tag:theconversation.com,2011:/us/topics/us-trade-relations-21825/articlesUS trade relations – The Conversation2022-01-06T13:18:14Ztag:theconversation.com,2011:article/1736292022-01-06T13:18:14Z2022-01-06T13:18:14ZThe ‘China shock’ of trade in the 2000s reverberates in US politics and economics – and warns of the dangers for fossil fuel workers<figure><img src="https://images.theconversation.com/files/437867/original/file-20211215-23-1hirha3.jpg?ixlib=rb-1.1.0&rect=95%2C53%2C3760%2C2383&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Containers are seen stacked at a port in Qingdao in China's eastern Shandong province on Jan. 14, 2020. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/containers-are-seen-stacked-at-a-port-in-qingdao-in-chinas-news-photo/1193594687?adppopup=true">STR/AFP via Getty Images</a></span></figcaption></figure><p>In December 1978, the Chinese leader <a href="https://www.britannica.com/biography/Deng-Xiaoping">Deng Xiaoping</a> introduced economic reforms that dramatically altered China’s economy by strengthening trade and cultural ties with the West.</p>
<p>Beginning in the 1990s, these reforms set China on a trajectory to become what it is today: a nation with a <a href="https://www.atlanticcouncil.org/content-series/the-big-story/the-2021-economic-scorecard-how-china-stacks-up-with-the-us-and-its-allies/">dynamic</a> and substantially market-driven economy that is also the world’s <a href="https://www.science.org/doi/10.1126/sciadv.aau9413">second-largest</a>. </p>
<p>U.S. residents have enjoyed lower-priced goods exported from China since then, but many communities that produced goods that competed with Chinese manufacturing exports suffered <a href="https://doi.org/10.1257/aer.103.6.2121">job losses and economic downturns</a>.</p>
<p>This negative effect on U.S. manufacturing jobs from Chinese exports is often called the “China Shock.” <a href="https://www.brookings.edu/bpea-articles/on-the-persistence-of-the-china-shock/">A recent study</a> has found that even though this shock leveled off around 2010, its harmful aftereffects continued for many years beyond, particularly in certain industries such as <a href="https://chinashock.info/">furniture, games and toys, and children’s toy bicycles or cars</a>.</p>
<p>I am an <a href="https://www.rit.edu/directory/aabgsh-amit-batabyal">economics professor</a> who has <a href="https://people.rit.edu/aabgsh/">conducted research</a> on China, and understanding when these trade effects ended allows me and other researchers to examine what long-term demographic aftershocks are occurring in U.S. communities and how best to deal with them. These policy prescriptions can be applied to other industries that are experiencing a rapid shift in employment because of macreconomic trends. </p>
<h2>How China gained so much so quickly</h2>
<p>As a part of its increased openness to the world, China joined the <a href="https://www.wto.org/index.htm">World Trade Organization</a> – the international body that sets global trade rules – in 2001. Believing that increasing economic liberalization would lead to <a href="https://www.penguinrandomhouse.com/books/298527/the-china-fantasy-by-james-mann/">political liberalization</a> in China, the U.S. began to engage in robust trade with the country. </p>
<p><a href="https://www.pearson.com/us/higher-education/program/Krugman-International-Trade-Theory-and-Policy-RENTAL-EDITION-11th-Edition/PGM1838560.html">International trade theory</a> teaches that free trade between nations makes them better off than not trading at all. And <a href="https://www.brookings.edu/bpea-articles/on-the-persistence-of-the-china-shock/">recent research</a> underscores that the economic gains to the U.S. from trade in general have been positive but small, adding about <a href="https://www.nber.org/digest/apr18/how-large-are-us-economys-gains-trade">2% to 8%</a> of <a href="https://www.bea.gov/data/gdp/gross-domestic-product">gross domestic product</a>. </p>
<p>Yet trade with China has given rise to a <a href="https://www.npr.org/sections/money/2021/11/02/1050999300/how-american-leaders-failed-to-help-workers-survive-the-china-shock">significant economic shock</a> involving job losses and declines in human welfare in <a href="https://chinashock.info/">several U.S. regions</a>, especially in the Deep South and in some Midwestern states. </p>
<p>The source of this shock is China’s <a href="https://www.aeaweb.org/articles?id=10.1257/aer.20131687">comparative advantage</a> in manufacturing, specifically in goods that are labor-intensive. <a href="https://www.investopedia.com/terms/c/comparativeadvantage.asp">Comparative advantage</a> is a nation’s ability to produce a good or service at a lower <a href="https://www.econlib.org/library/Topics/College/opportunitycost.html">cost</a> than its trading partners. China has an <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/twec.12619">abundant supply</a> of labor relative to capital and natural resources.</p>
<p>As China began to liberalize its foreign trade, there was a dramatic surge in manufacturing exports and an accompanying economic shock to the U.S. economy. That’s because U.S.-produced goods could not compete with the inexpensive Chinese goods that were flooding the market.</p>
<p>The <a href="https://docs.house.gov/meetings/EF/EF00/20210928/114084/HHRG-117-EF00-20210928-SD002.pdf">U.S. economy lost 1.5 million manufacturing jobs</a> between 1980 and 2000, and <a href="https://docs.house.gov/meetings/EF/EF00/20210928/114084/HHRG-117-EF00-20210928-SD002.pdf">5 million more</a> between 2000 and 2017. </p>
<p>This fall in manufacturing employment was <a href="https://news.mit.edu/2021/david-autor-china-shock-persists-1206">not accompanied</a> with the same number of job gains in other sectors of the U.S. economy. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/437869/original/file-20211215-6487-15iiv9h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Workers build desks." src="https://images.theconversation.com/files/437869/original/file-20211215-6487-15iiv9h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/437869/original/file-20211215-6487-15iiv9h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/437869/original/file-20211215-6487-15iiv9h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/437869/original/file-20211215-6487-15iiv9h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/437869/original/file-20211215-6487-15iiv9h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/437869/original/file-20211215-6487-15iiv9h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/437869/original/file-20211215-6487-15iiv9h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Workers produce desks for export to the U.S. at a factory in Nantong in China’s eastern Jiangsu province on Sept. 4, 2019.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/workers-produce-desks-for-export-to-the-us-france-germany-news-photo/1165927293?adppopup=true">STR/AFP via Getty Images</a></span>
</figcaption>
</figure>
<h2>The impact endures</h2>
<p>Today, even with the China manufacturing surge ending, its effects in the U.S. have endured.</p>
<p>A decade after the conclusion of the China trade shock in 2010, the U.S. still has a large number of local economies in which studies show social structures, including the institution of marriage, are fraying because <a href="https://www.aeaweb.org/articles?id=10.1257/aeri.20180010">workers have lost their jobs</a> and don’t have <a href="https://econpapers.repec.org/article/uwpjhriss/v_3a51_3ay_3a2016_3ai_3a1_3ap_3a1-29.htm">stable salaries they can live on</a>.</p>
<p>This lack of wages has subsequently resulted in declines in the demand for local goods and services and in <a href="https://www.aeaweb.org/articles?id=10.1257/pol.20150578">housing values and property tax revenues</a>. There has also been <a href="https://www.aeaweb.org/articles?id=10.1257/aer.103.6.2121">an increase</a> in the number of people on government assistance such as Medicaid.</p>
<h2>How to help communities still suffering</h2>
<p><a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2358751">Economists generally support</a> “people-based” over “place-based” policies. <a href="https://www.lincolninst.edu/sites/default/files/pubfiles/1403_719_lla080702.pdf">People-based policies</a> focus on distressed people, with a frequent focus on retraining, while place-based policies concentrate on investing in communities where workers live, such as revitalizing downtowns. Investment in the communities hit hard by Chinese imports have tended to focus on people-based policies because economists <a href="https://www.publicaffairsbooks.com/titles/abhijit-v-banerjee/good-economics-for-hard-times/9781541762879/">generally believe that investing in workers can help them move from distressed places with little job opportunity</a> to new places with better job markets, schools and other amenities.</p>
<p>The best-known people-based U.S. government program that assists workers displaced by trade competition is the <a href="https://www.dol.gov/agencies/eta/tradeact">Trade Adjustment Assistance for Workers</a>. It helps workers with job training, relocation assistance, subsidized health insurance and extended unemployment benefits. </p>
<p>Yet, relative to the magnitude of the job losses, the <a href="https://www.nytimes.com/2019/10/26/opinion/sunday/duflo-banerjee-economic-incentives.html">program is small</a>, providing too little relief to most workers who lost their jobs because of import competition in the 1990s and 2000s. </p>
<p>The Nobel laureates <a href="https://www.brookings.edu/blog/the-avenue/2019/11/12/displaced-workers-need-more-than-what-economists-are-suggesting/">Abhijit Banerjee and Esther Duflo have pointed out</a> that the TAA program needs to be expanded significantly. Although the House of Representatives is <a href="https://tcf.org/content/commentary/house-leaders-advance-bold-plan-revitalize-trade-adjustment-assistance/?agreed=1&agreed=1">taking steps</a> to reauthorize and expand the TAA program, it is still too early to tell what the final legislation will look like. </p>
<h2>Revisiting place-based policies</h2>
<p>Even though economists favor people-based policies, the evidence shows that those laid off as a result of import competition from China frequently <a href="https://www.forbes.com/sites/adammillsap/2016/12/21/people-are-giving-up-instead-of-moving-to-opportunity-and-thats-not-good/?sh=8b18dd4c562f">don’t move</a> because of unaffordable housing, child care costs and the uncertainties associated with finding a new job. </p>
