The great cap-and-trade swindle

It was really only a matter of time before Kyoto morphed into an excuse for protectionism.

The closer the United States gets to adopting a cap-and-trade system to control greenhouse gas emissions, the more frightening it gets.

Not because the plan now under debate in the U. S. Congress would complicate the lives of energy producers, or impose new costs on consumers. Those drawbacks might be bearable if the system was truly designed to reduce emissions, and if the expense was reasonable. The alarm results from increasing evidence that emissions have become a secondary concern of a plan whose main purpose is to serve the partisan interests of the Democratic Party.

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The Democrats' evident determination to use global warming to mask a transfer of wealth from one part of the country to another mirrors the ill-starred Green Shift proposed by former Liberal leader Stephane Dion, which began as a means of fighting emissions and ended up as an anti-poverty program financed by Alberta for the benefit of more Liberal-friendly parts of the country.

Barack Obama has his work cut out for him if he truly wants to avoid being called the Depression President.

Environmental protectionism

Environmentalists are not going to stop until they get their way. The latest lever to impose their designs on an unwilling population is the threat of trade protectionism:

The most immediate problem Canada faces from greenhouse gas emissions is economic rather than environmental. At least that was the message at a news conference on Thursday held to unveil a report from a government advisory body on carbon pricing.

Bob Page, the chairman of the National Round Table on the Environment and the Economy, said that if Canada does not introduce an effective, national carbon emissions control program, it will face potentially ruinous trade retaliation from the United States once Congress and the Obama administration introduce their own emissions control programs.

Just what we need – another pretext for trade protectionism. As if the problems of the current global economic crisis are not great enough. Great Depression II anyone?

Barack Obama: The Depression President?

The recent news that U.S. public works projects funded by the stimulus package will be required to use only U.S.-made iron and steel was not entirely unpredictable. On issues of trade, the Democrats are bad for Canada, and by extension global trade. If Barack Obama lets this stand he risks becoming known as the Depression President.

Thus far, the temptation among nations to shield their economies from the ravages of the global credit crisis has largely been limited to backstopping their financial sectors or bailing out struggling industries such as autos. To be sure, these efforts are at root protectionist, but it is still possible to believe that the primary intention is not to beggar thy neighbour.

The recent U.S. stimulus package approved by the U.S House of Representatives rips away any pretense of adherence to the principles of free trade. It is as if the legislators slept through their history lessons on the catalytic role of the Smoot-Hawley Act in the Great Depression.

So instead of standing up to the entreaties of Big Labour, Congress now looks to it for its marching orders.

"We've got manufacturing in America in a total and complete freefall. ... It's about time we had some economic patriots," said Leo Gerard, president of the United Steelworkers union.

And to make matters worse, Congress is not content to stop there:

Senators are working on an expanded version that would also include other materials such as cement, Sen. Sherrod Brown, an Ohio Democrat, told reporters.

Fortunately, Obama is on record as being opposed to protectionism:

By a cruel irony, President Obama used the steel business as an example of the futility of protectionism in his book The Audacity of Hope, where he wrote that "A tariff on imported steel may give temporary relief to U.S. steel producers, but it will make every American manufacturer that uses steel in its products less competitive in the world market."

Encouragingly, even Iggy sees the threat, although Jack remains true to form.

The Obama Administration is said to be "studying" the rule introduced by the House; meanwhile, our opposition leader, Michael Ignatieff, is asking pointed questions about it in the Commons when he might be better advised to form a united lobbying front with the Conservatives. (And Jack Layton is exemplifying the worsening international mood by calling for immediate countervailing action.)

We can only hope that there is substance behind Obama's rhetoric. Otherwise, things are going to get a lot worse.

Democrats bad for Canada

The Canadian fascination with the U.S. Democratic party has always puzzled me. With three quarters of Canadian exports going south of the border, we have a vested interest in keeping the border open. Yet, both candidates in the Democratic primary have been bashing NAFTA.

First, here is Barack Obama speaking of his opponent Hillary Clinton:

"Her supporting NAFTA didn't give jobs to the American people."

Hillary's defense:

"I was not in the Senate at the time. I did not have a vote. I find his argument to be quite tortured. I have been a vocal critic of NAFTA starting in my campaign for the Senate in 1999."

It would not be good for Canada if either were to become U.S. president.

Once a pirate

One hundred and fifty years ago, even America's closest trade partners were despairing about our cheating ways. Charles Dickens, who visited in 1842, was, like many Britons, stunned by the economic ambition of our nation's inhabitants, and appalled by what they would do for the sake of profit. When he first stepped off the boat in Boston, he found the city's bookstores rife with pirated copies of his novels, along with those of his countrymen. Dickens would later deliver lectures decrying the practice, and wrote home in outrage: "my blood so boiled as I thought of the monstrous injustice."

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In the literary realm, for most of the 19th century the United States remained an outlaw in the world of international copyright. The nation's publishers merrily pirated books without permission, and without paying the authors or original publishers a dime. When Dickens published a scathing account of his visit, "American Notes for General Circulation," it was, appropriately enough, immediately pirated in the United States.

SPP Conspiracies

I'm not a conspiracy theorist and neither is Stephen Colbert. Which makes me think the protesters at the Montebello summit could be on to something.

Still, I don't quite get what they are going on about. Wudrick is puzzled too and has a great post on the incoherence of their rage. Not to belittle their cause, for many it was a good opportunity to get some fresh air, show off one's piercings and, to keep things lively, throw things at the police to see if they would strike back (which they did). In the end, however, it leaves me doubting whether the protesters have thought these issues through.

Despite what some claim, there is really nothing that secret about the Security and Prosperity Partnership. Both the U.S. and Canadian governments have had informative websites on the initiative for some time. Mexico probably does too (although I'm not inclined to search for it). There is more than enough to debate and discuss without making stuff up.

For the most part, it is hard to argue against a cooperative approach to trade and security issues. In the end, if Canadians don't like what the Harper government agrees to, they will eventually have recourse at the polls. There is nothing anti-democratic about that.

Of course, Harper will have to be on guard against U.S. efforts to load the SPP with extraneous commitments. Michael Geist points out how the U.S. managed to slip in its intellectual property priorities in the final agreement. I'm not too keen on Harper giving in on that. Still, the SPP provides an indispensable forum to address common issues and, ultimately, to protect our economic interests. It would be foolish not to participate.


Update: New source of video provided as previous source expired.

Forest industry in crisis

Our sanctimony about the Americans telling us what to do with our forests during the softwood lumber dispute seems to have been misplaced. In our pique with the Americans, we missed the opportunity to reform the way we allocate timber on public lands. As it turns out, the Americans were right. Our timber allocation system is dysfunctional. Eastern Canadian forest workers are now paying the price.

The biggest reason Eastern Canada's forest industry has lost almost every comparative advantage it ever enjoyed -- and there used to be many -- is politics. Governments have managed our forests to maximize jobs and minimize efficiency. The inherent risk of such a strategy is that eventually there are almost no jobs left to maximize.

With a softwood lumber agreement now in place, it is time to focus on developing a timber allocation system that responds to market signals rather than defies them. It might not be enough to head off future trade disputes with the United States, but it might help save some of the jobs we have left in the sector.