Posted by: Jordan | February 13, 2009

“Buy Canadian”

The issue of free trade is, and always has been, one of the main battleground issues between “left-wing” and “right-wing” politics (I personally think that these two terms are themselves meaningless, but that is another story), and therefore it always amazes me how public debates on the subject can continue to be so incredibly misleading. Specifically what I have in mind is the recent “buy American” provisions initially included in the economic stimulus plan, and the “buy Canadian” rejoinder provided by NDP leader Jack Layton in a recent Question Period.

The argument in support of economic nationalist stimulus packages is familiar: if taxpayer dollars are being spent to support national industries, then those taxpayer dollars ought to be required to be spent at home, in order to stimulate the domestic economy rather than being spent overseas. In other words, if my tax dollars are going to be spent on this stimulus package, I don’t want domestic producers spending all the cash on materials and labour in China. If the money was required to be spent here in Canada, so the argument goes, supplies and labour would have to come from other Canadian suppliers and workers, who in turn would have more income to buy more or invest, eventually moving us out of recession.

There is something of crucial importance that is missing from this argument. Protectionist policies like Mr. Layton’s “buy Canadian” policy would work, but only if we were the only country that enacted such a policy. If our stimulus dollars were required to be spent in Canada, yet our companies could freely export our products overseas (and to the US in particular), then it would, in principle, work like a charm. But this is never the case. Protectionist measures are virtually always met with protectionist measures, which means when retaliatory protectionist measure are put in place to counter our “buy Canadian” one, all the new products and services that Canadian producers are making with this stimulus money will have nowhere to go.

So why, at this crucial moment when the US is considering a “buy American” policy that would shut out Canadian producers from their largest market, would Mr. Layton suggest an antagonistic policy like “buy Canadian”? How would we begin to convince our biggest trade partner not to institute a “buy American” policy, while we turn around an institute one of our own? This is the other side of the argument that ideological anti-free traders like Mr. Layton conveniently miss, and it is a point on which I think they are far too infrequently pressed on.

This is not intended to be a pro-free trade rant, because in fact, I believe there are many instances where regulations and institutional countermeasures must exist alongside barrier-free trading. Rather, I think the consequences of the ideological anti-free trade view are rarely made as clear as they should be.

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Responses

  1. Well put, I think that Canadians need to understand the bigger picture and understand that we need to support a balance of both local and global economy. Each nations economy has an impact on every other , the sub prime mortgage crisis is a prime (no pun intended) example of this. I think free trade is a great idea but only when all parties are equally benefiting, in the case of NAFTA there is only one country, the US, that benefits, but that should be left for debate at another time.


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