BALONEY METER: Canadian negotiations selectively optimistic
Published May 18, 2017 – 6:43pmHistory tells tales of both parties adapting to neighbours
OTTAWA — Natural Resources Minister Jim Carr has been offering reassuring words as the country prepares to defend its softwood lumber industry yet again from duties imposed by the United States.
The latest round marks the fifth time in about 30 years that Canada will engage in a softwood dispute with its biggest trading partner.
“We have prevailed in the past, and we will do so again,” an optimistic Carr told reporters late last month.
He called the U.S. decision to impose countervailing duties of about 20 per cent for most mills “unfair” and “punitive.”
“Our government disagrees strongly with this decision,” he said.
“It is unfounded, and we will vigorously fight for the interests of the Canadian softwood lumber industry, its workers, and their communities.”
Carr also insisted that Canada has won every court challenge of the past.
Has Canada indeed been victorious in every court challenge linked to softwood trade disputes with the U.S.?
Spoiler alert: The Canadian Press Baloney Meter is a dispassionate examination of political statements culminating in a ranking of accuracy on a scale of no baloney to full of baloney (complete methodology below).
This one earns a rating of a little baloney. Here’s why.
The Trump administration triggered the latest softwood skirmish by imposing retroactive duties on Canadian lumber.
For decades, the U.S. has argued that Canada’s lumber producers are unfairly subsidized through cheap access to public land.
The on-again, off-again dispute has led to duties, court battles and periods of peace with the help of temporary agreements.
Cross-border lumber quarrels are older than Canada itself and date back to the first half of the 19th century, Carr said recently.
The minister insists Canada has been victorious in all the court challenges in the “contemporary era” of the lumber disputes that began in the 1980s.
This time around, he says the federal government will tell their U.S. counterparts that Americans will also feel the pain from the border duties because jobs in both countries depend on the free flow of goods and services.
Carr has confirmed Ottawa is prepared to file challenges through the North American free trade agreement and the World Trade Organization, if necessary.
“We will look at our options, and we certainly would not exclude the possibility,” he said.
WHAT THE EXPERTS SAY
Trade experts say while the history of the softwood-lumber wars is long and complicated, they agree that Canada has repeatedly come out on top since the 1980s.
Some note, however, that the victories do not mean Canada came through completely unscathed.
Naomi Christensen, a senior policy analyst at the Canada West Foundation think tank, said that over the years Canada has had considerable success in appealing U.S. actions in front of NAFTA and WTO panels.
“What may actually be more accurate is to say the U.S. has never won,” said Christensen, who noted, for example, that panels have called on the U.S. to lower or lift its duties on Canadian lumber a number of times.
“It’s a little more complex than just a court case because it’s (presented) to trade panels, and so the rulings are typically not just ‘yes-Canada, no-U.S’.”
She noted that less than a decade ago, while the most-recent softwood lumber agreement was in place, the U.S. found some success after filing disputes with the London Court of International Arbitration over how Canada was applying the deal.
Christensen said the court ruled that some provinces were applying the agreement correctly and a couple were not.
However, she noted that these rulings came while an agreement was in place.
Peter Clark, a trade strategist involved in Canada-U.S. Free Trade and NAFTA negotiations, said Canada has had a winning record — but it depends where you look.
Clark said Canada has had lots of success with NAFTA challenges.
“They’ve won a lot of them,” he said, adding that it explains why the U.S. lumber industry wants to get rid of the Chapter 19 dispute settlement tool in the agreement.
“They figure it doesn’t work all that well for them, so they would just as soon get rid of it.”
But he says some WTO disputes have had mixed results for Canada.
Colin Robertson, vice-president at the Canadian Global Affairs Institute, said his impression is that Canada won most disputes that came before the WTO and NAFTA.
However, he added that even legal wins won’t solve the decades-long problem — Canada must still negotiate with the U.S. to reach a resolution.
“There is the judicial route, but what counts in terms of softwood lumber are the politics,” said Roberston, a former member of Canada’s NAFTA negotiating team.
“The (legal) outcomes give us moral suasion, but ultimately political solutions, certainly in the case of lumber, are what we have to arrive at.”
Overall, experts say Canada has generally prevailed through four rounds of the softwood lumber dispute with the U.S., even if the Americans saw some less significant success along the way.
For that reason, Carr’s statement rates “a little” baloney.
The Baloney Meter is a project of The Canadian Press that examines the level of accuracy in statements made by politicians. Each claim is researched and assigned a rating based on the following scale:
No baloney — the statement is completely accurate
A little baloney — the statement is mostly accurate but more information is required
Some baloney — the statement is partly accurate but important details are missing
A lot of baloney — the statement is mostly inaccurate but contains elements of truth
Full of baloney — the statement is completely inaccurate