Canada’s Import Laws and Taxes Are Dumb

At least that seems like a reasonable conclusion when it takes the Canadian International Trade Tribunal, a Federal Appeals Court, and the Supreme Court of Canada to figure out… whether this or that tax applies to imported hockey gloves.

This all revolved around the question of whether hockey gloves are gloves or “other articles of plastic.” Because despite the pretence of “free trade”, these categories of goods are taxed differently

Only in a country with dumb laws and dumb taxes is such a costly and ridiculous decision-making process possible for such a dumb issue.

— Read more at National Post — 

 

Government Puts Salt on Fort Mac Wounds

With its politically motivated ‘anti-dumping’ laws and tariffs.

 

“Environmental activism is becoming a new form of protectionism.”

This is worth reading:

An article from summer 2014 that explores how U.S. interests fund anti-oil environmentalist radicals to selectively target Canadian oil production as a roundabout protectionist strategy.

The Tar Sands Campaign pointedly ignores the dozens of tankers bringing foreign oil into the United States and Eastern Canada on a daily basis. Evidently, the only tankers this campaign opposes are those that would break the U.S. market’s monopoly on Canadian oil exports.

But in North Dakota and Texas where oil production is booming, there is no multimillion-dollar campaign to stop or slow down the oil industry. As far as I can tell, the only country where there is a systematic, multimillion-dollar, foreign-funded campaign to choke the oil industry is Canada.

Whether intentional or not, environmental activism is becoming a new form of protectionism. By exaggerating risks and impacts, activists exert such political and social pressure that major infrastructure projects can be stalled or stopped altogether, land-locking Canadian oil and gas and keeping Canada over a barrel.

— Read more at Alberta Oil Magazine

The TPP Is a Bureaucratic Nightmare, Not Free Trade

After all the complaining about the Trans-Pacific Partnership, until now no one actually knew what it said.

The text of the agreement, negotiated in secret by state leaders with their armies of bureaucrats and lawyers, has finally been released.

Few critics who complained about the TPP will bother to read the agreement. It is a 5,544 page monstrosity of rules and regulations. Reading such a thing is so boring it may cause aneurysms.

But even a cursory examination reveals that despite all pretense suggesting otherwise, the TPP has nothing to do with free trade.

Free trade policies can be imposed unilaterally by any country at any time, without any complex multilateral agreements. This requires only a few things:

  • Legislatures must reduce or eliminate taxes on imports (tariffs) and import quotas.
  • Legislatures must reduce or eliminate subsidies and other support to their exporters (such as foreign aid requiring purchases of goods from domestic producers).
  • Governments must stop using customs agents to force citizens — at gunpoint, if necessary — to pay tax on goods they buy from other countries .

And that’s it.

In and of itself, a “free trade” document that exceeds 5,000 pages (more than twice as long as NAFTA!) must be regarded as an indicator of trade restrictions, regardless of what such an agreement is called .

Free trade policies can be summarized in less than a page: “Imports shall not be restricted. Exports shall not be restricted.” (You can make it a bit fancier if it’s really important to you that lawyers rack up a few more billable hours.)

The TPP, negotiated by the Canadian government in collaboration with the governments of the US, Mexico, Peru, Chile, Japan, Vietnam, Brunei, Singapore, Malaysia, New Zealand and Australia, is nothing less than the adoption of labyrinthine trade regulations and restrictions. Six other countries have expressed intent to join the TPP.

Rather than purely economic integration (which is good), the TPP represents political integration (which is bad) — harmonization of tax and regulatory structure across the member states and a decomposition of national sovereignty, especially in the realm of intellectual property. The TPP gives more power to those with the most political clout — which will never be Canadian citizens.

And the TPP allows unelected, power-hungry bureaucrats to bring lawsuits against Canadian companies if they ‘violate’ the agreement (the interpretation of which is not a simple matter).

Restrictions on trade imply only impoverishment. If Canada desires free trade, it should withdraw from the agreement and abolish all tariffs and quotas. Since exports pay for imports, this would enrich Canada and its trading partners.

And amazingly enough, this doesn’t require 5,000 pages of maze-like rules and regulations.

Another Reason for Protectionists to Hate China

Protectionists hate China because their wages are “too low,” and that’s “not fair.”

(Mostly it’s not fair for the Chinese, whose wages would rise if their government would not print so much of its currency to prop up the US dollar.)

Prime Minister Harper wants more tariffs on Chinese goods.

Wait until the protectionists see this video. “Child labor! Child abuse!” they will cry. They will plead for more tariffs.