<p>And left-behind places never completely die. Instead, in <a href="https://www.theatlantic.com/business/archive/2017/03/manufacturing-marriage-family/518280/">such places</a> fewer people marry and have children. More children live in poverty, alcohol and drug abuse go up and young men are less likely to graduate from college.</p>
<p>Therefore, a rethinking of economic policy is likely now needed in the U.S. to focus on two key points: the need to provide adequate assistance to workers in mass layoff events and to recognize that this assistance, quite frequently, will need to be place-based.</p>
<h2>Two lessons for the future</h2>
<p>Like the China trade shock, the <a href="https://www.eia.gov/todayinenergy/detail.php?id=44115">decline of the coal industry</a> in the U.S. beginning in 1980 and the <a href="https://www.federalreservehistory.org/essays/great-recession-of-200709">Great Recession</a>, from 2007 to 2009, were also mass layoff events.</p>
<p>Although local economies exposed to the <a href="https://www.nber.org/papers/w29401">Great Recession recovered</a> their pre-recession employment rates quickly, the decline of coal and the China trade shock both <a href="https://www.nytimes.com/2021/04/23/opinion/climate-coal-china-us.html">gave rise to</a> long-lasting job losses, reduced incomes, and slow population declines. </p>
<p>Policymakers could apply the lessons learned from this trade shock to respond effectively to the next likely mass layoff event.</p>
<p>As economies transition out of fossil fuels, we will continue to see <a href="https://www.brookings.edu/bpea-articles/the-employment-impact-of-a-green-fiscal-push/">job losses</a> in the coal mining and oil industries. </p>
<p>Although the increased use of renewable energy is likely to <a href="https://www.edf.org/energy/clean-energy-jobs">generate new jobs</a>, there is no guarantee that they will be anywhere near where the localized job losses are occurring. Hence, the prospect of large-scale, localized job losses remains. And new policies are needed to enhance employment growth in regions hurt by prolonged joblessness. </p>
<p>The evidence in the <a href="https://doi.org/10.1111/ajps.12358">U.S. and Europe</a> shows that political support for populist nationalists tends to be greater in regions that have suffered large, trade-led job losses. </p>
<p>If policies that promote job growth in distressed regions are not implemented, we may see more populist nationalists in power in the U.S.</p><img src="https://counter.theconversation.com/content/173629/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amitrajeet A. Batabyal does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Large-scale job losses in the US due to trade with China will lead to enduring demographic and political aftershocks without the implementation of policies that promote widespread job growth.Amitrajeet A. Batabyal, Arthur J. Gosnell Professor of Economics, Rochester Institute of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/963952018-05-16T10:26:42Z2018-05-16T10:26:42ZUS and Europe face an ‘increasingly loveless marriage’ after Trump’s Iran deal withdrawal<p>Beyond its potentially <a href="https://theconversation.com/pompeo-confirmation-makes-mideast-war-more-likely-95698">dramatic consequences for Middle East stability</a>, Trump’s May 8 decision to <a href="https://www.nytimes.com/2018/05/08/world/middleeast/trump-iran-nuclear-deal.html">withdraw from the Iran nuclear deal</a> has also damaged the United States’ relations with its European allies.</p>
<p>France, Germany and the United Kingdom worked with the Obama administration to barter the <a href="https://www.nytimes.com/2015/07/15/world/middleeast/iran-nuclear-deal-is-reached-after-long-negotiations.html">United Nations-approved Iran agreement in 2015</a>. Now, the three European signatories must figure out how to save that deal and continue working with a U.S. president who has mostly shown them contempt. </p>
<p>As a scholar of transatlantic relations who has followed <a href="http://www.europeaninstitute.org/index.php/252-european-affairs/ea-may-2015/2066-auto-generate-from-title">the Iran deal for years</a>, I am frankly skeptical that Europe can manage either. </p>
<h2>Last-minute negotiations</h2>
<p>The United Kingdom, France and Germany tried desperately to convince the U.S. not to withdraw from the Iran deal, which is a signature achievement of EU foreign policy <a href="http://www.europeaninstitute.org/index.php/252-european-affairs/ea-may-2015/2066-auto-generate-from-title">that took a decade of painful diplomatic efforts to seal</a>. </p>
<p>Starting in January, senior European officials <a href="https://www.esquire.com/news-politics/a20631721/iran-deal-pullout-consequences-ivo-daalder/?org=1364&lvl=100&ite=1546&lea=76267&ctr=0&par=1&trk=">began meeting frequently with their American counterparts</a> to address Trump’s objections to the deal, which is designed to prevent Iran from developing nuclear weapons. </p>
<p>Since his 2016 presidential campaign, Trump has scorned restrictions in the deal that diminished over time, condemned Iran’s ballistic missile program and criticized Iran’s generally <a href="https://www.theatlantic.com/international/archive/2018/04/iran-syria-israel/558080/">bellicose behavior across the Middle East</a>.</p>
<p>In Europe’s view, the nuclear deal is working. The <a href="https://www.iaea.org/newscenter/news/iran-is-implementing-nuclear-related-jcpoa-commitments-director-general-amano-tells-iaea-board">International Atomic Energy Agency</a> has confirmed that Tehran has complied with the terms of the accord, halting uranium-enrichment activities and submitting to invasive international inspections.</p>
<p>British Prime Minister Theresa May asked Congress to <a href="https://www.cnn.com/2017/01/26/politics/theresa-may-us-speech/index.html">stand by the deal in January</a>. In late April, <a href="https://theconversation.com/macron-trump-summit-has-high-stakes-for-frances-embattled-leader-95022">French President Emmanuel Macron</a> and German Chancellor Angela Merkel even <a href="https://mobile.nytimes.com/2018/05/09/world/europe/europe-iran-trump.html">traveled to Washington</a> to personally urge Trump not to abandon it. </p>
<p>Their efforts came to naught.</p>
<h2>How to save the deal</h2>
<p>The remaining signatories – Russia, China and the three European nations – are now in flurry of diplomatic activity trying to salvage their agreement. </p>
<p>An American withdrawal endangers its survival because of the country’s sheer economic muscle. Trump’s threat to impose “<a href="https://www.bloomberg.com/news/articles/2018-05-15/treasury-warns-on-iran-sanctions-despite-trump-s-zte-reversal">the highest level of sanctions</a>” – targeting both Iran and nations that do business there – could easily make the deal unworkable. </p>
<p>The Iran agreement is essentially a quid pro quo. Signatories lifted sanctions, offering Iran the prospect of economic opportunities, in exchange for Tehran agreeing to scale back its nuclear program. If European powers cannot deliver <a href="https://www.ft.com/content/879a4c88-52d6-11e8-b3ee-41e0209208ec">real economic benefits</a>, Iran may declare the deal dead. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/219109/original/file-20180515-195305-e8hf1l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/219109/original/file-20180515-195305-e8hf1l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/219109/original/file-20180515-195305-e8hf1l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/219109/original/file-20180515-195305-e8hf1l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/219109/original/file-20180515-195305-e8hf1l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/219109/original/file-20180515-195305-e8hf1l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/219109/original/file-20180515-195305-e8hf1l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Protesters react to Donald Trump’s withdrawal from the Iran nuclear deal outside the former U.S. Embassy in Tehran.</span>
<span class="attribution"><span class="source">AP Photo/Vahid Salemi</span></span>
</figcaption>
</figure>
<p>If that happened, Iran would most likely resume uranium enrichment. That step, <a href="https://theconversation.com/pompeo-confirmation-makes-mideast-war-more-likely-95698">analysts say</a>, could trigger more <a href="https://carnegieeurope.eu/2018/05/11/europe-should-stand-its-ground-after-u.s.-iran-deal-pullout-pub-76321">violence in the already volatile Mideast</a> – a region just a stone’s throw from southern Europe. </p>
<h2>Defending European business interests</h2>
<p>In addition to re-imposing sanctions on Iran, the White House has given <a href="https://www.theguardian.com/world/2018/may/13/us-sanctions-european-countries-iran-deal-donald-trump">foreign firms operating in Iran</a> up to 180 days to wind down business there or else be barred from the U.S. banking and financial system. </p>
<p>These measures could <a href="http://www.bbc.com/news/world-europe-44080723">hit several major European firms particularly hard</a>. The French oil company Total and German industrial manufacturer Siemens, to name a few, both recently signed major contracts in Iran. They may be able to appeal <a href="https://www.ft.com/content/879a4c88-52d6-11e8-b3ee-41e0209208ec">to the U.S. government for exemptions on a case-by-case basis</a>.</p>
<p>To protect European businesses from punitive U.S. sanctions, one option would be to revive and amend <a href="https://www.theguardian.com/world/2018/may/09/europes-clash-with-trump-over-iran-nuclear-deal-is-a-durability-test">the EU’s 1996 blocking regulation</a>. That rule, passed after the U.S. Congress levied sanctions against Iran and Libya, shielded European firms from U.S. secondary sanctions by declaring them unenforceable within the EU.</p>
<p>The European Investment Bank could also consider providing smaller firms – those without a stake in the U.S. market, say – <a href="https://carnegieeurope.eu/2018/05/11/europe-should-stand-its-ground-after-u.s.-iran-deal-pullout-pub-76321">credit lines and financing</a> to create a safer, more stable environment for doing business with Iran.</p>
<p>The most extreme retaliatory option would be for the <a href="http://www.ecfr.eu/article/commentary_after_trump_iran_decision_time_for_europe_to_step_up">EU to levy sanctions on U.S. assets in Europe</a>. </p>
