Tuesday, October 2, 2018

The Bullies in the Land of the Moose

I don't know if the mainstream media actually covered it, but late Sunday night Canada caved in the standoff on overhauling NAFTA.

Now, trade talks are dull as all-get-out, but I think we knew the deal here.  President Trump was never a fan of the North American Free Trade Agreement, feeling that it had locked in some unfair practices that allowed jobs to escape the USA.  As president, he pledged to overhaul it in such a way that it would be fair to this country.

He had a tremendous objection to the tariffs placed on dairy products, making American dairy farmers essentially locked out of the Canadian marketplace by import duties that tripled the price of milk from the USA.  This he regarded as totally unfair (I believe the tariff was meant to protect Quebecois dairies and was related to the weird political relationship between Quebec and the rest of Canada, but that was Canada's problem which they were making ours).  He felt it needed to be fixed -- now.

What previous president would have gone to the land of the moose and the loon and the Mounties and Molson and actually said something like "Justin, you can take that dairy tariff back down to something reasonable, or I'm going to slap a tariff on the cars you hosers make up there.  How's that work for you, eh?"

The answer is that no previous president, Democrat or Republican, would have done that, not just because we actually love Canada and Canadians (I'm a big fan, myself), but that our historic posture would have been to cave and do something around the edges.  We can't possibly offend another country, can we?

But Donald Trump, as we know, is not like anyone else who has sat in the Oval Office -- not a bit.  In his view, he is the president of the United States, and is responsible first for bettering the lives of the people of the USA, lowering taxes, creating jobs, arguing on behalf of our people in the world's forums.

He was ready to walk away from the trade-talk table and focus on the new relationship with Mexico, which had already agreed to a significant update to NAFTA.

And that's the point today.  If our friends to the north were taking advantage of us when we had all the leverage -- and we surely did, given the size of our import volume -- then what do you think the rest of the world which, for the most part is not as friendly toward us as Canada is, was doing to us?

The folding by Justin Trudeau is a real watershed moment in American foreign relations.  It tells us that we have been bullied by our close friends, as well as by our less-close friends.  It tells us that we actually have leverage that no other country can claim, and that we need to start using it, rather than being the patsy to the economic bullies of the world.

I don't actually see Canada as a bully, of course.  They have this odd internal political dynamic up there that the USA's dairy farmers were being punished for.  But they also make or assemble a lot of cars up there that end up in the USA market.  They couldn't really expect that we would punish our own dairy industry, but let those cars come rolling in untaxed.

What could they have expected?  We never stood up to them before, so that while they might not have seen their intransigence as bullying, the outcome was the same as if it had been, for years and years.

Until we actually had a president of the USA, not, as he reminds us, of the world.

Copyright 2018 by Robert Sutton
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1 comment:

  1. I was listening to a podcast by the economist Tyler Cowen and a guest. They were mentioning how Trump's negotiating style worked in business, especially housing and construction, but was unsuited for international relations...It was interesting in that they were only discussing the effect of mis-understanding other cultures (Trump being a bumpkin, you know). What was missing, of course, was the effect of economic realities - you know, if I put a tarriff on you and you lose business, and you're a dictator of a volatile country, you might be afraid of having too high an economic price to pay.

    Of course, since bashing the president is many people's favorite sport, the possibility that he's getting the results no one else has gotten because he understands something the rest don't....is out of the question.

    I am always amazed when I see otherwise intelligent people missing things left and right because their assumptions are never questioned, and they are infinitely capable of ignoring the data right in front of their eyes.