Apparently the boy makes a salary of 4000 RMB, which is about $675 in Canadian dollars. Not bad.

European Union Wants to Tax Heavy Crude from Oil Sands

The European Union is falling apart. It is desperate for money. The bureaucrats in Brussels will tax anything they can.

Now the EU wants to modify its fuel quality directives, so that refiners who use oil that is “too dirty” (according to bureaucrats) must pay a tax.

Joe Oliver, the Natural Resource Minister of Canada, thinks this amounts to specifically targeted tax on Canadian oil-sands product. He says Canada will sue the EU at the World Trade Organization if they implement the changes, because the oil-sands crude isn’t any “dirtier” than many other crude imports which are not subject to the tax.

Firstly, let me note the hypocrisy when an official from Harper’s government whines about tariffs, while Harper’s government loves tariffs. “Oh yeah, taxing our stuff is bad; taxing your stuff is okay.” Typical government knavery.

On a more general level, yes the EU fuel quality directives and its associated penalties are bad for the economy. They are bad for Europe and bad for Canada. They reduce production of the taxed good and divert resources to government approved fuels. The government is in principle incapable of knowing to what extent a given quality of oil should be used.

Oil sands production is “dirty”, sure. The industry has a lot of flaws. Really, the CO2 emissions aren’t even a big deal, although that’s what everyone focuses on. But the environmental situation is still very screwed up, because Alberta is essentially a mini-petro-state. Property rights and laws of tort can rarely protect the environment because virtually all the pollution takes place on government land.

Even so, that is true of most oil. There is very little “clean” oil where you just turn on the tap and get light, sweet, succulent crude with minimal impact on the earth. Most of it is heavy and sour and difficult to get. Due to inept government regulation and interference with property rights, its production is environmentally problematic. So the European tax seems to be not just destructive, but arbitrary.

If the WTO agrees with Canada that the fuel directives constitutes an unjustified tax, they can’t force them to change it. It just means the Canadian government can put their own tariffs up to retaliate. That is bad for everyone. It would be better to just accept one dumb tax over which one has no controlnthan implement another dumb tax to go along with it. If the Canadian oil producer finds it harder to sell its oil, that’s already bad enough. Why should the Canadian consumer also be punished? It makes no sense, and only a politician or a shyster would advocate this.

Read more at Market Wire

Poloz Prepared to “Nourish” Economy. Translation: He Will Inflate

Poloz thinks it will be necessary to “nourish” the economy.

To a Keynesian central banker from the EDC, this means “buy assets” i.e. inflate.

The boneheaded idea that this strengthens the economy is characteristic of cranks throughout history.

Currency depreciation cannot ever boost the economy. If Poloz were to announce that he will start expanding rate of growth in the money supply, the outcome on the foreign exchange market would be for other currencies to appreciate versus the loonie. Domestic producers would want to increase exports due to increased international demand, and would borrow from commercial banks to fund production at interest rates lower than otherwise. Resources would shift away from other industries into Canadian export industries. Exporters would record higher profits, but in real terms, the citizens of Canada would be getting fewer imports for each export. Basically, Canada would gain more foreign exchange, but they would get getting fewer real goods in exchange. Canadians in general would therefore become poorer.

And those higher exporter profits? As time goes by, monetary expansion would cause prices to rise and those artificial, subsidized profits would disappear. The end result is a weaker economy where resources have been misallocated due to credit expansion and interference with market exchange rates, and along the way some politically-connected export industries would make a bit of extra money.

Poloz needs to read Mises:

The much talked about advantages which devaluation secures in foreign trade and tourism, are entirely due to the fact that the adjustment of domestic prices and wage rates to the state of affairs created by devaluation requires some time. As long as this adjustment process is not yet completed, exporting is encouraged and importing is discouraged. However, this merely means that in this interval the citizens of the devaluating country are getting less for what they are selling abroad and paying more for what they are buying abroad; concomitantly they must restrict their consumption. This effect may appear as a boon in the opinion of those for whom the balance of trade is the yardstick of a nation’s welfare. In plain language it is to be described in this way: The British citizen must export more British goods in order to buy that quantity of tea which he received before the devaluation for a smaller quantity of exported British goods.

The Canadian dollar will surely suffer under Poloz’s governance.

Australia to Join the World’s Orgy of Currency Debasement?

Australia’s mining boom is fading. Demand from China is slipping. The economy is going to contract. Yet their dollar is strengthening.

Central bankers are Keynesian-mercantilists that get bent out of shape when their own currencies are “too strong.” Especially when the economy is threatening to slow down. The bureaucrats at the RBA are no different.

