This presentation looks at the issue with global trade including protectionism policies.

1. GLOBAL
PROTECTIONISM
AND GDP GROWTH
PAUL YOUNG
FEBRUARY 21, 2019

2. PAUL YOUNG - BIO
• CPA, CGA
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• Former Lecturer – CGA Ontario – Public
Finance, Advance Accounting, Finance and
Advance Information Systems
Contact information:
Paul_Young_CGA@Hotmail.com

3. OVERVIEW
This presentation looks protectionism policies when it comes to merchandise
trade.
I said back in 2017 that world was headed to more protectionism policies and
trade wars. The trade wars has escalated as USA has moved forward with a
string of tariffs on imports like steel and aluminum.
USA has also raised concern with theft of IP that is also leading increase trade
tensions between USA and China

4. AGENDA
• What is protectionism
• Issues with protectionism
• Top exporting countries
• World GDP Growth
• IP Theft (Most Protective vs Less Protective
• China and USA Trade
• Canada and Trade Deficits
• Blog – Protectionism
• Blog – Canada and Trade
• Trump and USA Trade
• Solutions

5. WHAT IS PROTECTIONISM
Protectionism refers to government actions and policies that restrict or restrain international trade, often
done with the intent of protecting local businesses and jobs from foreign competition. Typical methods of
protectionism are tariffs and quotas on imports and subsidies or tax cuts granted to local businesses. The
primary objective of protectionism is to make local businesses or industries more competitive by increasing
the price or restricting the quantity of imports entering the country.
Source - http://www.investopedia.com/terms/p/protectionism.asp

6. ISSUES WITH PROTECTIONISM
Many countries are receiving pressure at
home to create jobs. The problem is that
government cannot create jobs directly as
that is up to private sector. Government
has a role and that is to do with policies,
like taxation or regulations or
trade/investment agreements with various
countries around the world.
Some countries artificially keep their
currency low as part of trying secure foreign
direct investment. Many countries feel
these countries that are using labor and/or
currency rates to keep their costs down are
not acting fairly as such will look at counter
measure through the form of tariffs/duties.
Some countries artificially control
investment by putting restriction on
ownership. Foreign ownership restriction
along with business subsidies can lead to
companies within those countries having an
unfair advantage over companies in other
countries.
Consumers can pay higher prices due to
import taxes

7. GLOBAL PROTECTIONISM
Source - https://www.cnbc.com/2019/02/05/un-warns-of-currency-wars-and-protectionism-if-trade-war-escalates.html

8. GLOBAL TRADE PROTECTIONISM
Source - https://www.washingtonpost.com/news/theworldpost/wp/2018/11/12/wto-2/?utm_term=.c7058dcb14cf
Washington Post – November 12, 2018

9. PROTECTIONISM – GLOBAL CONSUMER
• Source - http://www.jsonline.com/story/opinion/contributors/2017/04/13/roth-donald-trumps-
protectionist-trade-inclinations-hurt-wisconsin/100413028/
In contrast, hiking taxes on imports — as Trump has signaled — is regressive and
serves to hurt consumers, particularly the working class, by forcing American
consumers to pay higher prices. Whether it is a tariff or the BAT tax, consumers
ought to know that the end result will be higher prices on cars, clothes and
Coronas.
Milwaukee Journal-Sentinel – April 13, 2017

10. IP THEFT
Source - http://www.theglobalipcenter.com/wp-
content/uploads/2017/02/GIPC_IP_Index_2017_Report.pdf
Best Worse

11. TOP EXPORTING COUNTRIES
Source - http://www.worldatlas.com/articles/exports-by-country-20-largest-
exporting-countries.html
FORECASTED GDP GROWTH
Source - https://www.oecd.org/.../Growth-has-peaked-amidst-
escalating-risks-economic-outloo...

