When it comes to international trade trying to understand how the intricacies of trade work is frankly impossible, at least for a neophyte like myself, although I try.
At the heart of trade one hopes the key principle of supply and demand remain a foundational concept.
The greater the demand for a product and the lower its supply, the higher the value of that product should be. If 10 countries seek to buy a shipload of wheat but there is only enough supply for six ships, it stands to reason the countries wanting the wheat will pay more to ensure they get one of the six.
Of course the opposite is true as well. The same 10 countries are shopping for wheat and there are 15 shiploads to be sold, they are going to be a thrifty lot in terms of what they are willing to pay.
One would also hope to an extent the marketplace would operate in such a way to allow the lowest cost for producers to do their thing. That seems to be the logical approach, although this is the principle that often hits some serious bumps in the road.
It is all well, and good, to turn to a low cost producer half a world away for commodities, but in a world where there are often disruptions to supply, weather disasters, wars, political change all posing possible issues, that low cost of production supply is not always secure.
And, of course one best be aware of why one country is lower cost in its production than another. If they achieve a lower cost based on more lax safety controls, or on blatantly unfair and unsafe work conditions, the price may still be deemed too high to pay.
That is why key commodities, milk and flour coming to mind for the North American pallet, are often seen as important to maintain with a country's own borders to ensure some supply is maintained. We in North America may not see that as critical but in Europe where the ravishes of two world wars are still keenly remembered, or Africa where civil strife is often rampant, home production is more keenly pursued.
Of course any trade principle goes by the wayside when governments become involved.
In Canada we should expect that trade with our neighbour the United States is about as straight forward as loading a truck and heading south to a market.
But that is certainly not the case. There have been trade challenges over wheat and pork and soft wood lumber that have dragged on for years over the past 25-years.
And now the U.S. International Trade Commission has announced an investigation into Canadian blueberry imports. The Trade Commission launched the investigation in September following reports that U.S. farmers are being hurt by cheaper imported berries from Canada - which suggests low cost production is not a key to trade, at least blueberries.
And so the mystery of trade continues with politics and domestic food security ultimately trumping a more common sense approach.
