U.S. anti-trade sentiment stalling softwood lumber deal, trade minister says

September 6, 2016

By: CBC News

Canada’s international trade minister says anti-trade sentiment in the U.S., whipped up by Donald Trump and others, has made getting a deal on softwood lumber “fiendishly” complicated.

“It’s a tough issue and there are some significant differences between the U.S. and the Canadian position, but we are working very, very hard,” Chrystia Freeland said in an interview with Chris Hall on CBC Radio’s The House.

The Toronto-area minister said she would be meeting with her American counterpart, U.S. Trade Representative Michael Froman, on the margins of the G20 meeting in Hangzhou, China, on Sunday to discuss the softwood lumber standoff.

Time to reach a deal is ticking away. The previous softwood lumber agreement expired Oct. 12, 2015, but included a grace period that prevents the U.S. from launching any trade action against Canadian producers for one year.

When Prime Minister Justin Trudeau and President Barack Obama met during Trudeau’s official visit to Washington in March, Froman and Freeland were given 100 days to negotiate and set the parameters for solving the softwood trade dispute.

U.S. alleges Canadian lumber subsidized

That deadline has some come and gone, and little has been achieved. The two sides only said they had identified “shared goals” and that negotiations are ongoing.

Canada’s ambassador to the U.S., David MacNaughton, recently said “a successful negotiation is not guaranteed,” in the face of strong opposition from American legislators.

In July, 25 senators sent a letter to Froman that alleged Canadian lumber is subsidized, unfairly traded and has had decades worth of well-documented adverse economic impacts in the U.S.

“Lumber imports continue to severely harm United States mills, workers and communities,” reads the letter, signed by prominent senators including Marco Rubio.

The tense negotiations are unfolding in a time when a large part of the American electorate is pushing back against the forces of globalization — a trend some argue has hollowed out the U.S. middle class to the benefit of the business class. The anti-trade sentiments espoused by Republican presidential candidate Trump and others have encouraged lawmakers to take a more isolationist approach to curry favour with voters. Freeland said this perspective stands in stark contrast to the decidedly pro-trade Liberal government.

Protectionist sentiment in U.S.

“We are at the table very intensely with the U.S. But it’s important for Canadians to appreciate this is a — historically — fiendishly complicated and difficult issue. The protectionist anti-trade sentiment in the U.S. creates a particularly difficult environment in which to hammer out a deal, but we’re definitely hammering,” Freeland said.

The original deal to revoke U.S. trade barriers against Canadian lumber was signed in 2006 and renewed in 2012, after years of dispute at the World Trade Organization and an estimated 9,000 to 10,000 job losses for the Canadian industry.

More than $4.5 billion in tariffs were eventually returned to Canadian exporters. Since then, export charges have been levied on Canadian products when the lumber price dropped below a certain amount.

U.S. lumber companies oppose the import of softwood, claiming Canadian companies have an unfair advantage because of their preferential access to Crown-owned lands with lower stumpage fees.

Freeland champions canola reprieve

Freeland, who is travelling with the prime minister in China, championed the short-term reprieve the government negotiated with China on the export of canola. The two countries have disagreed on the level of “dockage” — foreign material such as weeds, other crops and detritus — that should be considered acceptable in canola shipments.

Freeland, whose father is a canola farmer, said the two sides have agreed to work towards a long-term agreement on rules for Canadian shipments. She added that Canada hopes to achieve this in the coming days and weeks.

Canada will also apply to join the Chinese-backed Asian Infrastructure Investment Bank (AIIB), an institution that eases access to capital for investments in transportation, power and telecommunications projects. In order to join, countries agree to contribute funds in the form of shares.

Washington has so far refused to join the bank out of fears it will provide loans to developing countries without requiring caveats about the environment, labour rights or anti-corruption reforms, as are typically included in loans from the World Bank and International Monetary Fund.

Experts raise red flags over new Chinese bank

David Mulroney, Canada’s former ambassador to China, has raised red flags about the bank.

“I still have reservations,” he said in a separate interview with The House. “Is China ready to host a major financial institution? My own sense is that it really isn’t. China is unready from the point of view of transparency. It’s a place where lawyers and journalists get put in jail, and it’s got a very selective approach to international rules and regulations. It follows the ones that suit it.”

Freeland conceded that doing business with China is “hard,” but said Canadian companies stand to gain from membership in the new bank.

“Canada has huge infrastructure expertise. We have a lot that we can bring to the AIIB, and our membership there will deliver real insight into opportunities in the vast infrastructure build-up that we’re seeing in Asia. Canada will have a seat at the table, Canada will have a line of sight into what is going on and the projects the bank is involved with, and that’s certainly good news for Canadian companies,” Freeland said.

By: CBC News

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