12. WORLD GDP GROWTH

13. WORLD GDP
Source – PWC

14. GDP GROWTH/COMMODITY PRICES
Source – Scotiabank

15. USA VS CHINA
TRADE 2016
Exports $116B
Imports $463B
Deficit ($347)B
New Trade 2017
• $43B Alaska LNG
• $37B Aerospace
• $170 Other

16. USA AND CHINA TRADE WAR
Source - https://www.industryweek.com/economy/trump-xi-agree-temporary-truce-bid-contain-trade-war?NL=IW-07&Issue=IW-07_20181203_IW-
07_943&sfvc4enews=42&cl=article_1_b&utm_rid=CPG03000001519274&utm_campaign=31183&utm_medium=email&elq2=c02fc733fbff47a2a5d7c5e7ac45d037
Industrial Week – December 3, 2018

17. CANADA TRADE DEFICIT
Source - Stats Canada
Issues:
• More taxes (Carbon Taxes)
• Tax hikes (Payroll Taxes, Income Taxes, Small Business Taxes)
• High hydro costs
• Pipelines approved, but not built
• Lack of capacity to expand exports (Ports, pipelines, roads, bridges)
• No new trade deals (Emerging Markets)
• Pushing social agenda (Agenda 2030)

18. JAPAN TRADE
Source -
https://www.canadianmanufacturing.co
m/exporting-and-importing/japan-trade-
deficit-highest-in-5-yrs-hit-by-china-
doldrums-227327/

19. BLOG -
PROTECTIONISM
• What is Protectionism?
• Protectionism refers to government actions and policies that restrict or restrain international
trade, often done with the intent of protecting local businesses and jobs from foreign
competition. Typical methods of protectionism are tariffs and quotas on imports
and subsidies or tax cuts granted to local businesses. The primary objective of protectionism is
to make local businesses or industries more competitive by increasing the price or restricting
the quantity of imports entering the country.
• Source - http://www.investopedia.com/terms/p/protectionism.asp
•
• What causes protectionism?
• Many countries are receiving pressure at home to create jobs. The problem is that
government cannot create jobs directly as that is up to private sector. Government has a role
and that is to do with policies, like taxation or regulations or trade/investment agreements
with various countries around the world.
• Some countries artificially keep their currency low as part of trying secure foreign direct
investment. Many countries feel these countries that are using labor and/or currency rates to
keep their costs down are not acting fairly as such will look at counter measure through the
form of tariffs/duties.
• Some countries artificially control investment by putting restriction on ownership. Foreign
ownership restriction along with business subsidies can lead to companies within those
countries having an unfair advantage over companies in other countries.
•
• Why is the world heading to more protectionism?
• Slow growth globally which is impacting both exports and the domestic markets for various
countries.
• New government leadership like Trump in the United States ran on platform to create jobs.
New government can lead to change in policies, like reducing taxation or reducing red tape or
tariffs/duties on imports.

20. BLOG - TRADE
• http://www.canadianmanufacturing.com/exporting-and-importing/canada-u-s-trade-not-broken-no-need-trump-fix-freeland-says-
181024/?custnum=11196356799&title=&utm_source=CMO&utm_medium=email&utm_campaign=161222B
•
• Key Quote “I think the reality is the trading relationship with Canada is the farthest possible thing from being broken. It is very balanced and
mutually beneficial”
•
• Fact:
• Mexico has leapfrog Canada in terms on trade with the United States - http://www.huffingtonpost.ca/2016/12/07/mexico-us-trade-
canada_n_13487730.html . “According to data from the U.S. Commerce Department, trade in goods between the U.S. and Mexico amounted to
US$245.3 billion this year through October, while U.S.-Canada trade totaled $230.4 billion”
• Canada is imposing carbon taxation and United States is not - http://www.cme-mec.ca/download.php?file=58ju7z2st.pdf – Canada needs to be
competitive in terms of taxation as well as regulations. Business investment by companies will go to various jurisdictions that maximize return on
investment (ROI)
• http://www.huffingtonpost.ca/2016/11/18/alberta-texas_n_13075844.html “Texas is right now in much better fiscal condition than Alberta.”
• Softwood Lumber - http://www.forestbusinessnetwork.com/66288/softwood-goes-deeper-than-just-lumber/ “The fact remains that Canadian
lumber companies continue to enjoy a supply of logs from government sources, while US counterparts that are in areas with a high density of
federally owned timberland continue to die off. This has far-reaching consequences for the US Forest Service and other land managers that no
longer have markets to sell their logs. That brings me to a question, why can’t mills positioned near the Canadian border compete for logs that
are in Canada? Now that the Canadian system is more market-based, shouldn’t logs be free to cross the border like lumber?”
• Canada has dropped out of the top 10 for FDI - https://www.slideshare.net/paulyoungcga/fdi-foreign-direct-investment-the-importance-of-
capital-inflow
• Ontario has fallen in terms of mining investment - http://www.mining.com/canadas-saskatchewan-manitoba-worlds-new-top-mining-
destinations/

