Friday, January 27, 2017

Will Trump Make Quebec Collateral Damage?

Sure as shooting, when rumours are swirling around the office and your manager or boss drops by your desk to tell you that your job is safe, it's probably time to polish up the old resumé.
So when a Donald Trump economic advisor, Stephen Schwarzman, said that Canada shouldn’t worry about the upcoming renegotiation of the North American Free Trade Agreement (NAFTA) it is perhaps time to worry just a tad.

Now truth be told, the $600 billion trade between Canada and the United States is fairly balanced, with Canada eking out a slight advantage of about $15 billion, an insignificant amount amounting to less than 2% and considering that a lot of what we export is oil products, on the manufacturing side, where the jobs are, America is ahead of the game vis-a-Canada.

Even Trump understands that his trade beef isn't with Canada, but that won't protect us from collateral damage when NAFTA is renegotiated.

Certainly poor Mexico seems to be in Trump's cross-hairs, not only over the border, but trade as well because of the $60 odd billion trade deficit in Mexico's favour.

Now I'll remind readers that a while back when the PQ proposed its infamous Charter of Values, it called for a ban on religious paraphernalia for employees in the public service, para public service and public education domain.
The real target was the Muslim hijab which sorely offended the PQ's' and many Quebecer's secular and feminist leanings.
But in order to make the law seem fair, equal and so more palatable, things like the Jewish kippah, Sikh turbans and ostentatious Christian crosses were also to be banned, a joke because you couldn't find more than a few dozen of offenders wearing these items in the public service.
Of course these people weren't the real target of the law but were deemed by the drafters to be acceptable collateral damage, sacrificed to make the law acceptable to the public, after all a law banning Muslim dress exclusively would never have a chance at acceptability.

And so in Trump's quest to punish Mexico, Canada will have to accept a small level of pain in order for his trade sanctions on Mexico to pass the smell test.

According to CTV Quebec exports $59 billion to the U.S. annually and imports $34 billion, creating a $25-billion trade surplus.

Although Canada has a trade surplus of about $15 billion in trade with the United States, it is in fact Quebec with a $25 billion surplus which is the real big winner in the trans border trade.
Remove Quebec from the equation and Canada would in fact have a $10 billion trade deficit with the USA
Fully half of Quebec's manufacturing exports are sent to the USA, and considering that oil is an untouchable for Trump (who just okayed the Keystone XL pipeline that will carry Alberta crude to the USA,) any trade sanction would likely hurt Quebec the most.

So where will Trump inflict this Canadian pain?

Certainly the ongoing dispute over lumber will be resolved to America's satisfaction, but a new initiative against Canada (and Quebec in particular) is likely to be the grandfathered protection of the entrenched dairy industry in Canada.

Quebec's monopolistic marketing agency which controls dairy production must be quaking in its boots at the prospect of coming under the mire of Trump's trade negotiators.
Quebec controls 37% of the Canadian dairy market which effectively bars imports from the United States.
Any attack on the dairy cartel that controls Canadian and particularly Quebec  production would be devastating because quite simply we cannot compete with American producers.

Prices remain high  for a variety of reasons, most importantly is inefficiency due to monopolistic policies but perversely because of the quotas attached to production. In order to produce milk, a dairy farmer must own or acquire quota, the right to produce milk, which costs between $25,000 and $45,000 per cow. I'm not kidding.
This quota saddles dairy farmers with enormous debt rendering competition with American farmers impossible.
But targeting this Canadian dairy monopoly is a no-brainer for Trump and already American dairy producers are urging the President to act.
"U.S. dairy organizations and the state departments of agriculture across the country turned to President-elect Donald Trump Wednesday to combat Canada’s existing and soon-to-be-expanded protectionist policies designed to block imports from the United States.
Joining in the plea to Trump are The International Dairy Foods Association (IDFA), the U.S. Dairy Export Council (USDEC), the National Milk Producers Federation, and The National Association of State Departments of Agriculture (NASDA).
In a letter the groups urge the president-elect and his key cabinet members to take immediate action."
Because of Quebec's disproportional percentage of the Canadian dairy market, it will be impacted to a much higher degree than other Canadian provinces and so conspiracy theorists might believe that Canadian anti-Quebec federal politicians will be inclined to give in because the pain will mostly be limited to Quebec.

I don't see any way out, so heeding Trump's henchmen telling us not to worry might not be wise, and in fact Quebec should probably worry a lot.

......Stay tuned.


