Trade Liberalization Isn't Dead

With all of the uncertainty and difficulties the world's financial ructions are causing, it's nice to know that some governments are still taking positive long-term steps. That's how news today of negotiations between Canada and the EU on a massive trade agreement should be received:

Following a meeting in Quebec City, Canada’s prime minister, Stephen Harper, and President Nicolas Sarkozy of France, who is the president of the European Union as well, are expected to sign an agreement for preliminary negotiations meant to create a trade pact between Canada and Europe that would be even more sweeping than the North American Free Trade Agreement.

A person who is familiar with the government’s plan, but who did not want to be identified as upstaging an announcement by two heads of state, said the agreement would begin “a scoping exercise leading to the launch of talks.”

It follows the release Thursday of a 192-page study by the Canadian and European governments that concludes such a deal could increase exports from Canada to Europe by 20.6 percent by 2014.

With so much talk of the United States' declining global economic leadership, it's tempting to see this as an example of the potential for trade patterns to shift away from the United States. After all, the Canadian economy is likely to get hit hard by declining demand in the United States, and to welcome alternatives.

But as protectionist rhetoric heats up in the US, any increased trade by major economies seems to be a good development to me. It's not a good thing for the United States to be so central, frankly, because it helps when other countries are able to pick up the slack if and when the US economy takes a downturn. In a best-case scenario, the negotiations between Canada and the EU could encourage the US turning inward itself, and maybe open up trade with Europe even more as well.

Here's to hoping both US presidential candidates are paying attention to the fact that trade relations, even among developed countries, can still matter. And that if the US is closing itself off while others continue to open, then any declines in US economic leadership will only accelerate.