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From: acton@ubc-cs.UUCP (Donald Acton)
Newsgroups: can.politics
Subject: Re: High Duties => Increased Competitiveness?
Message-ID: <24@ubc-cs.UUCP>
Date: Wed, 25-Sep-85 23:41:28 EDT
Article-I.D.: ubc-cs.24
Posted: Wed Sep 25 23:41:28 1985
Date-Received: Thu, 26-Sep-85 02:44:18 EDT
References: <1394@utcsri.UUCP> <2188@mnetor.UUCP> <2223@mnetor.UUCP> <14@ubc-cs.UUCP> <1692@watdcsu.UUCP> <2550@watcgl.UUCP>
Reply-To: acton@ubc-cs.UUCP (Donald Acton)
Organization: UBC Department of Computer Science, Vancouver, B.C., Canada
Lines: 53
Summary: 

In article <2550@watcgl.UUCP> jchapman@watcgl.UUCP (john chapman) claims:
>> "The North-South Institute in Ottawa estimated in 1981 that consumers
>> had to pay an additional $500 million for their clothes, or about $83,000
>> a year for every job saved." (That works out to about 6000 jobs.)
>
>Normally I'm willing  to take this kind of information at face value
>but it's pretty hard to believe these figures without some explanation.
>What are they using as a base price for clothes?  Perhaps the labour
>component of the cost of shoes is relatively small so that any increase
>in the price of materials is a high percentage increase in the retail
>price.  Since these figures come from the North-South institute are
>they for Canada & US (& maybe Mexico) in which case they work out to
>< $2/yr/person (pretty small) or are they just for Canada?  

The Canada West Foundation has done similar calculations and has taken 
the total amount of import duties and used that as a basis for determining the 
costs associated with protectionism. (That is, the costs attributable to
other artificial barriers like quotas weren't even considered.) They 
determined that import duties alone cost every man, women and child in this
country $136.62 (1983). If translated into manufacturing jobs this 
amounts to a subsidy of $2,028.58 for each job. This is considerably 
less than the $83,000 cited above, however it considers all manufacturing
not just a specific industry and it doesn't include the extra costs
attributed to quotas and the like. 

The Foundation did further calculations to see where in the country these
benefits accrued. Low and behold if they didn't discover that the four
Western provinces and the Maritimes lost $544 million. This is how much 
more those regions paid in duties then they received in subsidized 
manufacturing jobs. Ontario and Quebec on the other hand gained $544 million.
Ontario only has 35.4% of Canada's population yet it has 50.4% of the
manufacturing  jobs while Quebec with 26.2% has 28% of the manufacturing jobs.
If free trade were to come about the short term loser would certainly 
be Ontario while the rest of country would get to enjoy reduced prices on 
consumer goods. However, I firmly believe that the manufacturing industries
could survive the blow to their egos and eventually become competitive.
(In a separate article this past weekend it was pointed out that the duty
on clothing is 22%.)

One of the arguments often put forward in favour of tariffs is that it 
protects immature industries or allows old ones to retool to become 
competitive. The problem with this is that these industries never seem to 
get big enough or strong enough to come out from under the protectionist
umbrella. For example the shoe and textile industries have advocated
and received protectionist tariffs for over 15 years now. They always argue
that they need just a few more years to get new equipment and become
competitive. Once they get the tariffs they seem to forget all about 
modernizing and continue on in their old ways. If industries knew that they 
would never be able to have any tariffs imposed then we wouldn't be 
in the situation we are now.


 Donald Acton