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Poli 243- March 18 Notes.docx

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Political Science
POLI 243
Mark Brawley

Poli 243 Lecture Notes March 18 2013 Canada pursues free trade with the United States Decision Making in Canada - When conservatives came to power in 1984, high up on the political agenda - Macdonald Commission (Royal Commission on the economic union and development prospects) 1985 o Try to formulate ideas for plans o Trade with the United States- should Canada try to pursue trade with the United States? o The commission endorses free trade - Tories prefers trade liberalization- but also to “tie the hands” of future governments o Smaller government is better o Market left alone is better- free trade o To unilaterally change your policies- you need to make it into an agreement to make sure that policy is cemented into future governments- made it into a treaty, instead of just passing something in parliament - What about conservative supporters? o Canadian manufacturer’s association (CMA) o Capital Class o People who are wealthier - When we see the position of the business interests, the way that they are voiced in their associations (CMA) and the Business council on national issues, there was not a strong consensus on “free trade agreement” o Some manufacturing thought it would be fine, others didn’t o Whether you were competitive with U.S. or not is dependent on the economies o Not all associations sided with free trade o Difficult time in endorsing free trade altogether - Tories government advocated towards free trade whole heartedly Interests and the Economics of trade liberalization - Counties have similar factor endowments, and similar levels of technology o Two of the richest and well endowed capital, and lots of land, high wages – competitive in the same sectors –agriculture, manufacturing, technology- there are not huge things at stake in liberalizing trade o Because of the geography, there is a lot at stake, the two countries are looking at their major trade partner  Lot of money at stake - Markets largely open on many goods already o Tariffs lowered, no longer successful in comparison to the past o Especially on manufactured goods – 6%-7% o Extremely low- will not prevent goods from being traded o Liberalizing trade to free trade between the two countries- manufactured goods won’t make a big difference o Other goods agriculture still had high tariffs and services - Economies of scale possibly an issue o How do you remain competitive in certain manufacturing sectors, if you don’t service a really large market?  E.O.I. –in order for a modern efficient factory, you need to produce a large factory  Canadian firms were worried, because they saw European economy succeeding (large market for their producers), serving a single market easily and having many consumers  American firms already had it - Exporting vs. Importing competing producers o Import competing firms in manufacturing were already facing American competition o Tariff reduction is going to affect the Canadian economy - Where do consumers figure in? o Consumers get goods at cheaper prices- affects profits of the producers o Everybody’s a consumer- do consumers organize in lobbying the government as consumers?  No! Trade liberalization is supposed to reduce what consumers pay for many goods in a marginalized fashion  Who’s organizing and lobbying the government?  Consumers don’t really care about specific goods  Ignore the interests of consumers in our models  Tories emphasize it, and promote it to the Canadian public, and show that the benefits are going to observable in the goods they purchase The Election of 1988 - Conservatives interested in regional electoral strategy o Solidifying it’s position in government o Quebec- source of frustration in the 1980s o Conservatives needed to appeal to them and support and the Western provinces o The main areas they worried about the free trade: Ontario the kinds of manufacturing that were worried with completion with the U.S. was in Ontario and not in the West  Core supporters of Tory government – liked free trade with the U.S.  Quebec was not convinced  Free trade was presented in multiple ways  If you look at the agreement and the exclusions, you will find a lot of catering of industry in Montreal o Jackets that have –fur- are not covered under NAFTA or Free trade agreement o Labor extensive textile industry  In Quebec, the separatists said free trade with U.S. is good  Develop more ties with Americans, and less ties with Canada  Endorsed the agreement, good for Quebec’s development and developing a position where they can be independent from the rest of Canada - Liberals turn out to be divided on the issue o Macdonald commission started under the liberal government o Start of the idea came from a liberal initiative o Many liberals said free trade was a good idea, not dangerous for Canada to go down that route, but others who disagreed  John Cartien – two things that Tories did in the 1980s that he would try to reverse  Free trade with the U.S.  Having the GST o Ideologically, are the liberals objecting to it?  Concerned with things more than Tories  How wills this affect social policy? Negotiations with the U.S - Bureaucratic Politics o Department of External Affairs (Canadian)  Who’s in charge of the negotiations?  State of commerce, state department – the special trade representative – keeps US grounded (U.S.) o Competing departments on the Canadian side
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