<p>As Jeremy Shapiro of the European Council on Foreign Relations recently <a href="https://mobile.nytimes.com/2018/05/09/world/europe/europe-iran-trump.html">commented in The New York Times</a>, Europe must now decide “not if they stick with the deal but will they stand up to the American effort to unravel it.” </p>
<h2>What next for transatlantic relations?</h2>
<p>Ultimately, I believe that European companies would be <a href="https://mobile.nytimes.com/2018/05/09/world/europe/europe-iran-trump.html">wary of risking U.S. sanctions</a>. Trade with Iran has rapidly increased since the deal went into effect in 2016, but <a href="http://www.bbc.com/news/world-europe-44080723">it still represents less than 1 percent of the EU’s global trade</a>. The U.S. is the EU’s largest trading partner, <a href="http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113465.pdf">responsible for nearly 17 percent of all trade</a>. </p>
<p><a href="https://www.theguardian.com/world/2018/may/09/europes-clash-with-trump-over-iran-nuclear-deal-is-a-durability-test">Diplomatic slights aside</a>, in purely business terms, France, Germany and the U.K. know that the U.S. can take away far more than Iran can give. </p>
<p>Macron, Merkel and May thus face a dilemma: how to salvage their relationship with a U.S. president <a href="https://www.bloomberg.com/view/articles/2018-05-10/europe-won-t-rally-around-u-s-sanctions-against-iran">who has just demonstrated exactly how little he thinks of them</a>.</p>
<p>Trump’s jettison of the nuclear accord is the latest in a series of rebukes to Europe. Since taking office, Trump has moved the U.S. Embassy in Israel to Jerusalem – <a href="https://www.axios.com/hungary-czech-romania-block-eu-statement-against-embassy-move-jerusalem-6b85f6bb-8861-4dab-8473-e542196d1368.html">which the EU opposed</a> – and <a href="https://www.whitehouse.gov/briefings-statements/statement-president-trump-paris-climate-accord/">withdrawn from the Paris climate agreement</a>. He also wants to <a href="https://www.bloomberg.com/news/articles/2018-04-30/trump-keeps-allies-guessing-on-steel-tariffs-as-deadline-looms">impose tariffs on European steel and aluminum imports</a>. </p>
<p>European leaders could limit discord by appeasing Trump, while waiting out his administration. Europe remains <a href="https://www.ft.com/content/879a4c88-52d6-11e8-b3ee-41e0209208ec">dependent on the U.S. for its security</a>. And, in any case, getting all 28 members of the EU to agree to take any punitive measures against the U.S. would be a tall order.</p>
<p>In the meantime, the president’s “America First” foreign policy could significantly damage the <a href="https://www.nytimes.com/2018/05/09/world/europe/europe-iran-trump.html">multilateral international order to which the Europeans are committed</a>. </p>
<p>My best guess is that the U.S.-Europe relationship will become an increasingly loveless marriage. </p>
<p>These old allies will cooperate on a transactional basis on <a href="http://www.dw.com/en/french-president-emmanuel-macron-for-broader-iran-deal/a-43716203">areas of common interest</a>, such as counterterrorism and trade. But the shared world vision that has defined this partnership since World War II could very well be lost.</p><img src="https://counter.theconversation.com/content/96395/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Garret Martin does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Iran nuclear deal will struggle to survive the damage done when Trump pulled the US out on May 8. So will US-Europe relations.Garret Martin, Professorial Lecturer, American University School of International ServiceLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/906432018-02-02T12:25:17Z2018-02-02T12:25:17ZMexico negotiates NAFTA with painful history in mind – and elections on the way<p>As the latest round of negotiations in Montreal comes to an end, the future of the North American Free Trade Agreement (NAFTA) is still up in the air. Donald Trump’s threat of a unilateral US withdrawal hangs over the talks, despite some <a href="https://www.nytimes.com/2018/01/29/us/politics/nafta-talks-conclude-in-montreal-with-signs-of-progress-and-risk.html">conciliatory noises</a> from his administration. </p>
<p>Although a premature end to NAFTA would certainly pose serious problems for the Mexican economy (as well as those of the US and Canada), an abrupt end to North American integration could force just the sort of shake-up the country needs.</p>
<p>The end of NAFTA would force Mexico to seek out new opportunities south, east and west. Conversely, it might also turn the country into a more inward-looking economy, spurring badly needed development of a domestic market. All these, of course, would involve risky political and economic transitions. Hence, a fair and creative renegotiated NAFTA would be the best outcome for all parties involved. </p>
<p>Certainly NAFTA is far from perfect, and it has had some unintended economic consequences – the US, for one, has <a href="https://www.washingtonpost.com/opinions/wilbur-ross-these-nafta-rules-are-killing-our-jobs/2017/09/21/657bee58-9ee6-11e7-9083-fbfddf6804c2_story.html">valid concerns about the rules of origin</a> it applies to certain goods. Yet if the three countries can get beyond a mere obsession with <a href="https://theconversation.com/three-big-problems-with-trumps-new-nafta-plan-81301">trade deficits</a>, a fully modernised deal could be the best solution.</p>
<p>Of the three countries, Mexico finds itself in the trickiest situation: it wants NAFTA – but not at any cost. But at the same time, its position is much stronger than the one it found itself in some 30 years ago.</p>
<h2>A bad bet</h2>
<p>During the original negotiations in the early 1990s, the US in particular was reluctant to make the treaty seem in any way political. It worked zealously to avoid any appearance it was compromising its sovereignty, pursuing the deal on the post-Cold War credo that economic liberalisation alone could guarantee democratic evolution. </p>
<p>Thus, instead of becoming a positive factor in the struggle for human rights and democracy, signing NAFTA allowed Mexico’s undemocratic Industrial Revolutionary Party (PRI) regime to “indulge” in some of its more traditional repressive practices as its international image improved.</p>
<p>But at the same time, the regime staked its very survival on the agreement – betting that it would help redefine Mexico’s economy, clean up the government’s image abroad and drastically improve living standards. As it turned out, only the first two outcomes materialised and the PRI’s gamble backfired spectacularly.</p>
<p>Instead of drastically improving living standards, NAFTA contributed (through hasty financialisation and liberalisation) to the peso currency crisis of December 1994. The sudden devaluation of the currency led to a drastic fall in real wages, and the PRI could no longer claim to be the best party to manage the economy.</p>
<p>There are plenty of lessons to learn here. The expected benefits of NAFTA were at first deliberately “oversold” to the Mexican people, and the resulting optimism quite probably contributed towards the country’s democratisation. Two and a half decades on, this overegging is no longer necessary. Instead, Mexico’s best negotiating position would be a <a href="https://www.bloomberg.com/news/articles/2017-03-14/top-mexico-candidate-blasts-trump-says-can-t-wait-to-redo-nafta">moderate approach</a> that treats NAFTA as beneficial, but not indispensable. </p>
<p>Moderation would help avoid the sort of crisis that beset Mexico’s economy in the 1990s. While that crisis did at least push the PRI out of the presidency and force a political liberalisation, few would want to repeat the experience.</p>
<p>What’s really different today is the attitude of Mexico’s two partners. The Trump administration clearly has very little interest in Mexico’s political, economic or social development, and is more keen on its own unilateral goals. Canada’s position is less clear, but it is also unlikely that its prime minister, Justin Trudeau, would be willing to jeopardise NAFTA for something as irrelevant as Mexico’s democratic strengthening. The possibility to do so, however, is still there.</p>
<h2>A stronger hand</h2>
<p>Whereas NAFTA was originally negotiated by an undemocratic Mexican government, most Mexicans today want to live in an open, outward-looking country. As far as they’re concerned, NAFTA is still tarred with its undemocratic legacy. As such, even if Canada and the US are eager to finalise the renegotiation before difficult elections appear on the horizon, delaying the renegotiation until after Mexico’s 2018 presidential election may play to Mexico’s advantage.</p>
<p>Yes, there is a risk that the (<a href="https://uk.reuters.com/article/uk-mexico-election-amlo/mexico-presidential-race-roiled-as-leftist-front-runner-embraces-right-wing-party-idUKKBN1EA00P">arguably</a>) left-wing populist Andrés Manuel López Obrador wins the election and reneges whatever may have been achieved until then, though he has yet to come out against NAFTA in principle, whether renegotiated or not. But postponing the end of the renegotiation until after the election would help earn NAFTA more democratic legitimacy in Mexico; candidates will have to declare their preferences, and whoever ends up winning the election can rightly claim a direct democratic mandate for their vision. And that in turn will surely strengthen Mexico’s negotiating position. </p>
<p>Finally, this is an excellent opportunity to strengthen the so-called “third leg” of the triangle: Mexican-Canadian relations. For decades, NAFTA worked less like a trilateral treaty than two bilateral ones: a US-Mexico and a US-Canada rather than a proper trilateral one. Traditionally, Mexico and Canada have been reluctant to cooperate closely for fear of angering the colossus between them. </p>
<p>But with Trump at the helm, the colossus is already angry and unwilling to co-operate. The time has come for Mexico and Canada to forge a much closer and stronger relationship, joining forces to defend the North American project. But whether that project can hold together after a difficult quarter century still hangs in the balance.</p><img src="https://counter.theconversation.com/content/90643/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Pablo Calderon-Martinez does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The North American Free Trade Agreement forced Mexico into a crisis that turned into an opportunity. Could the same happen again?Pablo Calderon-Martinez, Lecturer in Spanish, Aston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/847472017-10-09T09:24:30Z2017-10-09T09:24:30ZFive ways Donald Trump is rolling back the Obama years – or trying to<p>In the absence of any clear ideology associated with Donald Trump’s US presidency, it does seem he has at least one obvious priority that transcends the hype and spin: he is determined to <a href="http://edition.cnn.com/2017/09/21/politics/donald-trump-barack-obama-legacy/index.html">undo his predecessor’s legacy</a>. </p>