  1. Well, leading the pack of alleged "anti-Quebec federal politicians" regarding the dairy industry is none other than Conservative Party leader candidate Maxime Bernier...a Quebecer!
    I'm on his email list and every other day there for a while came an email about how Bernier will do away with the whole dairy board. An unrepentent libertarian, Bernier believes freedom -- of the individual and of markets -- is exactly what Canada, generally, and Quebec, in particular, needs at this moment in history.
    And I couldn't agree with him more.
    Here's what I'd also like to see as part of any NAFTA renegotiations between Trump and Canada: a repeal of a Canadian law that racially discriminates against Americans. I am referring of course to section 23.1.a of the Canadian Charter of Rights and Freedoms which -- unlike the other 9 provinces -- is NOT in force in Quebec by virtue of 2. 59 of the 1982 Constitution Act. This means that immigrants that come to Quebec whose first language learned and spoken, such as the U.S. and the U.K., and become Canadian citizens do NOT have the constitutional right to send their kids to English language public schools in Quebec. Contrast this with the other nine provinces where s. 23.1.a is in force and where immigrants from French speaking countries can become citizens and DO have the constitutional right to send their kids to French publicly funded schools.
    Here's hoping it is part of renegotiations and that Quebec is forced to implement s.23.1.!

  2. Tony, Quebec just doesn't get it. Even during the recent killing of six Muslims in a Quebec City mosque, Philippe Couillard referred to "Canada and the Quebec Nation".

    Remember, Quebec is special, Quebec is distinct and Quebec is immune from the real world. Steven Colbert, the American talk show host and satirist, his his own "nation" and the Toronto Maple Leafs hockey club has "Leafs Nation", but to Quebec, it's its own "nation", i.e., separate and distinct from the rest of the world, even through it's a province in Canada.

    Quebec is the only political jurisdiction in North America where the Quebec Government sets milk prices. Whoever heard of a governmental jurisdiction setting commodity prices save perhaps in countries run by dictators? Our food prices are far too high because of these goddamn "marketing boards".

    There is a large farmers' market in the Waterloo/St. Jacobs area in Ontario I frequent in the Spring and Summer to get farm-fresh produce or items not regularly seen in grocery stores, and a few years ago a farmer informed me Ontario established a Potato Marketing Board and my knee jerk reaction was "Oh s--t!" I so interjected this right in front of this farmer as I knew it meant the price of potatoes was soon to go up, and the prices almost doubled within a couple of years.

    As for the United States of America, it's not as if their farmers don't come hat in hand to Washington. About 5-6 years ago there was a whole hoopla where Obama was as usual at war over congress with passing a bill to keep the price of a gallon of milk around $2.50 per gallon. Had a particular piece of legislation not been passed by the end of a particular calendar year, the subsidy keeping the price at that level would have evaporated and the price of milk would be closer to $7.00 per gallon.

    I'm not against Quebec's dairy lobby getting their cans kicked but good for they have far too much power now keeping the consumer hostage. Remember Parkay margarine's "butter" campaign in the states, and here as well until the dairy lobby said the use of the word "butter" was not allowed in a margarine commercial? Notice, too, how yellow dye cannot be added to colour margarine in Quebec because the dye makes it look too much like...y'know! Actually, that may be a blessing in disguise because there has been talk about food dyes not being so harmless. Nevertheless, only in Quebec can food processors not add dye to their margarine to look this unappetizing white, but hey, Quebec is special, isn't it?

    Mr. Sauga

    1. Growing up in the '60s and '70s in Quebec, I remember margarine as part of a family ritual. My father had a heart condition and in those days, butter was the #1 enemy. So all we had in the house was margarine...and because the law in Quebec was that it could NOT be yellow, it was sold with a pat of yellow dye in the middle of the plastic bag within which was the margarine. I was instructed by my mother every once in a while to take my turn "churning"; and of course this wasn't the churning of pure, wholesome cow-given butter but of kneading the goddamn margarine plastic bag so that the yellow dye could get evenly distributed throughout. And it was actually painful for my little 8 year old hands to do so.

      Then I remember going to summer camp and having toast every morning with real salted butter! And it was a revelation! I must have eaten 8 or 9 slices every morning. And I couldn't figure out what this marvelous product was that made my toast so delicious because, of course, the margarine at home was UNsalted, salt being bad for my father's condition.

      Today, at 62, I am still rebelling against this forced labour of my childhood and insist upon spreading liberal heaps and slabs of butter each morning on my English Muffins.