Time to demand Fair Trade!

[Glen]

Why should Canada allow for the import of goods that are produced under unfair trade policies? Of course Ontario and the rest of the West have been loosing jobs, while China and the other developing nations have been growing substantially. With fixed currencies and prices our producers cannot compete. For me this is the number one issue in the current federal election campaign. The candidate in my riding whom promises the best to address this issue has my vote.

Here is an example, while not involving a Canadian manufacturer the issue is the same.........

"In late 2005, early 2006, the Chinese were selling galvanized, finished, threaded pipe for about $580 a ton," Bolt said. "My company [Wheatland Tube] was paying $600 a ton for steel and $200 a ton for zinc, and and they hadn't turned on the furnace and a worker hadn't walked in the door yet. The only way the Chinese could do that was by government subsidies, government interference in the market."

http://www.boston.com/news/politics...eel_country_voters_put_focus_on_trade_policy/

more here.....
http://www.manufacturethis.org/

 

[AlvinofDiaspar]

Yes, and we should have similiar laws on the export of Canadian commodities, as well as the flow of capital to and from these countries.

On top of that, we should not allow the various pillars of the Canadian economy to be controlled by any foreign nation, currently friendly or otherwise.

AoD

 

[Glen]

Yes, and we should have similiar laws on the export of Canadian commodities, as well as the flow of capital to and from these countries.

On top of that, we should not allow the various pillars of the Canadian economy to be controlled by any foreign nation, currently friendly or otherwise.

AoD

I agree! No foreign ownership for companies that are state controlled, in whole or in part. Selling Canadian commodity producers to have their production be resold, below cost, in developing countries has to be prevented. Short term it is better for us and even in the long term it is better for them (sustainable).

 

[AlvinofDiaspar]

I agree! No foreign ownership for companies that are state controlled, in whole or in part. Selling Canadian commodity producers to have their production be resold, below cost, in developing countries has to be prevented. Short term it is better for us and even in the long term it is better for them (sustainable).

No foreign majority ownership, period - the decision making authority of firms should be centred in Canada for Canadian interests. Whether they are developing or developed countries have no bearing on that.

 

[Glen]

Whether they are developing or developed countries have no bearing on that.

True. It has just been the case, as of late anyway, that it has been those nations whom are doing this. But I agree that the rules should be agnostic towards status.

 

[Dichotomy]

Well, we are seeing the fruits of the unbalanced 'free' trade. I knew this day was coming. We cannot become a nation that exports resources, then imports value-added finished goods while the only job creation we are seeing is in the 'service' sector.
The John Deere plant closing in Welland is a case in point: 700 high paying jobs are wiped out. Perhaps 10 years ago, analysts would have argued high paying professional jobs would have picked up the slack, but now we are going to see that that was a house of cards: not too many job openings for lawyers, accountants and paper pushers if there is no money left in the country, is there?
We've been told for the past 20 years that we are in an 'information' economy now. Hmmm. I guess we will see if we can actually eat information.

On a side note: I recently went lookingn for a new blender that was made in North America. Nada. Zip. They are all made in China. Great. Ditto for shoes. This is a heaping bowl of notgood.

 

[Glen]

IMO China itself is a house of cards. Now that they have reached a size where they have fully consumed their own production of raw materials and have become net importers, their ability to price fix such resources becomes increasingly expensive. As food, oil and coal etc. prices exceeded that of the fixed market prices internally, the cost to cover the spread became apparent. SinoPec was buying oil for more than $100.00 per barrel and being forced to sell finished petroleum products for less than $75 per barrel equivalent. I would wager that the slim (negative?) margins on dairy production also played a role in the current milk crisis.


This is where it gets interesting, China needs a minimum growth in GDP of 8% in order to placate/accommodate the throngs of citizens leaving the interior for the industrialized areas. This is seen as necessary to prevent social unrest. At the same time it is fighting inflation in order to satisfy the general population and keep its low cost producer advantage. So growth has exhausted the ability to internally control inflation, and now the cost of doing so must actually be paid for in real dollars. Controlling prices on your own producers is easy, it is impossible for externally sourced commodities.

Hyper inflation is coming to China and there is no where to run.

 

[AlvinofDiaspar]

Also keep in mind ther economy and current account surplus is heavily dependent upon exports - which will be taking a beating with the industrialized countries slipping into recession. That, and the inevitable backlash against free trade does not work in their favour.

AoD

 

[Glen]

Again I agree AoD. Furthermore someone in a position of power is going to finally realize that Free trade is impossible when one trading partner has a fixed currency.

 

[shumoon]

^Every country manipulates or has the capacity to manipulate its currency value. There are few examples of currency values just floating up and down freely without any government input. In a sense, most or all currencies are fixed to some degree.

In the case of China, its government simply gives a better rate of exchange than what the market would bear. China in effect shortchanges itself on every currency transaction. What it gets is a stable currency pegged to the US Dollar. The Saudi Riyal is also pegged to the dollar, but no one is complaining about that, despite the influence Saudia Arabia has on the price of petroleum.