<p>Trump’s efforts to “repeal and replace” have had mixed success, just as Obama’s efforts to build that legacy in the first place were stymied by the 2010 Republican takeover of the House of Representatives. Obama did push <a href="https://www.washingtonpost.com/news/monkey-cage/wp/2014/08/05/executive-directives-and-misdirection/?utm_term=.8ea73fd5719c">executive branch authority to its limits</a> – most notably when it came to the diplomatic thaw with Cuba – but relying on administrative powers to bring about change was a second-best way of building a robust legacy. </p>
<p>Eight months into his term, Trump has added no major legislative achievements to his name, but he too has used executive powers to chip away at the achievements of his predecessor. Here are some examples of where his administration has tried to roll things back so far.</p>
<h2>Healthcare</h2>
<p>As a candidate Trump broke with conservative orthodoxy on some key social policy issues, notably in his support for the government-run Medicare and social security programmes. But he joined with Republicans to vociferously denounce Obama’s signature domestic policy achievement, the <a href="https://www.nytimes.com/2016/10/26/us/politics/hillary-clinton-donald-trump-affordable-care-act.html">Affordable Care Act</a>, better known as “Obamacare”. </p>
<p>Through 2017 congressional Republicans advanced various proposals and the House passed the American HealthCare Act in May, only for this bill to die a death in the Senate. The GOP’s narrow 52–48 majority means there is little room for internal party dissent, giving some voice to the few remaining moderates. The final week in September brought the year’s <a href="https://www.nytimes.com/2017/09/23/us/obamacare-repeal-graham-cassidy-mccain-trump.html?emc=edit_th_20170924&nl=todaysheadlines&nlid=5348137">last-ditch effort at repeal</a>, since the Senate’s arcane rules dictate that the use of the “reconciliation” process, which would preclude any Democratic filibuster of reform, ended on September 30.</p>
<h2>Trade and tarriffs</h2>
<p>Trump has consistently attacked trade deals that he claims are bad for American workers. Through the campaign he lambasted the North American Free Trade Agreement, which dates back to the George H W Bush and Clinton presidencies, <a href="https://www.nytimes.com/2016/10/06/opinion/campaign-stops/global-trade-war-trump-edition.html">and suggested that</a> the US might impose significant new tariffs on Chinese imports. He was also scornful of the Trans Pacific Partnership, <a href="https://www.nytimes.com/2015/06/15/world/asia/the-trans-pacific-trade-deal-and-a-presidents-legacy.html">a deal the Obama administration had negotiated</a> with 11 other countries and which encompasses almost 40% of the world’s economy. Here Trump promptly fulfilled his promise and withdrew the US from the agreement, which had yet to come into effect. Regarding other deals while Trump’s rhetoric remained fiery, he has mainly instructed <a href="https://www.usatoday.com/story/news/politics/2017/04/29/100-days-trump-order-review-free-trade-agreements-commerce/101066150/">that they be reviewed rather than revoked</a>.</p>
<h2>Funding family planning overseas</h2>
<p>On his first day in office Trump signed a memorandum reinstating the so-called Mexico City policy, which prevents federal funding from going to NGOs that perform or promote abortion as a means for family planning as part of their work. In May, Trump had <a href="https://www.nytimes.com/2017/05/15/us/politics/trump-gag-rule-abortion.html">announced</a> that it would expand the range of activities that would be prohibited under what critics call the “global gag” rule. The US would save around US$500m a year and Trump scores a win with his socially conservative base, while the number of abortions carried out in Sub-Saharan Africa and other areas is likely to rise, rather than fall. While the funding ban does not affect American women directly, it sends a clear message to them that their president is sympathetic to those who oppose female reproductive autonomy.</p>
<h2>Transgender Americans in the armed forces</h2>
<p>In August 2017 the president reinstated a ban on transgender recruits signing up to the US Army, and a ban on the military paying for any related medical expenses or surgery. Responsibility for the decisions on what to do regarding the thousands of currently serving transgender army members was left to the generals. </p>
<p>Again, this presidential memo was a direct reaction to an Obama-era initiative. It remains a political flashpoint, and as of September 2017 a six-month delay in implementation has been put in place. Those in favour of the ban decry the notion of the army being used as a forum for “social experiment” while others argue that a person’s qualification and suitability for military service should be the only criteria that matters. Chelsea Manning responded to the ban <a href="http://www.huffingtonpost.com/entry/chelsea-manning-donald-trump-military-transgender_us_5978959fe4b0a8a40e84234d">by stating</a> that the armed forces “have always been a social experiment just as much as a fighting force”.</p>
<h2>Gun rights</h2>
<p>Speaking to the BBC in the summer of 2015, President Obama noted that his biggest regret as president was the failure to make any headway on gun control. In truth it was only after the Sandy Hook massacre, in which 20 primary school children and their six teachers were gunned down, that he made the issue a top priority. Despite sustained efforts to get Congress on board, his efforts were fruitless, and he was forced to resort to executive action in January 2016. This had symbolic and some substantial value, and if nothing else demonstrated he was prepared to take on the gun lobby. Trump, on the other hand, embraced the gun lobby as a candidate, which rewarded him by donating US$30m to his campaign. That investment began to pay off when President Trump, on February 28 2017, <a href="https://www.nbcnews.com/news/us-news/trump-signs-bill-revoking-obama-era-gun-checks-people-mental-n727221">signed a bill</a> that undid one of Obama’s measures to strengthen background checks. </p>
<p>Even <a href="https://www.theguardian.com/us-news/2017/oct/06/las-vegas-shooter-may-have-planned-other-attacks">in the aftermath</a> of Las Vegas, the biggest mass shooting in modern America, little is likely to change. With 59 dead and hundreds injured, there might seem an opening for political dialogue on the widespread access to weapons of war, but opponents of more regulation will protest against “politicising the issue”. Trump and the Republican party will remain wedded to a culture promoting gun rights, emphatically reinforced by power of the National Rifle Association. Presidential thoughts and prayers, rather than actions, will have to suffice.</p><img src="https://counter.theconversation.com/content/84747/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Donald Trump seems vague on many policies except one: undoing as much of Barack Obama’s legacy as possible.Clodagh Harrington, Senior Lecturer in Politics, De Montfort UniversityAlex Waddan, Associate Professor in American Politics and American Foreign Policy, University of LeicesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/808472017-07-18T00:26:17Z2017-07-18T00:26:17ZWhy Trump’s threat to slap tariffs on foreign steel is a bad idea<figure><img src="https://images.theconversation.com/files/178518/original/file-20170717-27512-k7835b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A worker at an auto parts plant in Orion Township, Michigan, lifts coiled steel into place. </span> <span class="attribution"><span class="source">AP Photo/Paul Sancya</span></span></figcaption></figure><p>During the 2016 presidential campaign, Donald Trump attracted a lot of support by <a href="http://www.businessinsider.com/there-is-a-huge-hole-in-trumps-promise-to-bring-back-us-manufacturing-jobs-2017-3">promising to restore jobs</a> to the American manufacturing sector. </p>
<p>One sector that has been hit hard by purportedly unfair foreign competition is the U.S. steel industry. It <a href="https://books.google.com/books?id=WpuZ0bpoCVoC&lpg=PP1&dq=striking%20steel&pg=PA121#v=onepage&q=steel%20employment&f=false">supported as many as 650,000 American workers in the 1950s</a> yet now employs only <a href="http://www.steel.org/%7E/media/Files/AISI/Reports/2017-AISI-Profile-Book.pdf">about 140,000</a>. </p>
<p>In order to restore <a href="http://www.jstor.org/stable/2235256">American steel’s</a> flagging fortunes, the Trump administration has been exploring <a href="https://www.washingtonpost.com/news/wonk/wp/2017/07/12/top-obama-bush-advisers-band-together-to-warn-trump-against-steel-tariffs/?utm_term=.1bf9584c7667">increased tariff or quota restrictions on steel imports</a>, citing national security concerns.</p>
<p><a href="http://www.politico.com/story/2017/07/13/trump-tariffs-quotas-steel-240524">Trump upped the ante</a> this month in an exchange with reporters on Air Force One: </p>
<p>“Steel is a big problem… I mean, they’re dumping steel. Not only China, but others. We’re like a dumping ground, OK? They’re dumping steel and destroying our steel industry. They’ve been doing it for decades, and I’m stopping it. It’ll stop.”</p>
<p>My research focuses on the politics of trade, including the use of restrictions like tariffs. A look back at the last time a president slapped tariffs on steel is illuminating for the current debate.</p>
<h2>The Bush steel tariffs</h2>
<p>Imposing steel tariffs is not a new thing. </p>
<p>In early 2002, then-President George W. Bush <a href="http://usatoday30.usatoday.com/money/general/2002/03/05/bush-steel.htm">imposed steel tariffs</a> of up to 30 percent on imports of steel in an effort to shore up domestic producers against low-cost imports. These tariffs were controversial both at home and abroad because, even as they helped steelmakers, they squeezed steel users, such as the auto industry.</p>
