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 — 

 

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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.

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