Canada: America’s frustrated trade partner

by Colin Robertson

The Globe and Mail
June 9, 2015

What’s $3-billion? It’s the price that Canada will exact from the United States in reparations over the country-of-origin labelling dispute.

Armed with a World Trade Organization (WTO) ruling, Canada is threatening to slap retaliatory surtaxes of up to 100 per cent on U.S. products, including chocolates, wine and jewellery, cereal and orange juice, barbecues, stoves, swivel seats and mattresses.

Final WTO authorization will take some months. The tax goes into the national account. That’s small comfort to Canadians who will pay higher prices for those products, especially when our drooping dollar means that we already pay more for U.S. imports.

The country-of-origin labelling (COOL) dispute is rooted in U.S. protectionism – American ranchers who do not like competition from Canada and Mexico. Their lobbying of Congress resulted in COOL’s inclusion into the 2008 Farm Bill.

The rule defied the logic of North American livestock supply chains. For decades, U.S.-born cattle were sent to feed-lot alley in Alberta or south of the Rio Grande into Mexico and then returned to the United States for slaughter.

Canada and Mexico fought the measure in U.S. courts – without success – and through the WTO. Successive WTO rulings have sided with Canada and Mexico. It’s another reminder of the advantages that multilateralism provides to Canada. Through its rules-based institutions, multilateralism levels the playing field for small and medium nations against big countries.

The threat of retaliation has concentrated congressional minds and the Republican majority in the U.S. House of Representatives is moving to rescind the legislation. Canada and Mexico need to stay united and keep up the pressure on the U.S. to repeal COOL.

Congress also will soon decide the fate of President Obama’s Trans-Pacific Partnership (TPP). Mr. Obama’s request for fast-track authority, obliging an up or down vote in Congress on trade deals, has passed through the Senate. It now requires a majority in the House of Representatives.

Without fast-track authority, Canada and the other TPP partners won’t conclude negotiations. Why would we renegotiate the deal a second time with Congress, the cradle of special interests?

Any skilled negotiator holds their cards close until the final round. Canada has held out responding to the American request that we open to competition our heavily protected dairy, chicken and egg industries.

It should be an easy decision for Prime Minister Stephen Harper, for whom advancing freer trade is a government priority.

Reform of supply management is overdue. It is costly to the consumer and the industry should be able to compete internationally with the kind of adjustment assistance given, after the Canada-U.S. free trade agreement (FTA), to our now successful wine industry.

In bargaining the reform of supply management at the TPP table, we should push for better access for our forest products. We are likely to do better at the multilateral negotiating table, especially given the approaching expiration (October) of the current Canada-U.S. lumber agreement.

Lumber disputes with the United States predate Confederation. At U.S. insistence, lumber is managed through regional quotas. The lesson is twofold: diversify our markets while seeking improvements through multilateral agreements such as TPP.

Last week, Derek Burney, who as a foreign service officer persuaded Brian Mulroney to take the “leap of faith“ on the FTA, gave the O.D. Skelton Lecture in Ottawa’s Pearson Building.

Mr. Burney, who helped close the FTA deal when he was Mr. Mulroney’s chief of staff and later served as our ambassador to the United States, argued that we need to “recalibrate and counterbalance” the U.S. relationship. The United States is neither willing nor able to give us a “special relationship,” he said.

He declared that it is time for us to “exploit our strengths beyond North America.” This means a coherent, consistent strategy on China and repositioning our security role, especially in the Pacific. It also means putting our economic house in order. Mr. Burney warned against coasting on our resources and overreliance on the U.S. market.

Mr. Burney is persuasive. We should be opening doors to markets within the Pacific and Atlantic.

But the opportunities for trade within North America remain immense, especially as President Enrique Pena Nieto’s reforms make Mexico an even more attractive partner.

Three billion dollars is roughly the value of Canadian exports last year to India or Brazil. It’s also the value of what we export to the United States every 36 hours.

The disputes over lumber, labelling and pipelines are frustrating. They underline why we need to fully engage in trade negotiations and the insurance provided to us through muscular multilateralism.


Be the first to comment

Please check your e-mail for a link to activate your account.
SUBSCRIBE TO OUR NEWSLETTERS
 
SEARCH
PODCAST

Canada's State of Trade: Getting Our Goods To Market

May 17, 2018


On today's Global Exchange Podcast, we continue our series on the state of Canadian trade in a world of growing populism and protectionism. Today's episode, recorded during our February 13th State of Trade conference in Ottawa, features Bruce Borrows, Jennifer Fox, and David Miller in conversation with the Wilson Center's Laura Dawson about getting Canadian goods to international markets.


IN THE MEDIA

Between Trump, Iran and North Korea, Canada’s G7 has a high potential for chaos

by Chris Hall (feat. James Trottier & Colin Robertson), CBC News, May 18, 2018

The struggle Trudeau could face if Kinder Morgan walks away from Trans Mountain

by Robert Tuttle & Michael Bellusci (feat. Dennis McConaghy), Bloomberg News, May 18, 2018

Canada 'a laughing stock': Experts react to Trans Mountain indemnity

by April Fong (feat. Dennis McConaghy), BNN Bloomberg, May 18, 2018

AUDIO: NAFTA update

with Danielle Smith (feat. Sarah Goldfeder), Global News Radio, May 18, 2018

VIDEO: NAFTA Deadline Day (@ 3:00)

with Don Martin (feat. John Weekes), CTV Power Play, May 17, 2018

VIDEO: Deal or no deal on NAFTA: Canada and U.S. send mixed messages

with Rosemary Barton (feat. Colin Robertson), CBC The National, May 17, 2018

Trump’s 'submission' strategy is not working so expect NAFTA talks to drag on

by Kevin Carmichael (Feat. Eric Miller), Financial Post, May 17, 2018

Backstop deal may be last hope for TransMountain pipeline, says former oil executive

by CBC News (feat. Dennis McConaghy), CBC News, May 17, 2018

Stuck with limited oil export options, Liberals may regret B.C. tanker ban

by John Ivison (feat. Dennis McConaghy), National Post, May 17, 2018

Feds OK early start to construction of navy’s new supply ships

by Lee Berthiaume (feat. Dave Perry), The Canadian Press, May 17, 2018


LATEST TWEETS

HEAD OFFICE
Canadian Global Affairs Institute
Suite 1800, 421-7th Avenue SW
Calgary, Alberta, Canada T2P 4K9

 

OTTAWA OFFICE
Canadian Global Affairs Institute
8 York Street, 2nd Floor
Ottawa, Ontario, Canada K1N 5S6

 

Phone: (613) 288-2529
Email: contact@cgai.ca
Web: cgai.ca

 

Making sense of our complex world.
Déchiffrer la complexité de notre monde.

 

© 2002-2018 Canadian Global Affairs Institute
Charitable Registration No. 87982 7913 RR0001

 


Sign in with Facebook | Sign in with Twitter | Sign in with Email