<p>They were also seen as hypocritical at a time when the Republican administration was trying to encourage other countries to liberalize trade policies – and reduce their tariffs – through the (now-foundering) <a href="https://www.wto.org/english/tratop_e/dda_e/dda_e.htm">Doha Round of World Trade Organization</a> talks. </p>
<p>This case is instructive as to why President Trump may have a tough time imposing steel tariffs.</p>
<p>The <a href="http://internationalecon.com/Trade/Tch90/T90-11.php">general economic view</a> of trade protection says that tariffs transfer money from a good’s consumers to its producers. </p>
<p>Let’s say a country slaps a 20 percent tariff on imports of beef. The country’s beef producers will be much better off because now imported meat is as much as 20 percent more expensive, meaning domestic companies will be able to sell more ribeyes and raise their prices. That’s bad news for restaurants and fans of steaks and hamburgers, who will pay those higher prices.</p>
<p>This transfer is usually <a href="http://internationalecon.com/Trade/Tch90/T90-11.php">economically inefficient</a> because the benefits that domestic producers receive from a tariff will generally be less than the costs to domestic consumers. In the case of the steel industry, <a href="https://piie.com/sites/default/files/publications/pb/pb03-1.pdf">two economists found</a> that the Bush policy would cost US$400,000 a year per steel job saved.</p>
<p>Despite the fact that imposing tariffs is economically inefficient, one of the reasons they still happen is that consumers are typically a very large and dispersed group. While they collectively may lose a great deal of money in higher costs from a tariff, the cost to any one individual may not be that great. Therefore, consumers are often <a href="http://www.hup.harvard.edu/catalog.php?isbn=9780674537514">less motivated in opposing trade protection</a> than a relatively narrower and more unified group of producers who have a lot to gain.</p>
<p>Steel tariffs, however, don’t follow this pattern. </p>
<p>That’s because far from being broadly dispersed, steel consumers <a href="http://www.steel.org/%7E/media/Files/AISI/Reports/2017-AISI-Profile-Book.pdf">are heavily concentrated</a> in the <a href="https://www.opensecrets.org/industries/lobbying.php?ind=C">construction</a> and <a href="https://www.opensecrets.org/lobby/indusclient.php?id=M02">automotive</a> industries – which have very powerful political lobbies of their own. As a result, steel consumers are more likely to balk at the higher prices that would result from tariffs. </p>
<p>In 2002, it was pushback from these industries that helped persuade the National Association of Manufacturers to <a href="https://piie.com/sites/default/files/publications/pb/pb03-1.pdf">come out against the tariffs</a>. Eventually the World Trade Organization ruled the policy illegal because it violated U.S. trade commitments, which led to the <a href="https://www.theguardian.com/world/2003/dec/04/usa.wto1">threat of a trade war</a> with the European Union.</p>
<p>The Bush administration <a href="https://www.theguardian.com/world/2003/dec/04/usa.wto">withdrew the tariffs</a> in December 2003, about 21 months after they were imposed, but not without a cost. The Consuming Industries Trade Action Coalition found that 200,000 workers in U.S. manufacturing <a href="http://www.tradepartnership.com/pdf_files/2002jobstudy.pdf">lost their jobs</a> as a result of the tariffs. </p>
<h2>The politics of trade</h2>
<p>Of course, there are always competing voices lobbying for and against trade protection, and those preferences alone aren’t enough to push a protective measure into law. That depends on how effective an interest group is in working through the governmental process and winning the support of powerful political patrons. </p>
<p>Some of my <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0343.2011.00387.x/full">own research</a> has <a href="http://www.sciencedirect.com/science/article/pii/S0147596714000286">focused on this last step</a>. Politicians have an incentive to get elected and reelected to office. Therefore, the differing electoral rules that a country has along with which constituencies are considered pivotal to getting elected will help determine which industry voices get heard when asking for trade protection. </p>
<p>In that vein, the steel industry has several things working in its favor. Trump has said repeatedly that he wants to protect American manufacturing squeezed by foreign competition, and U.S. steel certainly fits that profile. But more importantly, steel production is concentrated in old industrial states in the Midwest, such as Pennsylvania and Ohio. These states have been swing states in recent presidential elections, which gives industries with workers in those regions outsized influence. </p>
<p>The U.S. sugar industry, <a href="http://www.heritage.org/trade/report/us-trade-policy-gouges-american-sugar-consumers">which is very heavily protected</a>, benefits in a similar way from being heavily concentrated in Florida, a <a href="http://www.cnn.com/2016/08/09/politics/election-2016-donald-trump-hillary-clinton-florida/index.html">frequent swing state</a> in presidential elections.</p>
<p>The flip side is that this opens administrations to <a href="http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?article=1259&context=bjil">accusations of playing politics</a> with U.S. trade, as was the case with the Bush White House in 2002. </p>
<h2>Will Trump roll the dice?</h2>
<p>Despite the <a href="http://www.jstor.org/stable/2235256">political advantages that the steel industry</a> has working in its favor, protective tariffs would still be a large gamble by the Trump administration.</p>
<p>The ostensible justification for the tariffs is <a href="https://www.commerce.gov/news/fact-sheets/2017/04/fact-sheet-section-232-investigations-effect-imports-national-security">Section 232 of the 1962 Trade Expansion Act</a>. This law authorizes the president to impose tariffs on imports that jeopardize domestic industries deemed to be vital to national security. </p>
<p>While the WTO also allows national security concerns to be used as a justification for extraordinary trade protection, <a href="https://www.wto.org/english/news_e/news17_e/good_10jul17_e.htm">it seems unlikely</a> that other WTO members will accept this reasoning. The Section 232 justification is probably a stretch in this case. Using the steel industry’s own numbers, <a href="https://www.washingtonpost.com/news/posteverything/wp/2017/06/20/this-generations-idiotic-trade-policy-is-about-to-be-born/?utm_term=.bde9a529f4c1">only about 3 percent</a> of domestically produced steel in the U.S. goes towards defense industries.</p>
<p>The impact of steel tariffs on other domestic manufacturers such as construction and automotive manufacturing is likely to be bad. However, the bigger concern would be that the WTO again rule such tariffs to be in violation of U.S. trade commitments. Such an event would likely touch off a trade war between the U.S. and its major trading partners, particularly the European Union. </p>
<p>That threat would have negative consequences for U.S. consumers and producers alike.</p><img src="https://counter.theconversation.com/content/80847/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>William Hauk has previously received funding from the University of South Carolina's Center for International Business Education and Research. </span></em></p>The president has promised to put a stop to foreign companies ‘dumping’ steel on US markets. Former President Bush tried the same thing, and here’s what happened.William Hauk, Associate Professor of Economics, University of South CarolinaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/806592017-07-14T02:44:01Z2017-07-14T02:44:01ZEU’s antitrust ‘war’ on Google and Facebook uses abandoned American playbook<figure><img src="https://images.theconversation.com/files/178167/original/file-20170713-32666-1n4hfxu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">European Union Commissioner for Competition Margrethe Vestager has followed an antitrust enforcement strategy pioneered in the U.S.</span> <span class="attribution"><span class="source">AP Photo/Virginia Mayo</span></span></figcaption></figure><p>The casual observer could be forgiven for thinking that European antitrust regulators have declared war on American tech giants.</p>
<p>On June 27, the European Union <a href="http://europa.eu/rapid/press-release_MEMO-17-1785_en.htm">imposed</a> a €2.4 billion (US$2.75 billion) fine on Google for giving favorable treatment in its search engine results to its own comparison shopping service. And Germany’s antitrust enforcer is <a href="http://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2016/02_03_2016_Facebook.html?nn=3591568">investigating</a> Facebook for asking users to sign away control over personal information.</p>
<p>In contrast, American antitrust enforcers have shown little interest in these companies. The Federal Trade Commission (FTC) did open an investigation into whether Google has a search bias, but closed it in 2013, despite <a href="https://www.ftc.gov/news-events/press-releases/2013/01/google-agrees-change-its-business-practices-resolve-ftc">recognizing</a> that it “may have had the effect of harming individual competitors.”</p>
<p>Anti-Americanism, however, does not explain these starkly different approaches. Europe targets homegrown companies with the same ferocity. Last summer, for example, the EU fined a cartel of European truck-makers even <a href="http://europa.eu/rapid/press-release_IP-16-2582_en.htm">more</a> than it did Google.</p>
<p>Instead, the divergence is explained by America’s abandonment in the 1980s of the theory that competition promotes innovation, which is still embraced by Europe today. America now seems to operate under the theory that competition threatens innovation by denying companies that develop a superior product the rewards of monopoly. </p>
