Dec 6, 2017 by Scott Garvey

The tricky world of international trade

Getting Canadian products into the international marketplace is getting complicated

At the 2015 Agritechnica show in Hanover Germany there were a lot of equipment brands from developing nations on display. Their spokespersons made no secret of the fact that they then saw the entire globe as a potential marketplace for their machines, and they were getting ready to try taking the world by storm—at least that was the stated plan. At this year’s Agritechnica, however, the most prominent, and seemingly the most bullish, of those brands, China-based Zoomlion, wasn’t even there, which a few people thought was odd.

That may be just a coincidence, but over the past few months it seems the environment around global trade has become a little weird, and it’s no exaggeration to say the lurking economic risks are making business planning for executives of global equipment and automotive brands far more difficult than it has been in decades. What is even more odd is U.S. stock markets are riding high, as many investors apparently see nothing but sunshine and dancing unicorns ahead.

This week’s meeting between our prime minister’s delegation and their Chinese counterparts has served to emphasize the uncertainty in trade negotiations with that country. It’s unclear just exactly what’s going on with that initiative.

During one of the days of the visit, reports emerged that at least one media member from Canada, was manhandled by Chinese security. Even the prime minister’s own photographer was said to be denied access to some of the official proceedings.

China certainly hasn’t ever been a beacon of transparency and openness. But even at a press conference in Canada several months ago, a Chinese official criticised journalists for asking legitimate questions. One of China’s state-sponsored newspapers has also come out this week with an overall criticism of Canadian media for suggesting this country should be cautious of dealing with a regime that puts a very low value on personal freedoms.

Those concerns, however, seem pretty justified.

A Canadian citizen has been imprisoned in China for what amounts to a civil business dispute resulting from an import shipment. We don’t always know what all the facts are in cases like this just from listening to the six o’clock news, but it’s clear that foreigners that want to do business there could face far more personal jeopardy than they would in any western nation where the rule of law demands better.

Even our own group of Canadian farm journalists who visited China last year had a similar, unnerving experience when a disagreement arose over payment to a Chinese company that had been touring them around. As it was explained to me, all had paid their fees before even arriving in China, but on the day they were to catch a flight home, the Chinese company claimed they were still owed money and the group was not permitted to leave until more money was paid. Only after getting out their credit cards were the journalists finally allowed to go to the airport.

All in all, the Canadian Government’s hesitation to acquiesce to Chinese preconditions for the start of free trade negotiations may be prudent, despite the potential upsides. It’s clear that much of the incentive to look for a deal with China is because the future of our business relationship with the U.S is on shaky ground—to say the least. The potential loss of NAFTA would be a severe economic shock to this country without other significant markets to fall back on.

The current U.S. president campaigned last year on a promise to kill NAFTA, and some of his most staunch support for that idiotic idea came from voters in states that most depend on NAFTA-related trade for millions of their jobs. Nevertheless, current efforts coming from the administration seem aimed at making good on that promise.

U.S. manufacturers are now becoming more vocal critics of the absurd NAFTA renegotiation demands their own government is making. Some critics have argued those unacceptable demands are likely just intended to be the foundation of an excuse to claim no deal can be reached that would “make America great again”. So a renewed NAFTA deal is far from certain.

“Regardless of whether this is a negotiating tactic, U.S. withdrawal from NAFTA would be cataclysmic for our industry,” reads a statement published by AEM, the Association of Equipment Manufacturers, published this week. And it points out that the demand for NAFTA to have a five-year sunset clause is nonsensical. There could be no serious investment in manufacturing when no one knows what will happen to trade regulations after only a few years.

The AEM article goes on to wonder if bogging NAFTA negotiations down with unreasonable demands might just be a Trumpian tactic, a la “Art of the Deal”. But even if it’s just that, manufacturers clearly don’t like the climate of uncertainty it creates in the near term.

But their criticism may be too little, too late. Extreme partisanship, “alternative facts” along with public and almost daily presidential derision of mainstream media that are reporting facts now seem to dominate the U.S. political landscape. It’s becoming all too reminiscent of the Chinese situation.

Evaluating our country’s trade options, it seems, is getting pretty complicated.

 

Scott

Scott Garvey

Scott Garvey


Grainews' machinery editor Scott Garvey follows trends and innovation in equipment technology, takes a look at new farm machinery offerings, tracks their performance and goes into the workshop to find better ways to keep them up and running.


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