited to hammer that theme, he will roil the domestic Canadian political waters and English-French relations in the country generally.

Presumably our trade negotiators will not become so intoxicated by the prime minister’s peppy talk and spontaneous popular boycotts of the U.S. that they forget the correlation of forces. An aroused American administration could do serious damage to Canada’s standard of living, and it could be a tempting tactic to expedite more important negotiations with Mexico and the principal Asian and European powers. The United States is now enjoying three times as great a rate of economic growth as Canada (4.8 to 1.5 per cent), has lower tax rates, 11 times as great an economy, and more unfilled jobs than unemployed people.

Behind the peeling façades of Norman Rockwell and Walt Disney, the United States is a monster, and not always an amiable monster. If Canadians are blinded by their visceral dislike of Donald Trump, as the antithesis of Canadian criteria for likeable public figures, they will be exposed to the ruthless pursuit of the national interest that in his own career propelled him from technical insolvency to immense wealth and celebrity and then, against all odds, to control of a great political party and to the headship of the most powerful country in the world. If these talks blow up, the U.S. doesn’t have to settle for WTO rules; it can impose outright protectionist measures. Justin Trudeau has been agile, and the country has responded admirably. But Canadian policy-makers must understand that they are playing for almost mortal stakes with potentially dangerous protagonists who have no sense of fair play and no interest in what Canada thinks of them.

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