<p>My research suggests that embrace of this new theory has led to under-enforcement of America’s antitrust laws, which may in turn have actually held back innovation.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/178170/original/file-20170713-11780-j4bgw0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/178170/original/file-20170713-11780-j4bgw0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=351&fit=crop&dpr=1 600w, https://images.theconversation.com/files/178170/original/file-20170713-11780-j4bgw0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=351&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/178170/original/file-20170713-11780-j4bgw0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=351&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/178170/original/file-20170713-11780-j4bgw0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=441&fit=crop&dpr=1 754w, https://images.theconversation.com/files/178170/original/file-20170713-11780-j4bgw0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=441&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/178170/original/file-20170713-11780-j4bgw0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=441&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Google’s innovative search engine emerged from competition, not monopoly.</span>
<span class="attribution"><span class="source">AP Photo/Virginia Mayo</span></span>
</figcaption>
</figure>
<h2>Betting on competition</h2>
<p>The mission of antitrust law, first articulated by the framers of the Sherman Act in 1890, is to <a href="http://heinonline.org/HOL/Page?handle=hein.journals/tndl84&div=7&g_sent=1">ensure</a> that markets contain large numbers of equally matched competitors. That’s why Europe calls its own antitrust rules “competition law.” </p>
<p>The <a href="http://www.linfo.org/sherman_txt.html">Sherman Act</a> implemented this goal by prohibiting two things: “restraint of trade,” such as price fixing, and monopolization, the attempt of a powerful company to keep competitors out of its markets. European competition <a href="http://ec.europa.eu/competition/antitrust/legislation/articles.html">laws</a> have a similar bipartite structure.</p>
<p>The EU case against Google falls under the second category, monopolization, or as Europeans <a href="http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:12008E102">dub it</a> “abuse of dominance.” </p>
<p>One of the most important and difficult areas of the law of monopolization involves <a href="http://www.jstor.org/stable/27897568">infrastructure</a>, which can be anything from the roads that crisscross America to the engineering standards that mobile phones use to communicate. Great innovations, such as Google’s search engine, often become the infrastructure that the next generation of competitors need to access in order to create their own, innovative products. But the infrastructure owner will often shut those competitors out, to maximize profits.</p>
<p>The goal of antitrust law would seem to require that its enforcers – the Department of Justice and the FTC in the U.S. – sue to force owners to share their infrastructure on reasonable terms with competitors.</p>
<h2>Skeptics emerge</h2>
<p>But in the 1960s, skeptics – particularly <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1014153">antitrust economists and lawyers associated with the University of Chicago</a> and <a href="https://www.washingtonpost.com/news/wonk/wp/2012/12/20/antitrust-was-defined-by-robert-bork-i-cannot-overstate-his-influence/?utm_term=.6ca040da4deb">led by Robert Bork</a> – started to <a href="http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:12008E102">argue</a> that forcing a business to share its infrastructure on an equal basis with competitors reduces the rewards a company can expect to generate from innovation, potentially discouraging technological progress. </p>
<p>If Google cannot earn monopoly profits on product search and sponsored links, will it stop investing in improving its search engine?</p>
<p>Getting the answer right is hugely important. Access to infrastructure may well have triggered the Industrial Revolution. A recent study <a href="http://voxeu.org/article/serfdom-and-russian-economic-development">shows</a> that the abolition of serfdom in Russia in 1861 – which broke up the monopoly of feudal lords over a very important type of infrastructure, land – greatly increased the growth of the Russian economy. The authors concluded that <a href="https://goo.gl/itphE6">Western Europe’s abolition of serfdom</a> at least a century earlier probably explains its subsequent economic dominance.</p>
<p>Until the 1980s, American antitrust enforcers followed this example by breaking up “feudal estates” when they got too big. In 1912, for instance, the Justice Department <a href="https://goo.gl/eXvQy6">won</a> a case that forced the owners of the only two railroad bridges crossing the Mississippi river at St. Louis – which connected numerous eastern and western railroad systems – to allow access to competing companies. </p>
<p>The bridges were a superior product, relative to railroad ferries, and the sharing requirement no doubt reduced the owners’ profits. But the Justice Department was willing to bet that intervention would not chill incentives to innovate. America has done OK since.</p>
<p>The Justice Department made the same bet when it filed its last successful monopolization case in 1974, making AT&T <a href="https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System">give up</a> the local telephone networks that once ran copper wires into most homes in America. That allowed an innovative competitor, MCI, to <a href="https://goo.gl/ceMpUu">use</a> those wires to connect home and office telephones to the company’s pioneering microwave and satellite transmission systems, <a href="http://www.jstor.org/stable/2117661">halving</a> long distance calling rates by 1990. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/178168/original/file-20170713-19126-1le6qm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/178168/original/file-20170713-19126-1le6qm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/178168/original/file-20170713-19126-1le6qm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/178168/original/file-20170713-19126-1le6qm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/178168/original/file-20170713-19126-1le6qm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/178168/original/file-20170713-19126-1le6qm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/178168/original/file-20170713-19126-1le6qm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The last major monopolization case was filed in 1998 against Bill Gates’ Microsoft and its then ubiquitous operating system Windows.</span>
<span class="attribution"><span class="source">AP Photo/Paul Sakuma</span></span>
</figcaption>
</figure>
<h2>Betting against competition</h2>
<p>The view of the Chicago skeptics who opposed enforcement grew in power during the 1970s, reaching a tipping point in 1981 with the election of Ronald Reagan, who appointed its <a href="http://harvardmagazine.com/2015/12/rhetoric-and-law">advocates</a> to federal judgeships and leadership roles in the enforcement agencies. That view has proven <a href="http://heinonline.org/HOL/Page?handle=hein.journals/flr81&div=76&g_sent=1">resilient</a> to changes in administration ever since.</p>
<p>The courts implemented the Chicago view by embracing a rule, known optimistically as the “<a href="https://definitions.uslegal.com/r/rule-of-reason/">rule of reason</a>,” that enforcement of antitrust law is warranted only if there is no danger of chilling innovation. As the Supreme Court <a href="https://goo.gl/WRZuTH">put it</a>, intervention should take place only after “elaborate study.”</p>
<p>I argue in a recent <a href="https://papers.ssrn.com/abstract=2896453">paper</a> that when enforcer budgets are limited, the rule of reason is just a polite way of partially repealing the antitrust laws, because the rule makes infrastructure cases, among others, too expensive for enforcers to litigate. And enforcement budgets are limited. Although budgets have increased in real terms since the 1970s, they have declined relative to the size of economy.</p>
<p></p><hr><p></p>
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<p></p><hr><p></p>
<p>Antitrust enforcement has, in fact, suffered. Apart from the <a href="https://goo.gl/corrWu">Microsoft case</a> 20 years ago, in which the goal of breaking up the company <a href="https://www.wired.com/2002/11/u-s-v-microsoft-timeline/">wasn’t achieved</a>, no other major monopolization cases have been filed since AT&T in 1974. </p>
<p>And even when cases are brought, usually by private individuals, the rule of reason has proven a <a href="http://heinonline.org/HOL/LandingPage?handle=hein.journals/gmlr16&div=31&id=&page=">virtually insurmountable obstacle</a> to success. </p>
<p>Has all this at least led to an uptick in innovation? You might think that the answer is “yes,” given that Google and Facebook were both launched in the U.S. in recent years. </p>
<p>But both – as well as their incredible innovations – are the products not of monopoly but of competition. <a href="https://blogs.cornell.edu/info2040/2015/10/19/how-google-won-the-search-engine-war/">Google won the search wars</a> by creating algorithms that beat those of rivals, including AltaVista and Yahoo. Facebook <a href="https://www.digitaltrends.com/social-media/former-myspace-ceo-reveals-what-facebook-did-right-to-dominate-social-media/">innovated by improving on the social network concept</a> that erstwhile rival MySpace helped create. Both companies flourished thanks to equal access to the internet – in other words, <a href="http://www.jstor.org/stable/27740540">net neutrality</a>.</p>
<p>Measures of innovation for the economy as a whole, rather than individual success stories, provide a more reliable, and less encouraging, picture. The <a href="https://www.washingtonpost.com/news/wonk/wp/2016/03/30/larry-summers-corporate-profits-are-near-record-highs-heres-why-thats-a-problem/?utm_term=.b78a8840c3ce">talk of the economics profession</a> these days is the current combination of soaring corporate profits with the absence of an accompanying uptick in one measure of economy-wide expenditure on innovation – business investment. </p>
<p>This outcome is exactly what you’d expect in an <a href="https://www.economist.com/news/briefing/21695385-profits-are-too-high-america-needs-giant-dose-competition-too-much-good-thing">economy of large companies</a> that generate profits from their monopoly positions, rather than by offering better products.</p>
<h2>The road not taken</h2>
<p>Europe has not followed this path.</p>
<p>In the 1950s and ‘60’s, when the foundations for current European antitrust law were being laid, American enforcers still believed that competition promotes innovation. The American emphasis on protecting upstarts resonated with a continent still recovering from Nazism, which used state-sponsored monopolies <a href="http://www.jstor.org/stable/1881766">to maintain control</a>. The EU case against Google is firmly in that tradition, as is the investigation of Facebook, which <a href="http://gs.statcounter.com/social-media-stats">dominates</a> another new economy infrastructure, social media.</p>
