Canadaâ€™s Trade Deficit with the EU Doubles
On last nightâ€™s Lang & Oâ€™Leary Exchange, I debunked the claim that the trade deal between Canada and the European Union (EU) will create 80,000 Canadian jobs. The conservative panelists did not even try to defend this figure (see this CBC video, starting at 15:45).
As Jim Stanford has previously explained on this blog, the governmentâ€™s model assumes full employment and projects higher output based on improved productivity from free trade. It is disingenuous to then translate that additional output back into extra employment.
Another point I made is that, last week, Statistics Canada released merchandise-trade figures for August. In the first eight months of this year, Canada ran a trade deficit of $14 billion with the EU.
That already exceeds the total annual deficits of $11.9 billion in 2012 and $12.0 billion in 2011. In other words, our trade deficit with the EU has jumped from $1 billion per month to almost $2 billion per month this year.
If free trade amplifies existing export and import flows, the result will be an even larger Canada-EU trade deficit. And unless you assume full employment, a larger trade deficit with the EU would mean a loss of output and jobs in Canada.
UPDATE (October 19):Â My recent Lang & Oâ€™Leary discussion is now on YouTube:
I also spoke about the overall Canada-EU trade imbalance for a few seconds at the end of the beef and cheese story on Thursdayâ€™s CTV National News.