On the first, on whether there is a trade surplus or a trade deficit, I think that's a very important question. In the rarefied world of the computable general equilibrium models, Mr. Emerson is correct: if you assume that all factors will eventually be fully employed and that your country is inherently competitive at producing whatever it is you do relatively best, then he's quite right, you'll have surpluses with some countries, deficits with others, and on the whole you'll be more productive and better off.
The problem is that isn't the world that we inhabit. Not all factors are produced. Competitiveness matters. You have to be competitive on actual cost grounds in order to successfully produce something and export it. In that world, trade surpluses and deficits do matter, and we see that in the auto industry today incredibly.
In the late 1990s we had a trade surplus in automotive products of $15 billion, we were an incredible success story. Suddenly that has evaporated, and this year we will have an aggregate trade deficit in automotive products of $8 billion, and that directly corresponds to the loss of 20,000 to 25,000 well-paid auto jobs because of that trade deficit. A deal with Korea, even according to the government's own studies, will exaggerate and make worse that automotive trade deficit.
In the real world, surpluses and deficits do matter, and how you perform in total is based on how you perform with each one of your trading partners.
In terms of the difference in approach between the two governments--between the Liberals, where it started, and the Conservatives today--I have sensed, if you like, a greater determination, or I'd almost call it bull-headedness, under the current government to try to reach an agreement at all costs so that they can hold it up and say, “Look, we have a foreign policy achievement here.”
That's what concerns me, that this is being driven by political motives rather than what's actually best for our economy.