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POLI 243 (112)
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Lecture

Poli 243- March 18 Notes.docx

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Department
Political Science
Course
POLI 243
Professor
Mark Brawley
Semester
Winter

Description
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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