Author Topic: Why 5 years sunset clause is a show stopper?  (Read 1899 times)

Viking

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Re: Why 5 years sunset clause is a show stopper?
« Reply #10 on: June 10, 2018, 02:25:56 PM »
Canada is certainly in a difficult position. It has integrated/hitched its economy to the US for decades; worked well for both countries for many years. Trump is turning everything on its head. And Trump has already won. Who in their right mind is building a new plant in Canada to service the US market? Can you imagine the discussions in the various board rooms right now on this topic? Trump wanting a 5 year sunset clause is another step; the threat alone will ensure most businesses take a pass on investing in Canada. Hard to see how this does not get much worse, absent Trump being removed from office. Fall elections in the US become even more significant; if Dems canít take back control of the House of Reps then Trump will continue down his merry path.
I wouldn't be so quick to declare a victory because the converse is also true. If you are looking to produce an export good why in your right mind would invest in production in the US. If you produce a mixed good that you sell domestically and abroad why would you invest to expand production when you could be hit with retaliatory tariffs at any moment?

Also even with tariffs why would a company invest in US production in an area where it's at a comparative disadvantage when a few years from now this lunacy can go away? For example why would a company invest in aluminium capacity when in the near future it's at risk of competing with Quebec aluminium who's cost it has no hope of matching?

Furthermore, don't you put American exports at risk when you tax their materials? Aren't Airbus planes gonna be cheaper than Boeing if Boeing has to pay 10% more for aluminium? What about autos? Those things use A LOT of aluminium these days. If demand goes down for these products won't there be layoffs? What about the industries that are targeted by retaliatory tariffs? Harley is already doing layoffs. Won't those get worse when Europe slaps tariff on its products?

Is this what victory looks like? So much winning...

Why would a company today want to build a plant in the US today? Lower taxes, lower regulation, cheap energy to name a few.... Part of our challenge in Canada is Federally/provincially we are moving in the opposite direction: higher government spending, higher taxes, more regulation, higher energy costs (canít approve a pipeline to get oil to market)... I am normally pretty agnostic/optimistic but I do see clouds on the horizon.


alertmeipp

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Re: Why 5 years sunset clause is a show stopper?
« Reply #11 on: June 10, 2018, 05:17:48 PM »
understood the uncertainty introduced by the sunset clause.. but isn't the uncertainty there anyways? why not get it done, wait five years and hope Trump will be gone by then.

I agree to some, even without the sunset clause, if I have large US customer base, I will open a factory in US just to be safe.

rb

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Re: Why 5 years sunset clause is a show stopper?
« Reply #12 on: June 10, 2018, 05:51:52 PM »
Once Canada agrees to a sunset clause why would a future US administration take it out. Even if it's a reasonable and competent administration, especially if it's a reasonable and competent administration. A US administration represents and works for the people of the US a sunset obviously benefits them and once we agree to that it won't come put for free. We'll have to make further concessions to the US. That's the way it works in these negotiations, you don't give anything away unless you get something in return. So no, Canada won't agree to a sunset clause.

Spekulatius

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Re: Why 5 years sunset clause is a show stopper?
« Reply #13 on: June 10, 2018, 06:52:47 PM »
Once Canada agrees to a sunset clause why would a future US administration take it out. Even if it's a reasonable and competent administration, especially if it's a reasonable and competent administration. A US administration represents and works for the people of the US a sunset obviously benefits them and once we agree to that it won't come put for free. We'll have to make further concessions to the US. That's the way it works in these negotiations, you don't give anything away unless you get something in return. So no, Canada won't agree to a sunset clause.

I think it does not make sense to negotiate with Trump at all, about anything. He changes his opinion by the spur of the moment, and most of what he does is irrational. I think most have figured out that itís best just to let this blow over and isolate and ignore him, as hard as it might be, since he does preside over the US right now. It is highly likely that Trump either self destructs, or does not get re-elected.

It will be interesting so see how that meeting with Kim Jong Un turns out. Kim himself is a bit like a Trump in a sense that he is unpredictable and tends react emotionally with apparent anger an management issues. Maybe these two will cozy up, which will look even more awkward.
To be a realist, one has to believe in miracles.

rb

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Re: Why 5 years sunset clause is a show stopper?
« Reply #14 on: June 10, 2018, 08:26:46 PM »
Spekulatius, I respectfully disagree.

In a normal business setting like company to company talks what you say is true. But now Trump may be a douche bag but he is still the president of the united states. Canada as a country has deep and intertwined interests with the US. Both economic - NAFTA - and security - NORAD, NATO. We can't act like a petulant child and just talk only to the administrations we like and ignore the ones we don't. There's too much at stake. But just because we talk and negotiate doesn't mean we have to sign anything. We don't have to give our country away. We must be reasonable and stay firm on the parts that are unreasonable.

Another thing to note is that when while Trump likes to do his real estate developer/Apprentice thing when you talk to Canada, you don't actually talk to some guy from Brooklyn flying by the seat of his pants. We have a deep bench of seasoned professionals, professional negotiators, and a fully staffed Foreign Affairs department. A lot of these guys have long standing relationships with their US contacts due to our deep relationship. And these aren't the types of people that get their panties in a twist because Trump tweeted something.

Canada hasn't just been negotiating with Commerce or the Trade Representative. Canada has been running a full court press. Talking to Governors, Senators, Congressmen, covering all the angles. Negotiating in good faith, sticking to the facts, and grinding it out. Frankly, this is what I expect of a professional government doing the work for its people.
« Last Edit: June 10, 2018, 08:34:20 PM by rb »

Spekulatius

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Re: Why 5 years sunset clause is a show stopper?
« Reply #15 on: June 11, 2018, 04:06:51 AM »
^ RB, you are correct. My writing was inconsistent. Of course thr US needs to negotiate with the US, but I think they need to avoid negotiating with Trump himself, but rather with the folks that run the machinery. I think over time, most leaders in the world will find out they negotiating with Trump himself is a waste of time.
To be a realist, one has to believe in miracles.