<p>Although the European enforcement actions will only directly benefit Europeans, they are a reminder to Americans of the road not taken.</p><img src="https://counter.theconversation.com/content/80659/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ramsi Woodcock does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Europe’s approach to antitrust enforcement picks up where the US left off in the 1980s, when the view that breaking up monopolies hurt innovation took hold.Ramsi Woodcock, Professor of Legal Studies, Georgia State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/506632015-11-25T04:36:56Z2015-11-25T04:36:56ZWhy South Africa needs the US for its agricultural trade<figure><img src="https://images.theconversation.com/files/102798/original/image-20151123-18255-1zndxw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The dispute between South Africa and the US over poultry products could harm relations between the two countries. </span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Relations between the US and South Africa have hit another low in a series of trade disputes that go as far back as <a href="http://www.bilaterals.org/?-US-SACU">2003</a>. While strengthening its relations with other countries, the US has threatened to suspend South Africa from its preferential trade programme for Africa due to its failure to comply with the latest terms of the African Growth Opportunities <a href="https://www.whitehouse.gov/the-press-office/2015/11/05/letter-president-suspension-application-duty-free-treatment-all-agoa">Act</a> (AGOA).</p>
<p>AGOA enables preferential access to the US market for African countries that meet specific criteria. The US extended these benefits to 2025 for South African products while restrictions on US poultry imports were <a href="http://agoa.info/about-agoa.html">relaxed</a>.</p>
<p>In South Africa’s defence for not complying, there were outstanding issues relating to sanitary and phyto-sanitary (animal health) measures to be considered following an outbreak of H5 Virus, or bird flu, in <a href="http://www.cdc.gov/flu/avianflu/h5/">21 US states</a>.</p>
<p>Lately veterinary authorities of the two countries have signed another agreement that will <a href="https://www.thedti.gov.za/editmedia.jsp?id=3579">allow</a> poultry imports into South Africa from the unaffected states. This agreement is expected to defuse a potentially volatile situation and the US poultry imports will start coming into South Africa early in 2016. </p>
<p>The US has been an important trade partner for many years - in the lead up to South Africa’s democracy and afterwards. But this has changed. The US accounted for 13% of South African imports and 10% of exports in 1996. It was the second most important trading partner. But by 2014 the US had been overtaken by China as its share declined for both imports and exports to 7%.</p>
<p>Nevertheless the US is still one of the country’s top five main trading <a href="http://www.sars.gov.za/ClientSegments/Customs-Excise/Trade-Statistics/Pages/default.aspx">partners</a>. And it is clear that the US has an interest in South Africa as it is by far its leading market in <a href="http://agoa.info/data/total-trade.html">sub-Saharan Africa</a>. </p>
<h2>Why AGOA matters</h2>
<p>AGOA offers diversification opportunities for agricultural products. It also provides access to an alternative and highly competitive market. These two factors - diversification and an alternative market - are important in the light of highly volatile markets and fast changing global demands. They help reduce the risk of market volatility.</p>
<p>South African products benefiting from AGOA include avocados, wines, nuts and citrus. The US is the most or second most important market destination for these products.</p>
<p>Since AGOA was inacted in 2000, exports of these products to the US has grown annually. These exports help industries such as citrus which employ more than 80 000 people directly, 40 000 indirectly and a further 100 000 in peak <a href="http://www.financialmail.co.za/opinion/2014/07/04/on-my-mind-jobs-need-export-juice">season</a>. The wine industry employs more 300 000 people directly and <a href="http://www.wosa.co.za/The-Industry/Statistics/World-Statistics/">indirectly</a>.</p>
<p>The US also serves as a benchmark for global competitiveness in many areas. It makes it easy to sell products into other countries once they have been accepted by the US.</p>
<p>South Africa needs the US market for job creation as well as revenue generation. It is therefore important that the current trade disputes are resolved. The situation must be approached with a long term and broader view. </p>
<p>After all, trade relations are always complicated. Similar to other relations, they need to be maintained, nurtured and disputes need to be resolved.</p>
<h2>Complicated and growing global trade</h2>
<p>The US-South Africa case shows how complicated global trade can be. Agreements are there to facilitate trade and to ensure products get favourable treatment in foreign markets. But the world trading system is complex, costly, burdensome and time consuming. </p>
<p>In 1990 the value of global trade was $1.3 trillion. By <a href="http://comtrade.un.org/data/">2014</a> it had increased to $17.1 trillion. Agricultural products contribute about 10% of this global trade. </p>
<p>The World Trade Organisation regulates global exchange of goods and services at a <a href="https://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm">general level</a>. But it is the responsibility of governments to simplify the system for companies that wish to participate in global markets.</p>
<p>Trade agreements serve as contracts under which trade will take place between members. In the process of moving products from one country to another, many regulations, border posts, insurance, inspections, ports, logistical arrangements and other issues are involved. These can complicate or facilitate trade, depending on the existence of trade agreement.</p>
<h2>Types of trade agreements</h2>
<p>Different types of agreements are signed to deal with the exchange of goods and to make products competitive. These differ by the level of complexity, ambition or integration involved. They include economic unions, which represent a high level of agreement. This allows or simplifies the movement of people and goods. It also includes the harmonisation of economic and monetary policies between members. The EU is an example of one such agreement.</p>
<p>In a customs union members have the same trade policies, tariffs and commit to moving towards common trade goals. Examples include the Southern African Customs <a href="http://www.sacu.int/show.php?id=471">Union</a> and East African <a href="http://www.eac.int/index.php?option=com_content&view=article&id=1&Itemid=5">Community</a>.</p>
<p>Then there are free trade areas which allow duty-free movement of goods for most traded goods.</p>
<p>Preferential trade agreements such as AGOA are not negotiated, but granted by one partner. They are unilateral and non-reciprocal grants, usually offered by a developed partner to a developing or least developed country to enhance economic development through trade participation. </p>
<h2>New US trade agreements that will affect South Africa</h2>
<p>The US is currently negotiating two main trade agreements involving goods and services. These are the Trans-Pacific Partnership (TPP) involving 11 countries in the <a href="https://ustr.gov/tpp/overview-of-the-TPP">Pacific Rim</a> and the Transatlantic Trade and Investment Partnership with the 28 members of <a href="https://ustr.gov/ttip">the EU</a>. Agricultural products are included in both negotiations. </p>
<p>The negotiations will influence global trade and specifically South African trade. If concluded, the TPP will represent about 40% of global GDP and more than 30% of <a href="http://www.nytimes.com/2015/10/06/business/international/the-trans-pacific-partnership-trade-deal-explained.html?_r=0">world trade</a>. Once these negotiations are concluded, there will be direct and indirect effects on South African trade. </p>
<p>This is because some countries involved in the US negotiations have trade agreements with South Africa, such as the EU members. US and South African products will then compete in the EU market on terms that may be favourable to the US. Others, including Chile, are competitors to South Africa in the US market.</p><img src="https://counter.theconversation.com/content/50663/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mmatlou Kalaba receives funding from National Reserach Foundation. </span></em></p>South Africa’s agricultural sector has benefited handsomely from the US’s preferential trade agreements. It is important that the current dispute is resolved speedily.Mmatlou Kalaba, Lecturer in Agricultural Economics, University of PretoriaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/494222015-10-20T19:52:41Z2015-10-20T19:52:41ZCanadian election: scholars on what the rest of the world needs to know<p><em>Canadians voted yesterday to toss out Stephen Harper’s Conservative Party in favor of newcomer Justin Trudeau and the Liberals. The change in leadership in Canada, the US’ biggest trading partner, has important implications in the US. We asked three scholars to comment on what they see as notable about the vote.</em></p>
<h2>Canadians picked empathy</h2>
<p><strong>Peter John Loewen, University of Toronto</strong></p>
<p>The Canadian election was unquestionably a landmark. </p>
<p>Justin Trudeau won a massive majority, the mirror of which was the collapse of the New Democratic Party. This closes a chapter on Stephen Harper’s nine years in power, though not completely.</p>
<p>Throughout the election, colleagues and I conducted the <a href="http://www.localparliament.ca/">Local Parliament Project</a>, a daily representative poll of 600 to 1,200 Canadians. We asked a lot of questions, among them voters’ impressions of the leaders and expectations of the outcome. Trudeau’s victory is attributable to two factors. </p>
<p>First, voters’ impressions of him improved throughout the campaign. While he was always strong on character traits – empathy and trustworthiness – he was weaker on competence traits – especially the trait of being a strong leader.</p>