 

[Dilla]

Again I agree AoD. Furthermore someone in a position of power is going to finally realize that Free trade is impossible when one trading partner has a fixed currency.

A lot of Laitn countries used to peg their currencies to the dollar, it had a lot to do with their undoing in the 90s. China might not have that difficult of a time, seeing as it now owns, what is it, over a trillion US dollars? They could just sell them off to lower the value of the dollar (somewhat) if it should suit them. At any rate, fixed currencies work in certain situations, for a time. Most countries that try it eventually have to give it up, and often times get screwed. It's can get very expensive very quickly.

"In late 2005, early 2006, the Chinese were selling galvanized, finished, threaded pipe for about $580 a ton," Bolt said. "My company [Wheatland Tube] was paying $600 a ton for steel and $200 a ton for zinc, and and they hadn't turned on the furnace and a worker hadn't walked in the door yet. The only way the Chinese could do that was by government subsidies, government interference in the market."

I'm not certain that government subsidies or interference is the ONLY way. A lack of government interference can also have this effect. If this product were mined in China, their labour laws (thousands of miners die there every year), environmental laws, and wages would significantly lower prices on even raw materials when compared to Canada. Also, assuming a mix of 50% of each material, the overall price of a tonne of overall material would be $400, even at the Canadian prices. The $600 and $200 is for a ton of each, or two tons of material.

 

[Dilla]

No foreign majority ownership, period - the decision making authority of firms should be centred in Canada for Canadian interests. Whether they are developing or developed countries have no bearing on that.

I'm not sure this is possible, or desirable. We quickly forget that Canadian firms have been quickly snapping up foreign entities themselves. Would all the currently foreign owed firms in Canada be grandfathered? Tearing up all WTO and free trade agreements would lead us into a legal unknown of, well, unknown proportions.
Moreover, the connection between firms centred in Canada and them acting for Canadian interests is assumed, and tenuous, at best. Firms go for profits, and rarely give two shits about the national interest.

 

[Dilla]

On a side note: I recently went lookingn for a new blender that was made in North America. Nada. Zip. They are all made in China. Great. Ditto for shoes. This is a heaping bowl of notgood.

I guess we will see if we can actually eat information.

Oh, please. Maybe we can't make 100% Canadian smoothies without a down-home blender, but we produce way more food than we eat, and a lot of other things, too. It's not as though the Chinese or whoever are suddenly going to stop sending blenders to us, they need the money. We don't need to make one of everything.

 

[Glen]

A lot of Laitn countries used to peg their currencies to the dollar, it had a lot to do with their undoing in the 90s. China might not have that difficult of a time, seeing as it now owns, what is it, over a trillion US dollars? They could just sell them off to lower the value of the dollar (somewhat) if it should suit them. At any rate, fixed currencies work in certain situations, for a time. Most countries that try it eventually have to give it up, and often times get screwed. It's can get very expensive very quickly.

Selling off quickly would devalue the underlying asset. Not wise when it is your asset to sell. Yes they could use it as a tool to lower the value of their dollar but that would create artificial inflation.

I'm not certain that government subsidies or interference is the ONLY way. A lack of government interference can also have this effect. If this product were mined in China, their labour laws (thousands of miners die there every year), environmental laws, and wages would significantly lower prices on even raw materials when compared to Canada. Also, assuming a mix of 50% of each material, the overall price of a tonne of overall material would be $400, even at the Canadian prices. The $600 and $200 is for a ton of each, or two tons of material.

The reason given was subsidy or interference. I know from first hand experience that Chinese coal producers are not allowed to freely export their coal. Even though they could get more money in the open market. They are forced, not given or a limited license for export, to sell nationally at a government set price.

I also know of a company here in the GTA that at one point had 300 employees making specialized tool parts. Their raw material prices are higher than finished products from China. They now have less than 30 employees.

 

[Dichotomy]

Oh, please. Maybe we can't make 100% Canadian smoothies without a down-home blender, but we produce way more food than we eat, and a lot of other things, too. It's not as though the Chinese or whoever are suddenly going to stop sending blenders to us, they need the money. We don't need to make one of everything.

Inglis, Electrohome, Westinghouse...these and many more were factories located in and around Toronto - all gone. These were high paying jobs, manufacturing value added hard goods to be shipped all over North America...gone. Now, so-called experts would have us believe that we are all going to have rosy desk jobs, making six figures, but I think that myth is going to come crashing around our ears in the next 6 months. The Bay St. layoffs are already happening enmasse.

I am not trying to be doom-and-gloom, but both Canada and the U.S. have been running huge current account deficits with Asia for quite some time. They have accumulated well over a trillion dollars in U.S. treasuries. This was not sustainable and I don't know why alarm bells didn't go off a couple years ago. Our diet for cheap foreign manufactured goods is going to bite us on the ass.

Oh, wait - I know: we demand choice. It is our 'right' to buy cheaper goods manufactured wherever we want, sold at Wal-Mart, and drive imported cars. Screw our neighbors jobs; we don't give a shit. We demand lower prices.