TABLE OF CONTENTS I. Issue #1 : The Big Picture--Why Are We Living In Dangerous Trade Times? II. Issue #2: Areas Of Convergence, Therefore Easier Cooperation III. Issue #3: Two Very Important Issues: Lumber And The Trans-Pacific Partnership Thank you for being here and thank you to Steve Petras, Ted Parran, and Chios Carmody and Members of the Canada-United States Law Institute Board for helping us host such a great gathering.
Let me start by giving the audience a brief big picture of why this is a particularly perilous time for free trade. Then, I will transition to a few punctual trade issues where Canada and the United States can engage in cooperation to address current protectionist practices. Finally, I will conclude with a couple of comments about two very important trade issues in the bilateral relationship where we may not be as "trade sympatico": the expiration of the Softwood Lumber Agreement ("SLA") and the current status of the Trans-Pacific Partnership ("TPP") in Congress.
ISSUE #1: THE BIG PICTURE--WHY ARE WE LIVING IN DANGEROUS
Since the economic slowdown that started in December, 2007 and the following Great Recession, the United States and its biggest trade partners (Canada, the European Union ("E.U."), Japan, and China) have lived in a world awash with excess savings and inadequate demand. In this stagnant economic environment, interest rates in the Western world cannot fall any further to help boost investment and economic activity because rates are already near zero.
In other words, we are in a liquidity trap: without an increase in government spending, the private sector will keep on saving and waiting for a recovery in the long term, and the long term becomes longer as further economic retrenchment occurs. Thus, President Obama's first-term economic stimulus helped reduce the depth of the recession, but later budget sequesters and other forms of political budget brinkmanship damped the frail recovery. Abenomics, a mix of quantitative easing and massive spending in infrastructure, is having mixed results, getting Japan out of a two-decade long period of stagnation.
If you do not believe we are in a liquidity trap, remember the warnings about how the United States' "dependence on Chinese financing" through purchases of Treasury bonds would harm the United States once the Chinese stopped buying bonds? Well, the Chinese have been selling them for nearly a year and a half and not much has happened. Here is...