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International Agreements

September 25, 2016

International agreements are all over the news recently.  The trade agreement between Canada and the EU is almost completed.  Canada and China are beginning talks that will lead to a trade agreement between them.  The US is negotiating a trade agreement with the EU.  The TTP is coming.  It’s a multi-lateral agreement between the US and many Asian countries that are friendly with the US.  China is notably absent from this agreement.  NAFTA, a trade agreement negotiated many years ago between Canada, the US, and Mexico, has been the subject of complaints recently.  What’s going on?

I’m in favour of free trade between countries, at least in principle.  I also oppose tariff barriers and subsidies, in principle, because they constitute unfair competition between countries.

Did you notice that the recent agreements are not called free trade agreements, but just trade agreements.  That’s because they sometimes restrict trade, rather than make it more free.  One thing that western countries try to do is to spread their intellectual property laws (patent, copyright, and trademark laws) to other countries.  These laws often grant monopoly powers to companies that hold these properties.  As well, trade agreements may preserve subsidies or preserve import quotas on certain products.  This is not free trade in all aspects, but does facilitate trade between countries.

One feature of trade agreements that’s new to me is that they are negotiated in secret.  Why is this?  What are they trying to hide?  The problem with secret agreements is that many people will be dissatisfied with them when they are finally made public, but by then it’s too late to change anything.  The news media can only speculate about what one country had to give up while negotiations are in progress.  I have no doubt that ordinary people understand that their country must have both gains and losses in such an international agreement.  Even then, the agreement must benefit the majority of the people.  If it doesn’t, there will be a great deal of opposition within the country.  Secrecy is not appropriate for such an important undertaking.

Will there be job losses?  Of course.  There have always been job losses.  Companies always seek to reduce labour costs.  Unrelated to trade agreements, they have introduced automation, division of labour, and self-service to reduce their labour costs.  They had to do this to remain competitive with other companies.  With trade agreements, products are often made in other countries where labour costs are lower.  Even some services can now be done in other countries.  This is bound to happen.

Of course, trade agreements lead to globalization.  Globalization can be an excuse for economic domination by one country.  People in one region of a country, or in an entire country, can see it as something imposed on them by some other country.  It can be Americization or Westernization.  Trade agreements have to prevent economic domination by one of the parties to the agreement.

It’s also important to maintain the national identity of each country.  This requires exceptions to the general rule of free trade.  In particular, local culture must be protected.  Cultural industries must be protected.  National policies must be respected by trade agreements.

Recent trade agreements allow legal action by producers in one country against restrictions imposed by another country.  Of course, this can be an enforcement mechanism for the agreement.  It can also be misused to break down national policies such as protection of the environment.  Such things that need to be protected have to be part of the agreement.  Then, special courts can be fair in the face of legal actions.

Yes, trade agreements can be beneficial to all countries involved, and to people in regions within those countries.  Negotiating such an agreement requires that people take on the viewpoint of another country, and do this as friends and not as adversaries.  This is not an easy thing to do.  I can understand why negotiations may go on for years in many cases.

 

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