Heading off a potential trade war

January 13, 2017   ·   0 Comments

JUXTAPOSED AGAINST Claire Hoy’s valid concern in this week’s column opposite that Justin Trudeau is making the same mistake Stephen Harper made eight years ago, by not attending the inauguration of a new American president, was a front-page story in Monday’s Globe and Mail disclosing that the Trudeau forces in Ottawa have already been making moves to head off the possibility of a Canada-U.S. trade war.

Although obviously only time will tell, it strikes us that the moves described in the Globe article are far more important than the non-attendance of the prime minister at an event that has been traditionally a time for domestic celebrations that don’t require the presence of dignitaries from abroad. In fact, if we were in Mr. Trudeau’s position, we would ask former prime minister Brian Mulroney to represent Canada, knowing that he and President-elect Trump know one another.

The Globe article says Mr. Trudeau’s principal secretary, Gerald Butts, chief of staff Katie Telford and David MacNaughton, Canada’s ambassador to the United States “have met several times in Washington, in what have been described as bridge-building talks with Jared Kushner, Mr. Trump’s son-in-law, and Stephen Bannon, chief strategist and senior counsellor to the incoming Republican president.” Also involved in some of the discussions was Peter Navarro, a China critic who will lead a White House office overseeing U.S. industrial policy as Mr. Trump moves to reshape existing trade relations.

Perhaps even more important, the article says Mr. Trudeau “has enlisted former Progressive Conservative prime minister Brian Mulroney and Derek Burney, Canada’s past ambassador to Washington who played a key role in the 1989 Canada-U.S. free-trade agreement, to open doors in D.C. for the Liberal government.”

The article went on to note that Mr. Mulroney last month publicly praised Mr. Trump and stated his belief that the billionaire president-elect – a neighbour in Palm Beach – “views Canada with favour.”

At the time, Mr. Mulroney also noted that “no one … is looking to pick a fight” and “it would be to [the United States’s] advantage to celebrate this important bilateral relationship.”

The Canadian strategy was described as including outreach efforts to U.S. senators and congressional representatives in 35 northern states. “In addition, Mr. Trudeau and Mr. MacNaughton appeared in a video message to the U.S. Congress last week stressing the strong economic relationship between the two countries, including the fact Canada is the largest foreign market for U.S.-made goods and services.”

At present, no one (likely including Mr. Trump) knows whether a trade war is imminent, since to date most of the incoming president’s attention has been targeting Mexico and China, which he sees as mainly responsible for the loss of U.S. manufacturing-sector jobs.

We’ve certainly heard precious little from him about U.S.-Canadian trade, and we suspect he knows little, if anything, about the huge job losses in Canada’s manufacturing sector, many of which were the result of U.S. firms consolidating their operations in the continental U.S. (A couple that come to mind are Fisher Price Toys and Caterpillar, once resident in Orangeville and Brampton, respectively.)

If, as seems more than likely, Mr. Trump moves to scrap or re-negotiate the North America Free Trade Agreement (NAFTA), one area that will undoubtedly present a challenge is softwood lumber, where repeated claims by the U.S. industry of unfair competition have led to both tariffs and caps on import volumes.

But since the claims are based on allegedly too-low prices charged for timber from crown forests in Alberta and B.C., perhaps the two provinces might try raising those fees just enough to satisfy the U.S. industry while keeping the Canadian producers in business.

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