US Election Results Will Have Little to no Effect on Trade Relations with Canada: Olive
What’s at stake for Canada in the U.S. presidential vote on Nov. 8?
Surprisingly little, as it happens.
For all the storm and fury of this most unpleasant of U.S. presidential campaigns, the two chief contenders are actually campaigning on common ground.
The chief issues for both Donald Trump and Hillary Clinton are job creation, boosting economic growth, national security, and what they each regard as genuine free trade.
A rupture in U.S.-Canada trade relations would be near-catastrophic for the U.S. The North American auto and livestock industries, to pick just two examples, are thoroughly integrated between the U.S. and Canada. New England gets most of its electric power from Quebec — something to keep in mind the next time you see the New York City skyline at night. That’s Canadian electricity lighting up Times Square and Broadway.
The anti-trade rhetoric of the candidates for the U.S. presidency has obscured the fact that in seeking greater economic growth — the top goal for each candidate — the U.S. will have to become a more vigorous exporter. That means gaining greater access to world markets. And that, in turn, requires an even greater U.S. commitment to free trade than currently exists.
Trump and Clinton have each expressed reservations about the North American Free Trade Agreement (NAFTA), and they also vow not to proceed with the proposed Trans-Pacific Partnership (TPP), the 12-country trading block of which Canada is a member.
Yet either candidate, as president, will almost certainly leave NAFTA wholly or largely untouched, and will also lead America into a ratified TPP.
Trump is a global entrepreneur. His business has long generated much of its profits outside the U.S.
And Hillary Clinton was a Day One negotiator for America on the Trans-Pacific Partnership (TPP) in her role as U.S. secretary of state. Stepping away from the TPP talks, on completing her tenure at State, Clinton declared that the not-yet-completed TPP is “the gold standard of trade agreements.”
Why would each of these candidates flip-flop on free trade after becoming U.S. president? This space can highlight only some of the many compelling reasons:
•Most of the low-skill, low-pay U.S. jobs that were vulnerable to offshoring have already been lost. And in the main, they haven’t been lost to America’s NAFTA partners Mexico and Canada. Most have been lost to China, South Korea, Bangladesh, Malaysia, Cambodia and other lower-cost jurisdictions with which the U.S. has no trade deals. They’ve also been lost from the U.S. Midwest to the world’s newest sweatshop, the low-pay, anti-union U.S. South.
•Trump has all but declared a trade war with China. But no one wins in a trade war. Americans who can only afford to shop at Wal-Mart or Costco will find the shelves bare. And China’s retaliatory walls against U.S. imports would enrage CEOs of the Fortune 500, who would demand compensation for the damage Trump has done to their extensive Chinese investments. Given America’s current era of discontent, bashing the Chinese, Muslims and Mexicans might be a slam dunk in winning a presidential nomination. But doing so as president is profoundly contrary to America’s economic interests.
•For the U.S. economy, there is tremendous upside potential in using the TPP to bulk up U.S. trade with America’s existing trading partners (TPP members Japan and Australia) and cracking new markets in the Pacific Rim (Malaysia, Vietnam, New Zealand) and Latin America (Chile, Peru, Colombia). America derives only about 20 per cent of its GDP from exports, pointing to a tremendous upside potential for the U.S. economy by becoming a more substantial exporter. Frankly, as a mature economy, America’s internal economic growth rate will be modest for decades to come. For America’s GDP to grow substantially, the U.S. simply must build up its export prowess. And that can be achieved only by embracing free trade. Clinton and Trump know this. And they have each been watering down their anti-trade talk as the election approaches. Trump regards himself as a superb negotiator, and relishes the chance to, as he has said, “negotiate the best trade deals ever.” But whether Trump or Clinton are able to improve much on what seven years of TPP negotiations have already yielded is beside the point. They’ve each revealed themselves as free traders, in stark contrast to what they’ve said on the campaign trail.