What are they going to do? Try to hold down the price of the Australian dollar. They will join Europe, Japan, China, America, and the Swiss in the frenzy of currency debasement.

This is… a bad idea. Yet it is to be expected, as are the negative consequences it will create.

It might be best to start trading your Aussie dollars for something better. For other currencies, few good choices exist. I used to like the yen before Abenomics. Now I like the Singapore dollar.

Hardly any central bank  can resist racing to the bottom. I don’t think Australia’s can resist.

— Continue reading at Sunday Morning Herald —

Harper: Free Trade is a Tax Break for China

Harper was criticized the other day for wanting to increase taxes on various imported consumer goods.

There is no defense for raising taxes ever. This is even more important when Canada will be soon in recession. So what is Harper thinking? He rightly pointed out that the Liberals had voted against budgets in which there were some tiny tax cuts. Okay, sure, the Liberals lack any principled objection to higher taxes. What was his rebuttal to their criticism on the tariff issue?

“What the Liberal Party seems to stand for, Mr. Speaker, is that somehow we should give tax breaks to emerging economies like China.”

OMG, my brain just exploded from the unbelievable stupidity of that statement. I love a good cheap shot at a Canadian political party as much as the next guy, but Harper’s statement is just dumb.

So not taxing imports is a tax break to the countries from which we are buying those imports. So a free trade policy is a tax break for our trading partners.

That is incoherent, protectionist nonsense. First of all, the importer pays the tax, not the exporter. So China is not getting the tax break, per se. It is the one importing Chinese stuff.

But then this is kind of like saying it’s a “tax break” if the government taxes anything less than 100% of your income. The meaning of “tax break” is clearly being twisted. A “tax break” is meant to be a means of reducing a tax liability that already exists. The absence of a tax is not a tax break. Adding new taxes is not the same as taking away tax breaks. The underlying philosophy revealed in Harper’s words is that the government rightfully owns everyone else’s wealth, and letting people keep anything is a tax break. The whole notion is economically utterly perverse.

The case against protectionism is logically irrefutable. Harper, like virtually all politicians, is a mercantilist who thinks protectionism is good (for his friends), meaning he is no ally of capitalism and free trade. He is a classic Canadian crony prime minister.

— Read more at CBC News. —

LOL Justin Trudeau

Ok, so it is very possible that Justin Trudeau is an annoying, spoiled brat who hungers for power. Let us be charitable and see if we can find anything good about Justin Trudeau.

Now the leader of the Liberal Party, Trudeau spent his first day in the House of Commons attacking Harper over proposed tax hikes on imported goods, including iPods. That’s good! Of course, the NDP was also attacking Harper over these tariffs. Obviously the opposition is purely political. After all, just a few years ago the NDP was in favor of iPod taxes (and the Conservatives were opposed — politics makes me sick).

If Trudeau devoted himself to arguing against raising taxes, that would seriously be great. I would probably become a fan. Unfortunately, that will never happen. Trudeau actually loves taxation in general, because it is that on which the Canadian system of West-to-East transfer-payments depends. He must realize that the tariffs he is arguing against will in no small part pay for stuff in Quebec.

Speaking of which, people seem unclear of where he stands on the separatism issue. The Tory attack ad makes him seem to favor Quebec separation, but Trudeau had said he would only favor Quebec independence if “Harper succeeds in imposing his values on Canada,” or something.

I find that interesting. Firstly, since Trudeau blames Canada’s problems on Alberta, I am sure he would love to punish Alberta if he had an opportunity to impose his values on Canada. Would he then favor Alberta separatism if Albertans objected to his values? Of course not. Secondly, if Harper’s values are so bad for Canada (and they are), wouldn’t that justify Alberta independence as well? Again, Trudeau would say no — because even with Harper in charge, he would not want to jeopardize the essential status quo of the Canadian power structure, which depends on the extraction of wealth from any “have” provinces like Alberta (but they won’t be for long, because its government is quickly grinding them to ruin).

Basically, Justin Trudeau is a hypocrite and a jerk. I suspect he would happily argue in favor of tariffs doing so would benefit him politically. I also suspect he would never seriously support Quebec’s secession if the issue came up in real life.

Everyone should support free trade. It’s not even a question. But everyone should also support the freedom to choose separatism, because it is the ultimate check on centralized power.

Yet power-hungry politicians always want more territory under their dominion, not less. Trudeau really doesn’t support separatism at all. He wants a united Canada so that Ottawa can continue subsidizing the politically connected elite. He would never really support the independence of Quebec beyond a few oracular assertions, because then Quebec would actually have to cut its spending.

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