peterr@utcsri.UUCP (Peter Rowley) (09/10/85)
Just to show that a lot lurks behind the word "free" in free trade... The MacDonald commission made a point of saying that it did NOT favour a customs union with the US, only free trade. A customs union would mean that the two countries would treat all other countries equally. Enforcing the difference between the two is not simple, however. Take the case of Cuba. Canada trades with Cuba, but Americans are not allowed to either buy from or sell to that country. Clearly, the US cannot let arbitrary goods from Canada (which would include Cuban cigars) flow into the US. So, despite the connotations of "free" trade, there would still be a lot of red tape to determine whether goods could cross the border or not. One so-called "loose" criterion would be a 50% content rule. If something was 50% or more US content or 50% or more Cdn content, then it could pass without duty. But it seems likely that this would not be enough to satisfy the US... so more complicated rules would most likely be required. Some people point to the amount of money spent collecting duty (more than is taken in) as an argument for free trade. But it's clear that the customs brokers will by no means be put out of business. This may be viewed as a minor point. In any wide-ranging agreement between 2 countries, there will be a lot of details to work out. But I just want to take the shine off the concept of free trade-- it is NOT simple. Due to the intertwining of economic and political policies, and the dependence of both on old grudges and alliances, trade agreements usually have to be quite complicated. ---------------------------- I stopped reading the net for a while after I posted my last article on all this, so I didn't respond to responses to it. I think one of my points could have been stated more succinctly... US companies already enjoy the economies of scale of a large market. With that advantage they could, without any nasty tricks, undercut Canadian companies when free trade starts. Not because of any Canadian incompetence, just because we haven't had time to develop the same economies of scale. And with the overpowering competition from the US, there's a chance that Canadian companies would never have the chance. Unless, of course, there were provisions in the agreement; say, duties for goods going into the US are dropped 5 years before Canadian duties are dropped. There are still enough things in free trade that bother me to make me very wary of it, but without provisions such as this, I think it is quite clearly suicidal. Surely, we can agree on that. p. rowley, U. Toronto
atbowler@watmath.UUCP (Alan T. Bowler [SDG]) (09/10/85)
In article <1378@utcsri.UUCP> peterr@utcsri.UUCP (Peter Rowley) writes: > >Some people point to the amount of money spent collecting duty (more than >is taken in) as an argument for free trade. But it's clear that the >customs brokers will by no means be put out of business. > I know the more rabid libertarians try to give this impression, but it just isn't true. What is true is that the amount of money collected at the border from Joe Public (i.e. amounts in excess of your personal exemption for things bought outside the country) does not cover the entire cost of manning the border. The amount collected on all tariffs is a lot more. Free trade or not the border stations will still have to be manned by the same number of people. You still need to check for illegal immigrants, illegal substances, and a number of other things that we don't want in the country. (Just consider the cost of a major outbreak of something like hoof and mouth disease).