by Thomas Walkom
As Kathleen Wynne and Rachel Notley have reminded us, trade protectionism doesn’t easily go away. It is too popular.
Wynne, the embattled Ontario premier, is earning political points by threatening to retaliate against New York and other U.S. states that impose Buy American laws.
Alberta Premier Notley is doing much the same thing. But her target is British Columbia. In retaliation for its effort to stall a heavy-oil pipeline that Alberta wants, Notley has banned the sale of B.C. wine in her province.
All of this comes as Canadian politicians across the political spectrum swear allegiance to the theology of free trade.
Their unspoken assumption is that only ignoramuses like U.S. President Donald Trump think otherwise.
In fact, all kinds of savvy politicians flirt with trade protection. They do so because that’s what voters want.
The U.S. has had Buy American laws in place since 1933. They require government-funded projects to use American-made materials.
The 1994 North American Free Trade Agreement opened up some U.S. federal projects to Canadian
firms. The 2010 Canada-U.S. Agreement on Government Procurement potentially opened up some state projects.
But in both deals, the U.S demanded important exemptions that, in effect, kept its Buy American-
powers largely intact.
Wynne has been sparring with New York for a year. Last April, she persuaded the state to back away from a more ambitious Buy America measure. But in December, Gov. Andrew Cuomo signed a bill requiring New York to use only U.S.-made steel in road or bridge projects worth more than $1 million.
It was this second version that Wynne was responding to when she said Tuesday she would retaliate. She pledged to introduce a bill later this month that would give her government the authority to retaliate against any U.S. state deemed to have treated Ontario firms unfairly.
With an Ontario election due in June, it’s not a bad time to raise the flag.
So, too, in Alberta, where Notley’s New Democratic Party government is due to face the voters next year.
After B.C. had the audacity to interfere with Alberta’s desire for a new pipeline to carry oilsands bitumen
to the Pacific coast, Notley first threatened to rethink Alberta’s plan to buy hydroelectric power from
B.C.
It’s not clear how serious that threat was, given that Alberta needs B.C. power if Notley is to keep her promise to wean the province away from coal-fired electricity generation.
Then she hit on the politically brilliant idea of banning B.C. wines.
This move almost certainly runs afoul of any number of interprovincial trade agreements. But it punishes B.C. without hurting Albertans much. And it is popular.
Notley even won grudging praise from her arch-enemy, Conservative leader Jason Kenney.
Free-trade purists are not likely to be wowed by the Wynne-Notley actions. They will argue that protectionist measures, even those designed as retaliation, end up hurting consumers. They will warn that tit-for-tat retaliation risks spiralling out of control.
They will say that instead of retaliating, politicians would do better to develop even more comprehensive rules that explicitly require states, provinces and municipalities to adhere to the norms of free trade. The Comprehensive Economic and Trade Agreement between Canada and the European Union is often cited as a model here.
Such arguments, while academically sound, forget two things. First, free-trade deals are never pure. As the NAFTA talks are showing, the most powerful partner gets to call the shots. Almost invariably, the price of admission is submission.
Second, most people have an inchoate notion of fairness that often contradicts the tenets of free trade.
New Yorkers think their tax money should support the jobs of fellow Americans. Ontarians think their industries shouldn’t be put at a disadvantage. Albertans think outsiders who put the province’s jobs at risk deserve at least a punch in the snoot.
All of which, as Notley and Wynne know, are very understandable positions.
Thomas Walkom appears Monday, Wednesday and Friday.
Copyright 2018-Torstar Syndication Services
