US stocks hit fresh all-time highs overnight as President Trump’s ‘dysfunctional’ and ‘chaotic’ White House secured a new trade deal with Canada.
The Financial Times has the story:
‘President Donald Trump has hailed Canada’s eleventh-hour decision to join the US and Mexico in a revamped trilateral trade deal as “historic news” for America and the world, sparking a rally across North American financial markets.
‘The agreement, which until Sunday night had seemed out of reach for the US’s northern neighbour, caps months of tensions over the future of Nafta. The US president, who called it “the most important trade deal we’ve done so far”, said the US carmaking and farming sectors would in particular benefit from the deal.
‘Mr Trump said that the deal was groundbreaking and a “new dawn” for the auto industry, since it introduced new rules of origin requiring a certain share of the content be produced in North America, and with workers’ wages exceeding $16 per hour. “I don’t want to see our companies leave and fire our workers, those days are over,” he said.’
As I said a few weeks ago, if you want to understand the motives behind Trump’s trade deals, you must watch Death By China, a documentary made by Peter Navarro, one of Trump’s trade advisers.
Also understand there is really no such thing as ‘free trade’. There may be in some goods, but in many others there are all sorts of conditions placed on trading relationships.
In the case of the US-China trade relationship, the documentary makes it clear that the Clinton Administration, followed by Bush, sold out the US manufacturing sector. It did this by allowing ‘free trade’ to flourish with China.
This involved taking advantage of the lack of environmental and labour market regulations in China. The result? Environmental degradation on a massive scale, and widespread worker exploitation.
Western democracies have fought hard to protect workers and the environment from the forces of economic growth. This is why China was such an appealing entrant into the World Trade Organisation in 2001. A Communist state with no care for the environment or workers? Sweet!
But I ask, is that really free trade? If one country legislates to protect workers and the environment, and the other does not, is that genuine free trade? Labour and environmental costs are real.
China is seeing this now. Pollution is so bad in some cities it has now become a political problem. The government is scrambling to avert an environmental disaster thanks to decades of neglect…neglect that saw a select bunch of families gain incredible power and wealth. Not bad for a bunch of communists!
China’s lack of responsibility
It should come as no surprise then to see that China accounts for nearly 30% of global carbon dioxide emissions. And despite being a part of the Paris Agreement, China isn’t required to do that much. As The Hill reported back in May this year:
‘…an analysis from Greenpeace indicated that China’s 2018 carbon emissions were on track to grow at the fastest rate in six years. The study, based on government data regarding the use of coal and other energy sources, shows carbon output rising 4 percent in the first quarter of this year. Analysts are projecting similar gains over the next several quarters.
‘The weakness of the Paris Agreement was that it was lopsided, requiring little from China and a great deal from the U.S. President Obama committed the United States to reducing carbon emissions in 2025 by 26 to 28 percent, which would have meant a substantial jump in electricity costs.
‘By contrast, China committed to boosting non-fossil fuels to around 20 percent of its overall energy mix by 2030 (a project already underway) and a “hope” that emissions might peak at that time. As one analyst commented in the New York Times, “What China is pledging to do here is not a lot different from what China’s policies are on track to deliver.”
‘As vague as its goals were, it is becoming clear that the country is unlikely to meet them. To do so would require sacrificing growth to rein in pollution. Since the Chinese Communist Party has pledged to double China’s 2010 GDP by 2020 and to create a “moderately prosperous society” by 2021, that is extremely unlikely.’
The Paris Agreement also asks developed countries to contribute to a fund to help developing nations with climate change. The fund is meant to raise an astounding $100 billion a year, but that doesn’t seem likely.
In 2015, Australia committed to spend $1 billion over five years. We have invested over half of that, and are expected to contribute a further $400 million, although Treasurer Josh Frydenberg said that won’t be happening.
Why Australia should say no to the Paris Agreement
Let me be clear here. The principle of giving to poorer nations is a noble one. But when that giving is facilitated through a bureaucratic/technocratic institutional set up, it’s nothing more than a money grab.
Poor nations will get cents on the dollar in effective aid, while the bureaucrats will siphon off the rest. It’s a stitch up.
You want to know why pollution is so bad and everyone is freaking out about climate change?
Try thinking about the world’s insane debt levels. In July, CNBC reported that global debt levels hit a record US$247 trillion.
Debt is simply future demand brought forward. When you think about that level of debt, can you see how much ‘extra’ growth we’ve achieved over the past few decades?
And China accounts for a good chunk of that growth, a country that is responsible for nearly one-third of global carbon emissions.
These bankers are pure genius. First, they benefit from the explosion of debt. This causes the ‘problem’ of climate change. Then, they get their technocratic servants to demand ‘the rich’ throw in US$100 billion a year to solve the problem that only more money can fix.
It’s a fix alright. And we’re the suckers!
Saying no to the Paris Agreement is not about climate change denial. It’s about saying no to thieves in suits. It’s about achieving reductions in emissions on a scale that doesn’t damage our economy, while countries like China go on doing as they please.
Editor, Crisis & Opportunity
PS: If you’ve got an interest in the share market, but completely new to the whole deal and don’t know where to start…this report is for you. Get started now.