Global trade as the solution to global trade

Don’t have a lot to say on this article, but I am supremely dumbfounded that Canada’s “industrial policy” budget has been followed up with a return to trade negotiations with Mercosur. While I have nothing against Mercosur, it seems like the Canadian government has not received the memo that the neoliberal era is over.

Even beyond that, is Mercosur not a direct competitor to Canada? Here we have a group of countries that include a large oil producer, a large beer producer, a large producer of aerospace products, large production of agricultural products, and generally in the same “periphery” zone of international trade that Canada plays with countries like the US and China. So where is the comparative advantages here if that is what is motivating these negotiations? Canada will specialize in oil, while Brazil will also specialize…in oil?

While there has been great fanfare at the national and provincial level that Canada is engaged in “industrial policy,” the combination of the recent federal budget in Canada and the announcement of these negotiations just seems like more of the same. Cognitive dissonance, but in the form of economic policy.

In recent years, there has been a growing acceptance that unfettered global trade has contributed to the global slowdown in economic, particularly in advanced industrial economies. Why? Essentially, to combat stagflation in the 1970s, countries like Canada exported jobs and imported unemployment to suppress wages, crush unions, and control prices. We also imported the very goods we used to produce domestically to meet those anti-inflationary ends. And while that satisfied decision makers for a long time, this dependence was turned on its head during the pandemic, when basic necessities like medical equipment were impossible to obtain due to the assumption that the global supply chain would also work to the benefit of advanced economies. (As an aside, anyone else having problems getting products that require microchips, say for something like a car?)

So once again – why are we doing this?

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