<p>Second, voters’ expectations about which party was most likely to defeat Stephen Harper coalesced on the Liberals in the last two weeks of the campaign.</p>
<p>Trudeau’s victory was thus a result both of voter coordination and of his own hard work. But this is just beginning. </p>
<p>There is a paradox at the center of Trudeau’s policy promises. He has turned the page on balanced budget orthodoxy, instead embracing the belief that government can take an active role in the economy through <a href="http://globalnews.ca/news/2188393/justin-trudeau-promises-to-double-infrastructure-spending-in-canada/">infrastructure construction</a> at the cost of fiscal <a href="http://www.canadianbusiness.com/economy/trudeaus-gamble-on-deficit-spending-became-the-liberals-turning-point/">deficits</a>. </p>
<p>On the other hand, he has accepted the prime minister’s basic belief that government should not create social programs but instead send cash directly to those in need. </p>
<p>His election represents both change and just more of the same.</p>
<p><em>Peter John Loewen serves as Director of the Centre for the Study of the United States at the Munk School of Global Affairs. He is currently the Assistant Editor of the Canadian Journal of Political Science.</em></p>
<h2><strong>The niqab won!</strong></h2>
<p><strong>Jim Wallace, Boston University</strong></p>
<p>Canadian voters agreed with Liberal Justin Trudeau’s position on the Muslim veil. He pledged to uphold the ruling of the federal courts that Muslim women did not have to remove their veils while swearing the Canadian citizenship oath.</p>
<p><a href="http://www.cbc.ca/news/politics/niqab-controversy-stephen-harper-justin-trudeau-wade-into-culture-war-over-the-veil-1.2989576">The controversy began</a> in 2011 when Conservative Minister of Immigration Jason Kenney initiated a policy forbidding Muslim women from having their faces covered during citizenship ceremonies.</p>
<p>The niqab policy blew up during the 2015 federal campaign when Prime Minister Harper made it an election issue. He said the Conservative government would seek to stay the court order and force Muslim women to uncover their faces. Later, he declared that if reelected, he would consider banning all federal employees from wearing a niqab. </p>
<p>During the 78-day campaign, <a href="http://www.huffingtonpost.ca/2015/09/30/harper-niqab-trudeau-mulcair_n_8222140.html">the niqab became a hot-button issue</a>. It was the focus of furious political ads, tweets and debate talking points. Harper was attacked for using the niqab to distract from the real issues of the economy and the government’s performance.</p>
<p>The niqab was a proxy for complex issues troubling the Canadian electorate – Bill C-51, the Conservative anti-terrorism bill; ISIS and global terrorism; Islamophobia; the Syrian refugee crisis; and the Quebec immigrant controversies.</p>
<p>Even more, Canadians were repelled by the politics of fear over the niqab. Canadians made clear they wanted a government that reflected Canadian values of kindness, inclusiveness, diversity, acceptance of immigrants and multiculturalism.</p>
<p>Prime Minister-designate Justin Trudeau repeatedly highlighted these values in his victory speech. </p>
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<p>In his closing words, he made a clear allusion to the niqab controversy, telling the story of a Muslim woman he met on the campaign trail. He then declared:</p>
<blockquote>
<p>You and your fellow citizens have chosen a new government. A government that believes deeply in the diversity of our country. We know in our bones that Canada was built by people from all corners of the world who worship every faith, who belong to every culture, who speak every language.</p>
</blockquote>
<p>To wild cheers and applause, Trudeau concluded, “My friends, we beat fear with hope… . We beat negative divisive politics with a positive vision that brings Canadians together.”</p>
<p>Clearly <a href="http://news.nationalpost.com/news/canada/canadian-politics/pumpkin-voter">Canadians agreed</a>. </p>
<p>The niqab began as a flashpoint, became a turning point, and ended as an exclamation point.</p>
<p><em>Jim Wallace has worked for over 30 years as a religious leader, government consultant and political advisor in the United States and Canada.</em></p>
<h2>More of the same for big oil</h2>
<p><strong>Geoffrey McCormack, Wheelock College</strong></p>
<p>Justin Trudeau is the son of Canada’s 15th prime minister, <a href="https://books.google.com/books?hl=en&lr=&id=xNHmbY-BGkYC&oi=fnd&pg=PT4&dq=Pierre+Elliott+Trudeau+Oil+Crisis&ots=ZVxrZ8F2rw&sig=_X7tVBnOyBupauPGedlu0y2nHTU#v=onepage&q=Pierre%20Elliott%20Trudeau%20Oil%20Crisis&f=false">Pierre Elliott Trudeau</a>, who managed governmental affairs during key moments in Canadian history such as the oil crisis of 1973 and the growth of the environmental movement. </p>
<p>Like his father, <a href="https://theconversation.com/canadas-new-prime-minister-who-is-justin-trudeau-and-how-did-he-win-48792">Justin Trudeau</a> has inherited a struggling economy and a population increasingly <a href="http://www.cbc.ca/news/politics/vote-compass-canada-election-2015-issues-canadians-1.3222945">concerned</a> about the environment – especially the <a href="http://www.theguardian.com/environment/true-north/2015/aug/11/canadian-government-spent-millions-on-secret-tar-sands-advocacy">tar sands</a> controversy.</p>
<p>Since emerging from the Great Recession, Canada has been afflicted by stagnant employment and <a href="http://www.wsj.com/articles/amid-slumping-economy-canadas-stephen-harper-braces-for-tight-election-race-1445211094">sluggish growth</a>. The economy was kept from serious trouble by high oil prices and booming demand for Albertan crude in global markets. But the sweet crude turned sour at the beginning of this year when oversaturated markets forced the price of <a href="https://theconversation.com/low-oil-prices-are-here-to-stay-as-the-us-shale-oil-revolution-goes-global-48100">oil below US$50 a barrel</a>. As a result, corporate profits took a momentous hit, and the economy slipped into recession for the first time in six years. </p>
<p>Business profitability and economic growth in Canada are firmly welded to Alberta’s drilling rigs and mega-mining trucks. Over a fifth of the country’s <a href="http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=0310006&pattern=capital+stock+by+industry&tabMode=dataTable&srchLan=-1&p1=1&p2=-1">capital equipment</a> is sunk in mining, oil and gas extraction.</p>
<p>The oil industry is also the country’s <a href="http://www.cbc.ca/news/canada/oil-industry-canada-s-biggest-contributor-to-greenhouse-gases-1.2608295">chief contributor</a> to greenhouse gas emissions – a burden that is borne by the world’s population. Alberta’s tar sands are a stark reminder of the clash between profit and the environment.</p>
<p>It seems many Canadians were driven to the polls by a seething <a href="http://www.thestar.com/news/canada/2015/09/11/anyone-but-harper-carved-into-brantford-area-farmers-field.html">“Anyone but Harper!”</a> sentiment. </p>
<p>The election was uninspiring for its lack of alternatives concerning the economy and the environment, despite Trudeau’s modest <a href="http://www.wsj.com/articles/canada-networks-project-liberal-party-victory-1445306893">deficit spending plan</a>. The future of the petrochemical industry was conspicuously absent or only sheepishly addressed by the three big parties during the election campaign. </p>
<p>As contenders for the helm of the Canadian state, these parties have demonstrated their commitment to ensuring that it fulfills its role as guarantor of optimal corporate profitability and economic growth. </p>
<p>In the context of Canadian capitalism, that means digging more holes, pumping more oil, and laying more pipelines to get crude to market. Like the Conservatives before them, the Liberals can be expected to prioritize the interests of corporate Canada above the interests of working people and the environment. </p>
<p><em>Geoffrey McCormack is the coauthor of <a href="https://fernwoodpublishing.ca/book/the-servant-state">The Servant State: Overseeing Capital Accumulation in Canada</a>, examining Canada’s unique experience during and since the Great Recession. At this time, he is completing a second book that explores the economic history of Canada over the last five decades.</em></p><img src="https://counter.theconversation.com/content/49422/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jim Wallace is a dual citizen of the United States and Canada. He has lived and worked in both countries.
Jim has done consulting work for and received funds from various departments of the Canadian government - Prime Minister's Office, Department of Foreign Affairs, Department of Indian Affairs and Northern Development, Department of National Defence and the Canadian Armed Forces - and the U.S. government - State Department, Department of Defense, and the White House National Security Council.
Jim has done consulting work for politicians in Canada belonging to the Progressive Conservative Party, the Conservative Party, the Liberal Party, and the New Democratic Party. He has not done consulting work for either the Democratic or Republican parties in the U.S.
In the past, he has been a member of both the Democratic and Republican parties in the United States. In Canada, he has been a member in the past of the Progressive Conservative Party. Currently, Jim is not a member of any political party in the United States or Canada.
In the 2015 Canadian Federal Election campaign, Jim served as an occassional, unpaid, volunteer advisor to Liberal candidate (Calgary Confederation) Matt Grant whose family have been long-time, personal family friends.</span></em></p><p class="fine-print"><em><span>Peter John Loewen works at University of Toronto.</span></em></p><p class="fine-print"><em><span>Geoffrey McCormack does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Canada’s new leader is young. He promises change. He supports the XL Pipeline and promised US$46 billion in infrastructure spending to boost the Canadian economy. Here’s what else you should know.Geoffrey McCormack, Assistant Professor of Political Science, Wheelock CollegeJim Wallace, Lecturer in International Relations and Foreign Policy, Boston UniversityPeter Loewen, Associate Professor of Political Science, University of TorontoLicensed as Creative Commons – attribution, no derivatives.