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Published on Tuesday, August 14, 2001 in the Toronto Star
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Canada Needs to Wise Up to U.S.
Cheating |
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by Thomas Walkom |
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EVERY FEW years, the United States slams Canadian lumber exporters with a draconian financial penalty. Each time, the Canadian government's reaction is the same, wounded outrage. "Bullying" was the word International Trade Minister Pierre Pettigrew used this time to describe the most recent U.S. action, a decision last week to whack Canadian softwood lumber exports to that country with a retroactive 19.3 per cent tariff. Pettigrew denounced the U.S. commerce department's decision as contrary to the North American Free Trade Agreement and a slap in the face to the very idea of a rules-based international trading system. All of which is true. But so what? The ongoing softwood lumber saga is bizarrely fascinating. At one level, it is a boring dispute about two-by-fours. Yet, like many boring things, at another level it is important. Canadians hew a lot of wood. When the American market is shut off, plenty of people (the lumber town of Hearst in Northern Ontario comes to mind) get hurt. What truly fascinates, though, is the federal government's ability to learn. It's as if Ottawa can't believe its good friends in Washington would do such a thing as break the rules. This is the fourth time in 20 years that the U.S., at the behest of its own lumber producers, has penalized Canadian softwood exports. Canada signed its pioneering 1989 U.S. free trade agreement, and later NAFTA, specifically to put an end to this kind of trade harassment. But the Americans didn't care. They just kept on doing it anyway. Each time, the Canadian government diligently followed the rules, appealing the U.S. actions to a NAFTA trade dispute panel. Each time, the panel came down in Canada's favour. Each time, the U.S. ignored it. The Canadian reaction to all of this is usually to castigate the U.S. government as unfair. Pettigrew's "bullying" comments are in this tradition. But I confess that I don't understand why everyone gets so miffed with the Americans. Surely, Washington is doing what a national government is supposed to do - protect its own economic interests. Maybe Ottawa should quit whining and take a lesson. Our government, however, seems to be handicapped by its belief in the quaint notion that international trade can be governed by a set of rational rules. The Americans aren't prey to that particular superstition. They don't play by the rules. Being the biggest and most lucrative market around, they don't see why they should. Given this reality, surely the point for other nations is not to try and bind the Americans to rules they won't follow, but to find other, more practical ways to pressure them. My friends in The Star's editorial board have written that Canada should respond to the U.S. softwood lumber duty by slapping an equivalent penalty on American imports. That's not a bad idea. It would be difficult to implement, given the way that NAFTA has so integrated the two economies. (In many cases, Canada and the U.S. don't export finished products to one another anymore; they trade parts back and forth. A punitive duty on U.S. carburetors, for instance, could shut down a Canadian auto assembly plant.). Still, trade retaliation is possible - with food products, such as Florida oranges or California wine. More potent, though, would be an oil, gas and electricity embargo to the U.S. That might grab George W. Bush's attention. (I know. I know. An oil and gas embargo would be explicitly contrary to NAFTA, which requires the proportional sharing between Canada and the U.S. of any cutbacks in Canadian petroleum production. But if the shoe were on the other foot, would that technicality bother the Americans?) More important though, Canadians should rethink their whole idea of international trade. Trade is not new to this country; neither is globalization. We've been dependent on global trade since before Confederation. But we've also been most successful when we haven't given ourselves up completely to the vicissitudes of the international marketplace, when we've maintained some level of autonomy and self-sufficiency. Probably one of the most successful federal trade ministers in recent times was Ed Lumley, who, in the 1980s, almost single-handedly forced the Japanese auto companies to set up production plants in Canada. He did so by simply arranging for Canadian customs officials to inspect every single Japanese-made car imported into Canada - very, very thoroughly. As containers full of cars backed up on the Vancouver docks, the Japanese auto manufacturers began to get the picture. Investments in southern Ontario by Toyota, Honda and Suzuki soon followed. Under the rules of NAFTA and the WTO, Lumley's actions would no longer be allowed. That would stop our prissy government. It wouldn't stop the Americans. Thomas Walkom's column appears on Tuesday.Copyright 1996-2001. Toronto Star Newspapers Limited ### |
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