•Strengthening NAFTA and recommitting to the TPP would enable the U.S., finally, to establish harmonious relations with a Latin America that, in the main, has felt nothing but the back of America’s hand for generations.
•Free trade has been good for the U.S. In the six years after the U.S. joined Mexico and Canada in creating NAFTA in 1994, the U.S. created 23 million new jobs, a record that remains unsurpassed. And Canada has seen a whopping 173-per-cent increase in merchandise exports to the U.S. alone from 1994 to the present. As a TPP-member America gains more favourable terms of trade with Vietnam, Malaysia and Chile. American job creation will soar once again from the surge in sales of tariff-free IBM mainframes to the governments and private-sector businesses of America’s fellow TPP countries. And American consumers will enjoy greater access to, and lower prices for, Kiwi woollens and Vietnamese shrimp, the most nutritious in the world.
•Finally, if America opts out of the TPP negotiations, the other 11 TPP member-countries, including Canada, will remain committed to the TPP. That would greatly disadvantage the U.S., which would be on the outside looking into one of the world’s biggest free-trade zones. That is the scenario that Britain faces if it exits the European Union (EU) in March, as the U.K. PM has said she will do. Outside the TPP, America loses the chance to isolate China, whose growing regional influence is of great concern to Washington. Conversely, a TPP whose members include the largest- and third-largest economies (the U.S. and Japan, respectively) will tame China’s recent adventurism in the South China Sea and elsewhere. Accordingly, China has already signalled an interest in eventually joining the TPP, and so has the emerging economic powerhouse South Korea.
It’s a simple matter of geopolitics. The U.S. can allow its influence in the world to weaken by revoking NAFTA and rejecting membership in the TPP. Or the U.S. can use its membership in the world’s biggest trade blocks, in which it will be the biggest member, to gain still more influence in both the Pacific Rim and Latin America.
Trump and Clinton are emphatic adherents to Pax Americana. Retreat from free trade is one of the surest ways of undermining that U.S. doctrine. Neither of these candidates wants to be the first U.S. president to break faith with it.
What’s at stake for Canada in the U.S. presidential vote on Nov. 8?
Surprisingly little, as it happens.
For all the storm and fury of this most unpleasant of U.S. presidential campaigns, the two chief contenders are actually campaigning on common ground.
The chief issues for both Donald Trump and Hillary Clinton are job creation, boosting economic growth, national security, and what they each regard as genuine free trade.
A rupture in U.S.-Canada trade relations would be near-catastrophic for the U.S. The North American auto and livestock industries, to pick just two examples, are thoroughly integrated between the U.S. and Canada. New England gets most of its electric power from Quebec — something to keep in mind the next time you see the New York City skyline at night. That’s Canadian electricity lighting up Times Square and Broadway.
The anti-trade rhetoric of the candidates for the U.S. presidency has obscured the fact that in seeking greater economic growth — the top goal for each candidate — the U.S. will have to become a more vigorous exporter. That means gaining greater access to world markets. And that, in turn, requires an even greater U.S. commitment to free trade than currently exists.
Trump and Clinton have each expressed reservations about the North American Free Trade Agreement (NAFTA), and they also vow not to proceed with the proposed Trans-Pacific Partnership (TPP), the 12-country trading block of which Canada is a member.
Yet either candidate, as president, will almost certainly leave NAFTA wholly or largely untouched, and will also lead America into a ratified TPP.
Trump is a global entrepreneur. His business has long generated much of its profits outside the U.S.
And Hillary Clinton was a Day One negotiator for America on the Trans-Pacific Partnership (TPP) in her role as U.S. secretary of state. Stepping away from the TPP talks, on completing her tenure at State, Clinton declared that the not-yet-completed TPP is “the gold standard of trade agreements.”
