Jim Stanford writes this morning that, as soon as the Harper government won a majority, it began dashing around the world signing free trade deals. But free trade alone does not amount to smart economic policy:
There’s a big difference, however, between signing free-trade pacts and actually doing something about trade. Canada’s trade performance deteriorated badly over the past decade. The quantity of goods and services shipped abroad is seven percentage points lower than when the Harper government took office, lower even than back in 2000. And what we do export increasingly consists of raw resources (especially oil). Our once-impressive trade surplus has melted into deficit. Despite accelerating petroleum sales, we’re running up international red ink at the rate of 3 per cent of GDP per year.
What's wrong with the Harper strategy? Trade needs to be developed and supported. And Harper budget cuts are undermining support for trade.
Ottawa trumpets its latest free-trade pact (with Honduras) as evidence of a commitment to trade. Honduras is an impoverished quasi-dictatorship where journalists are routinely assassinated. Canada sells less than $50-million a year there (while importing four times as much). We export more to the United States in 88 minutes than to Honduras in a year – yet as we ink this blockbuster deal with Honduras, we close trade offices in the United States. What’s the net impact on trade? Clearly negative.
The government's right hand doesn't know what its left hand is doing. That's because it never does a thorough analysis before implementing policy. The justification for any policy is that the Harperites possess the moral high ground -- truly simplistic, magical thinking.
Canada’s export failure cannot be blamed on foreign trade barriers. Instead, we must look in the mirror – at the structural inadequacy of our business sector. Canada has chronically failed to nurture and develop domestically based globally active firms that produce innovative, high-value products for world markets. Working to fix that problem (through proactive technology, innovation and sector-development strategies) would do more for our actual trade than all the free-trade talks in the world. If you truly believe in trade, don’t be distracted by the trade deals.
Despite all the Harper government's self congratulation, it really doesn't know much about doing business.