21. USA TRADE AND
TRUMP
Source -
http://www.ttnews.com/articles/us-
trade-gap-narrows-seven-month-low-
record-exports or
http://www.startribune.com/ap-fact-
check-trump-ignores-strong-points-in-
us-trade/485093841/

22. PROTECTIONISM
POLICIES AND
WTO
The Trump administration’s economic policy is rapidly
breaking down the World Trade Organisation (WTO) system
and shattering the rules-based international order. On top of
imposing tariffs, the United States is blocking the
appointment of new judges to the body that interprets and
enforces WTO rules, decisions and agreements.
If this continues, the WTO will virtually cease to function by
the end of 2019.
This will cause a gradual breakdown of the multilateral
trading system and lead to a new international economic
order that is no longer anchored in liberal democratic values,
nor fully constrained by the rule of law.
Source - https://theconversation.com/australia-has-to-
prepare-for-life-after-the-world-trade-organisation-100522

23. WTO REFORMS
SOURCE - HTTPS://IISD.ORG/BLOG/WTO-REFORM-2019

24. STOCK MARKET / GLOBAL INVESTMENT
Source – OECD and BMO Economics

25. IMMIGRATION/REFUGEE – GEOPOLITICAL EVENTS
• I am all about helping people but let’s start going to the root cause
https://m.washingtontimes.com/news/2018/jan/23/roughly-80-of-all-voters-say-us-needs-secure-
borde/?utm_campaign=shareaholic&utm_medium=facebook&utm_source=socialnetwork&fbclid=IwAR0K7_f
ms2PQCAEdPrRGY3IEzq8Z-zMkVoVR4bp2WlmsKAhomFeKw-Mr1NI
If people want to come to USA and Canada that is there choice, but they should do it through proper channels
•
• I applaud people’s passion to help people but too many people do not grasp geo-political events
Source - https://www.slideshare.net/paulyoungcga/understanding-cause-and-effect-of-geo-political-events-
january-2019

26. INDIA AND USA
Source -
http://www.globaltimes.cn/content/114
1048.shtml

27. FOREIGN RELATIONS RANKING
Source - https://foreignpolicy.com/2017/09/06/report-u-s-ranks-near-bottom-
in-commitment-to-global-development-foreign-aid-diplomacy/
2018 ranking

28. SOLUTIONS / TRADE
Source - https://piie.com/blogs/trade-investment-policy-watch/three-ways-reduce-trade-deficit
1. Consume less and save more. If US households or the government reduce consumption (businesses save more than they spend), imports
will drop and less borrowing from abroad will be needed to pay for consumption. This means that consumption taxes—like those that nearly
all other countries in the world have—could help reduce the deficit, by discouraging consumption, increasing saving, and reducing the
government deficit. In contrast, an unfunded tax cut, such as the one proposed by the administration, will expand the deficit because the
government will be consuming more relative to its earnings
2. WTO needs to be reformed to ensure all countries follow similar policies when it comes to FIPA and Trade Agreements
3. Countries need to stop pushing their social agenda on to countries.
4. Depreciate the exchange rate. Trade deficit reversals are typically driven by a significant real exchange rate depreciation. A weaker dollar
makes imports more expensive and exports cheaper and improves the trade balance. Given the dollar is the world's reserve currency, and
still regarded as the safest for investors, it tends to run stronger than other currencies. But when foreign governments actively push the
dollar up to maintain their surpluses, the United States could counteract interventionby selling dollars and buying foreign currencies. The
administration could also encourage the adoption of other major currencies, such as the euro, yen, or renminbi, as alternative reserve
currencies. A weaker dollar would be good for the US economy, but relinquishing the role as the dominant currency would reduce the power
of the United States in global markets and the seigniorage (profit) earned
5. Tax capital inflows. One of the reasons that the United States runs a trade deficit is because borrowing from abroad is cheap and easy. If it
were more expensive, US citizens and the government would borrow less. A tax on (non–foreign direct investment) capital inflows that rises
with the size of the inflow could reduce excessive borrowing for consumption and help close the government imbalance. While some worry
that capital controls could distort asset prices and reduce investment, they could also curb excessive speculative investment, such as
happened before the financial crisis.