I can't believe I'm putting up what you might interpret as a pro-free-trade post. Twenty years ago, as a student journalist, I remember writing editorials ridiculing attempts by then Prime Minister Brian Mulroney to negotiate the Free Trade Agreement with the U.S. Now there are substantial — monumental, some might say — flaws with the agreement and its successor NAFTA as well as the approach U.S. administrations have taken since then to circumvent the spirit, if not the letter, of the agreement. (See Softwood Lumber) But the evidence seems to suggest that, since signing those agreements, Canada is a wealtheri country for the deal than it would have been without it. (And, it seems to me, just as sovereign. My concerns in 1985 centred on the potential loss of cultural autonomy through free trade. I concede that the effects of free trade on our cultural autonomy remain a hotly debated question but I don't think they're as bad as some predicted in 1985.)
Moreover, I tend to agree with those, like the spokesman for one of America's biggest companies, below, that one of the major mistakes policy makers made during the 1930s was raise trade barriers. And yet – though it signed an agreement at APEC in Peru saying it would not do so, the U.S. is poised to do just that, the Washington Post reports, partly in retaliation for perceived trade barriers recently erected in China and in Europe:
Nations including China and many in Europe are preparing to spend billions of dollars of taxpayer money on stimulus projects. American companies are angling for a piece of those pies, and retaliatory measures against U.S. companies, executives argue, could significantly complicate those efforts. This week, a European Commission spokesman threatened countermeasures if the Buy American provisions are approved.
“There is no company that is going to benefit more from the stimulus package than Caterpillar, but I am telling you that by embracing Buy American you are undermining our ability to export U.S. produced products overseas,” said Bill Lane, government affairs director for Caterpillar in Washington. More than half of Caterpillar's sales — including big-ticket items like construction cranes and land movers — are sold overseas.
“Any student of history will tell you that one of the most significant mistakes of the 1930s is when the U.S. embraced protectionism,” Lane said. “It had a cascading effect that ground world trade almost to a halt, and turned a one-year recession into the Great Depression.”
Lane sounds he might have been listening to Canada's prime minister address business leaders at APEC:
…let us remember what led to the Great Depression. It was not caused by a stock market crash. That was only the beginning. Policymakers pursued four sets of actions that defined that terrible decade. They allowed a rapid contraction of the banking system. They allowed widespread deflation as a consequence. They undertook to balance the books at all costs – raising taxes and contracting government economic activity at the one time when fiscal stimulus was absolutely essential. And, finally, they erected protectionist barriers in a short-sighted attempt to preserve jobs. These are mistakes the Government of Canada will not make.
Some of these things – letting badly run institutions fail, falling inflation, a balanced budget – would have been the right policies at a different time. But not building walls. Not closing doors. That is always wrong.