i ovtibiton i iJ ; ty «iki! fee Magazin e Section Trade patterns have changed, we must keep By NORMAN FREED C2rada’s traditional pat- i an of foreign trade i about to collapse. A ae trade policy, as an r gral part of a new na- nal policy, should have ®en adopted long ago to a the radical changes ir: orld trade patterns. beta trade has always i. one important place Dur S economy. While ‘ pee cation is less than Teent of the world pop- Ulatj aces for a long time, we ae third place in world at = aed recently we slip- Ho a place. We are still much 4 Many countries with arger populations. © relative importance of ex eee trade for Canada as Am with the United is i hile very substantial. 3 nly about 10 percent Ss annual production in in ey depends on exports, ae Perea a it is from 20 to 25 The | difference a) ™ the smallness Ome m Cur ego inf] springs of our arket, the nature of tea Nomy and the historic oe ae Britain se the € economi evel- opment of ae : : Te MATERIALS our ee etout our history, Sisteq Ports, in the main, con- of agricultural and Products, paper, raw Is and semi-processed of oy, ts. This was the nature still ©xport when we were remain British colony. This aa €d the nature of our ae after we won our in- ; pec’ from Britain. ier re Well known, no soon- Den nes We gained our inde- Ww ce from Britain, than he sah to lose control of States. nomy to the United Wo od Materia Produce oe More modern methods oy a some variations, the Same OSs perpetuated the trade Pattern in our export that : The only change was e ae _at one time we were dependent on Britain, we now became dependent on the U.S.A. As we look back into his- tory, we can observe that there has been a certain con- sistency. We have been con- sistently behind the times. The pattern of world trade has been undergoing a radi- cal change since the end of World War Il. The following three events were mainly responsible for bringing about a new trade pattern: e The emergence of social- ism as a world system of soc- jalist states with its world trading system. e The sweeping national liberation movements and the disintegration of the colonial empires, including the British Empire. e The drive of the U.S.A. for world domination. Great Britain’s decision to join the European Economic Community, better known as the Common Market, is ina sense a recognition of the fact that a new world relationship has emerged. Britain has decided to aban- don a_ policy pursued for generations. With the tech- nique of the “balance of pow- er”, setting France against Germany, and Germany against Franée as the situa- tion demanded, Imperial Bri- tain dominated Europe poli- tically and economically for generations. The “balance of power” policy cannot operate any longer. Europe is not what it used to be. Eastern Europe is now socialist. GONE FOREVER Britain is not what it used to be either. The Empire is gone forever. So, if you can’t beat them, you join them and that is what Britain decided to do. Britain is hoping to gain leadership of Western Europe directly instead of through the “balance of power” as soon as the two old men, de Gaulle and Adenauer depart from the scene. After all, can’t live forever. pe ig pl aes This float of the United Fishermen and Allied Workers Union in Vancouver’s May with the times Day parade emphasized the need for salmon conservation. New trade policies could, as outlined in this article by Norman Freed, open up vast new markets for B.C.’s fishing industry. The fact is that Britain is turning to Western Euprope for the broad ‘markets the Empire once provided. The British Empire, as a broad market, has been out of ex- istence for a long time. Even the term itself is not in use anymore. The Commonwealth which took its place is mostly a sen- timental concept with little real political or economic power. The general trading preferences, established some 30 years ago within the Em- pire, will be finished when Britain goes into Europe. This development has caught Canada unprepared and off balance. Not because of a failure to see it coming — even the blind could see the handwriting on the wall — but because both the Lib- erals and the Conservative government refused to change the direction of Canada’s trade policy to meet the changing world. Ever since Canada gained her independence from Great Britain she pursued a policy known as the “triple play” trade system. This was a sys- tem by which Canada sold more to Great Britain than she purchased and used the surplus to pay for imports over exports to the U.S.A. An unfavorable trade bal- ance with the U.S.A. and a favorable trade balance with Great Britain and the rest of the world has been a regular feature for many years. Last year, for example, our exports to the U.S.A. were 54.2 percent while our im- ports were 66.9 percent. Our exports to Great Britain were 15.6 percent, imports 10.8 percent. Other Commonwealth coun- tries — exports 5.05 percent, imports five percent. To all _ other countries, Europe, Japan, Asia, Latin America and mainly People’s China, exports were 24.5 percent, imports 17.3 percent. The old “triple play” sys- tem has not worked for a long time and should have been -thanged long ago. Our sur- plus from all countries other than the U.S.A. has not been sufficient to cover our deficits from the United States. TRADE DEFICITS If we take our current ac- count dealings with all coun- tries for the five years 1956- 1960, Canadian deficits have amounted to a total of $6,700 million. Of this figure, the deficit with the US.A. totalled $7,000 million, offset by a surplus of $300 million in transactions with all coun- tries except the U.S.A. How could the “triple play” system work under such circumstances? ’ There are those who argue that we should be happy that our deficits in current - ac- counts were balanced by the inflow of foreign capital, (mainly from the U.S.A.) less the amount of capital export- ed from Canada to other countries. This argument is complete- ly false. It’s like a person unable to pay his bills at the end of the year who borrows more money, and then not only owes for the unpaid bills but also the new debt. One does not balance the other. It compounds the problem and in the case of Canada the current account deficits and the inflow of capital from the U.S.A. only increases U.S. domination of our economy. The old “triple play” for- mula has not been effective, particularly since World War II. All the efforts—the Ab- bott plan, currency manipula- tion, dollar stabilization, etc. — have been feeble attemots to tackle the current account deficits without success. The main reason for their failure is because they tackled the effect and not the cause. The distortion of the eco- nomy which results from U.S. domination is what causes Canada’s balance of payment problem. BRANCH PLANT ECONOMY The inflow of capital which started on a large scale about 30 years ago to take advan- tage of “preferential tariffs” within the British Empire led to the establishment of a branch plant economy in Can- ada, dependent on made-in- U.S.A. parts. This branch plant economy set the pattern for our huge imports from the U.S.A. It also set the pattern for our exports to the U.S. and other parts of the world. The U.S. monopolies only developed those sectors of Canada’s economy required to feed U.S. industry and safe- guard U.S. exports to other - countries. The inflow of U.S. capitai determined Canada’s imreris and exports. It led to an c er emphasis on production of Yaw and semi-processed mat- erials. It distorted our eco- nomy and conditioned our whole national economic policy. To reduce imports, to in- crease exports to all coun- tries wanting to deal with us, we must end the old “triple play” and adopt a new na- tional policy of developing a manufacturing industry which will produce parts we now import from the U.S.A. and produce goods we can sell to all countries. May 11, 1962—PACIFIC TRIBUNE—Page 5