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There's no summer vacation for Canada on the trade file

by Colin Robertson

The Globe and Mail
June 27, 2017

There is more acrimony this week around the Canada-U.S. trade relationship as the softwood-lumber dispute comes to a boil. This week’s anti-dumping levies, on top of the countervail duties already applied, should serve as a wake-up call to affected provinces to get their act together.

The U.S. Lumber Coalition cleverly differentiated between Canadian companies operating in different provinces. The overall marginal rate only aggravates the differing perspectives: interior versus coastal British Columbia (the province with the most at stake), Alberta, Ontario, Quebec and New Brunswick.

The political situation in British Columbia has created complications but it should not prevent the respective provincial “wise persons” – David Emerson (B.C.), Gary Doer (Alberta), Jim Peterson (Ontario), Raymond Chrétien (Quebec) and David Wilkins (New Brunswick) – getting together and figuring out a common position.

Then they need to sit down with the U.S. Lumber Coalition. If they can work out a deal, they can expect a rapid blessing by the national governments, both of which would prefer softwood lumber out of the way before the renegotiation of the North American free-trade agreement.

The NAFTA clock is already ticking. The U.S. Trade Promotion Authority requires the Trump administration to publish a detailed summary of its negotiating objectives and expected “positive” outcomes 30 days before Aug. 16, the earliest date that the negotiations can begin.

Both the Mexicans, who fear that unfinished negotiations could affect their presidential election (July, 2018), and the Americans, who want it done before their midterm elections (November, 2018), want a quick deal. It is possible, especially as President Donald Trump seems more interested in deal-making than rule-making.

Hearings this week in Washington, hosted by the U.S. States Trade Representative (USTR), will supplement the 12,453 written comments already submitted and available online. The U.S. process has its critics, but we could learn from its transparency.

The government of Justin Trudeau has positioned itself well for the coming negotiations. Even if Mr. Trudeau and Mr. Trump disagree on fundamentals such as climate, migration and multilateralism, they can speak frankly. This is important, especially as most Canadians, and the citizens of our friends and allies, dislike Mr. Trump.

The Trudeau-Trump agenda, set at their February meeting, focuses on creating middle-class jobs and on areas of shared interests: defence, shared infrastructure, border pre-clearance, energy security, joint regulatory reform and empowering female entrepreneurs.

Their agenda is making headway.

The Trump administration quickly permitted the Keystone XL pipeline. Empowering female entrepreneurs earned a shout-out in Mr. Trump’s address to Congress. The Trudeau government will increase defence spending from 1 per cent to 1.4 per cent of GDP. It still needs to move on its pre-clearance legislation (Congress passed its legislation last December).

Progress will also depend on the deep and profoundly tangled web of personal relationships that have long characterized Canada-U.S. relations matters.

As Franklin Roosevelt once observed, ours is a “forthright fellowship with neighbours who are also friends.”

Since the initial Trudeau-Trump meeting, there has been a veritable flood south of Canadian ministers, provincial premiers and legislators from all levels of government to Washington and throughout the United States, especially into Trump territory. They carry the message of mutually beneficial, job-creating trade and investment with the reminder that we are also steadfast allies and good neighbours.

This week, with strong stakeholder encouragement, Western premiers and Ambassador David MacNaughton are meeting with their counterparts in Montana to discuss joint economic development, including integrated supply chains, energy, and practical matters such as wildfires and forest management. Similar regional meetings throughout the summer underline the value of personal relationships.

This is not to say the road to a new deal will not have a few bumps. Mr. Trudeau may not have a Plan B, but his government, in tandem with Mexico, is wisely preparing a list of punitive trade actions directed at U.S. congressional leadership on both sides of the aisle that we can take if the negotiations go off the rails.

As we learned in the country-of-origin dispute, Americans need to understand that protectionism has a cost.

With common sense, we can avoid begger-thy-neighbourism.

Happily, the Canada-U.S. relationship has very stable foundations. Its pillars are our shared institutions and the hundreds of agreements, some dating back more than a century, embracing all levels of government. Despite all the recent noise, we need to keep in mind that, in a world in disarray, the two countries continue to be a model of neighbourly relations.

A former diplomat, Colin Robertson is vice-president and fellow at the Canadian Global Affairs Institute.

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