Why would each of these candidates flip-flop on free trade after becoming U.S. president? This space can highlight only some of the many compelling reasons:
•Most of the low-skill, low-pay U.S. jobs that were vulnerable to offshoring have already been lost. And in the main, they haven’t been lost to America’s NAFTA partners Mexico and Canada. Most have been lost to China, South Korea, Bangladesh, Malaysia, Cambodia and other lower-cost jurisdictions with which the U.S. has no trade deals. They’ve also been lost from the U.S. Midwest to the world’s newest sweatshop, the low-pay, anti-union U.S. South.
•Trump has all but declared a trade war with China. But no one wins in a trade war. Americans who can only afford to shop at Wal-Mart or Costco will find the shelves bare. And China’s retaliatory walls against U.S. imports would enrage CEOs of the Fortune 500, who would demand compensation for the damage Trump has done to their extensive Chinese investments. Given America’s current era of discontent, bashing the Chinese, Muslims and Mexicans might be a slam dunk in winning a presidential nomination. But doing so as president is profoundly contrary to America’s economic interests.
•For the U.S. economy, there is tremendous upside potential in using the TPP to bulk up U.S. trade with America’s existing trading partners (TPP members Japan and Australia) and cracking new markets in the Pacific Rim (Malaysia, Vietnam, New Zealand) and Latin America (Chile, Peru, Colombia). America derives only about 20 per cent of its GDP from exports, pointing to a tremendous upside potential for the U.S. economy by becoming a more substantial exporter. Frankly, as a mature economy, America’s internal economic growth rate will be modest for decades to come. For America’s GDP to grow substantially, the U.S. simply must build up its export prowess. And that can be achieved only by embracing free trade. Clinton and Trump know this. And they have each been watering down their anti-trade talk as the election approaches. Trump regards himself as a superb negotiator, and relishes the chance to, as he has said, “negotiate the best trade deals ever.” But whether Trump or Clinton are able to improve much on what seven years of TPP negotiations have already yielded is beside the point. They’ve each revealed themselves as free traders, in stark contrast to what they’ve said on the campaign trail.
•Strengthening NAFTA and recommitting to the TPP would enable the U.S., finally, to establish harmonious relations with a Latin America that, in the main, has felt nothing but the back of America’s hand for generations.
•Free trade has been good for the U.S. In the six years after the U.S. joined Mexico and Canada in creating NAFTA in 1994, the U.S. created 23 million new jobs, a record that remains unsurpassed. And Canada has seen a whopping 173-per-cent increase in merchandise exports to the U.S. alone from 1994 to the present. As a TPP-member America gains more favourable terms of trade with Vietnam, Malaysia and Chile. American job creation will soar once again from the surge in sales of tariff-free IBM mainframes to the governments and private-sector businesses of America’s fellow TPP countries. And American consumers will enjoy greater access to, and lower prices for, Kiwi woollens and Vietnamese shrimp, the most nutritious in the world.
•Finally, if America opts out of the TPP negotiations, the other 11 TPP member-countries, including Canada, will remain committed to the TPP. That would greatly disadvantage the U.S., which would be on the outside looking into one of the world’s biggest free-trade zones. That is the scenario that Britain faces if it exits the European Union (EU) in March, as the U.K. PM has said she will do. Outside the TPP, America loses the chance to isolate China, whose growing regional influence is of great concern to Washington. Conversely, a TPP whose members include the largest- and third-largest economies (the U.S. and Japan, respectively) will tame China’s recent adventurism in the South China Sea and elsewhere. Accordingly, China has already signalled an interest in eventually joining the TPP, and so has the emerging economic powerhouse South Korea.
It’s a simple matter of geopolitics. The U.S. can allow its influence in the world to weaken by revoking NAFTA and rejecting membership in the TPP. Or the U.S. can use its membership in the world’s biggest trade blocks, in which it will be the biggest member, to gain still more influence in both the Pacific Rim and Latin America.
Trump and Clinton are emphatic adherents to Pax Americana. Retreat from free trade is one of the surest ways of undermining that U.S. doctrine. Neither of these candidates wants to be the first U.S. president to break faith with it.