Friday, October 18, 2013

Is First Best? Another Post on Canada-EU Trade Agreement

I am not a scholar of International Political Economy, nor do I play one on TV, but I do have a few quibbles about how the new trade agreement between Canada and the EU is being discussed.  I already posted on the Cheese issue.  The second thing getting played up today is that this is the first trade agreement between a member of the G8 and the EU.  Let's examine that one. 

First, the G8 (group of eight) includes Canada, France, Germany, Italy, Japan, Russia, the UK, and the US.  Since France, Germany, Italy and the UK are members of the EU, Canada has only beaten out Japan, Russia, and the US.  Woot!  Maybe still impressive but not so sure.

Second, since an agreement is the result of a bargaining process, being the first to conclude an agreement can mean several things:
  • The agreement deals with less controversial, less combative, less conflictual issues, so an agreement could be reached faster.
  • The Canadian government had a great deal of leverage so it brought the EU to its collective knees faster.
  • The Canadian government was in a clear position of weakness and conceded whatever it is that the EU wanted quickly (cheesy concessions?).
  • The other governments interacting with the EU may have other things on their mind
    • Japan: recovering from the Tsunami
    • US: the joy that has been budget politics
    • Russia: um, Putin is more focused on appearing shirtless and such?
The simple point here is that being first may be either meaningless--that there was no race so coming in first is irrelevant; or it may actually be a bad thing, as Canada could have conceded far more for far less.

To be clear, I am not opposed to a free trade agreement.  Indeed, I am a big fan of lowering barriers especially between advanced countries.  I would like cheaper European products, and the Canadian markets would be better off with more competition and less collusion.  I am just taking shots at a silly way to portray the agreement. The big questions are: who wins, who loses, and how and NOT who is first.  

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