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Canada Politics: Talking Trade Deals (And TPP)

Updated on October 6, 2015

Trade: Surplus' and Deficits

Canada is a country divided on trade. Both protectionism and free trade have long histories in our country and both have merits. On the face, I must admit that trade liberalism is a very attractive offer. Instinctively it seems right that access to new markets would mean a healthier, more vibrant economy. However, my argument would simply be that free trade at a default is not a recipe for this and that each deal must be examined by it’s own merits.

At its core, a trade deal’s success is determined by its ability help the fundamentals of an economy. Without this a trade deal is at best a dud and at worst a drain. How this is measured is through concepts named trade surplus’ and trade deficits. Canada’s economy is one which relies significantly on our exports so what we look for in a trade deal is that we can export our goods more easily. It is not necessarily as important that we have more access to outside goods - so what we are looking for is a trade surplus.

A trade surplus ensures that our producers have a larger market to sell to, thus they can bring money into the economy and keep and hire more workers. A trade deficit means that our consumers are spending money on outside produced goods, thus taking money away from the economy and more importantly snubbing our local producers and market. Over the last few years our government has engaged in numerous trade deals and the trend isn’t looking good.

Canada's trade overlook over last 5 years.
Canada's trade overlook over last 5 years. | Source

As you can see, aside from a few upward spikes now and again Canada rather consistently has found itself in trade deficit over the last five years. This is not ideal at all and it suggests that our government has not negotiated successful deals in the only sense that matters: our interests. A trade deal which does not serve the interests of the nation is not a trade deal worth having. Neoliberal free trade ideology breaks down when such deals hurt the economy more than it aids it.

Tom Mulcair, Leader of the NDP, has stated that he won't be bound by the TPP agreement.
Tom Mulcair, Leader of the NDP, has stated that he won't be bound by the TPP agreement. | Source

The TPP and Solutions

The latest free trade deal as of this writing and one of the most significant in recent history, the Trans-Pacific Partnership, threatens Canadian auto manufacturing, dairy farms and even threatens national sovereignty in the form of international tribunals with legal power over some of our policies; for example in regards to pharmaceuticals. How much is Canada willing to give up to engage in these kinds of deals? Should we really give up on free trade all together? We could stop engaging in trade deals when they appear less than helpful but this looks bad diplomatically and more significantly it leaves us behind in the steps our neighbour industrialized nations are taking. Globalization - the expansion of trade and political liberalism in the world - is happening and being left behind on this would leave Canada somewhat isolated on the world stage. And besides, we do need trade to keep our economy growing - we are a net exporter. The answer is we need to commit more to negotiations and look after our own interests more as to achieve better deals for our country.

As for the TPP, I cannot comment on its overall efficacy at the time of this writing because we simply do not know enough details. However, given what we do know and our government’s record I do not have much confidence.

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    • Carey Hurst profile image

      Carey Hurst 2 years ago

      What an extremely well written article Mr . Mowatt . It will be wonderful to see what else you write about. Very well written and thoughtful. Very insightful for myself. I am very glad I came across your Hubs.