Canada, Mexico and NAFTA

Should Canada ditch Mexico and go it alone with U.S. on new trade agreement?

NAFTA was designed to help Mexico, but now it’s hurting Canada, argues journalist

CBC Radio · 

As NAFTA talks become ever more fractious, some commentators are asking whether it’s time to disband the three-way agreement and form bilateral pacts between the countries. (Judi Bottoni/Associated Press)

1 comments

Listen19:08

Canada should recognize Mexico as a “toxic” trading partner, and pull out of NAFTA in favour of a bilateral trade agreement with the U.S., says Diane Francis, editor at large with the National Post.

“Canada should look after Canada,” Francis told The Current’s Anna Maria Tremonti. “We have nothing to be sorry about.”

The U.S. announced Thursday that Canada, Mexico and the E.U. would be subject to tariffs of 25 per cent on imported steel and 10 per cent on aluminum. Ottawa responded with a promise of dollar-for-dollar tariffs on a variety of goods.

Industry insiders said the U.S. tariffs are intended as leverage over NAFTA negotiations, which stalled last month. In a tweet earlier today, U.S. President Donald Trump condemned Canadian “trade barriers.”

Donald J. Trump

✔@realDonaldTrump

Farmers have not been doing well for 15 years. Mexico, Canada, China and others have treated them unfairly. By the time I finish trade talks, that will change. Big trade barriers against U.S. farmers, and other businesses, will finally be broken. Massive trade deficits no longer!

Twitter Ads info and privacy

Francis told Tremonti that signing the trade deal with Mexico in 1994 “was a bootstrapping exercise to help the neighbour to the south get better living standards, higher wages and get their act together.”

But more than two decades later, Francis said that Mexico is worse off now than it was back then.

Those low wages are bad for Mexican workers, Francis said, but low costs also draw investors south, hurting Canada’s industrial base.

Former U.S. president Bill Clinton signs the North American Free Trade Agreement Dec. 8, 1993. (Paul J. Richards/AFP/Getty Images)

By contrast, Francis points to the strong, “harmonious” trading relationship between Canada and the U.S.

“Bilaterally, we have so few irritants between each other,” she said.

She argued that adding Mexico to the mix and trying to “cling to a trilateral agreement” isn’t in Canada’s best interest.

Mexico is a ‘hidden success story’

Turning away from Mexico would be a strategic blunder, according to Colin Robertson, a former Canadian diplomat who helped to negotiate the Canada-U.S. Free Trade Agreement in the late ’80s, and then later NAFTA.

“[It] would put us at a disadvantage with both the United States and any effort we wanted to have to expand trading ties, especially within the Americas,” he told Tremonti.

“I think there’d be a certain temptation on the part of Latinos: If we were to throw Mexico under the bus, then they would think, ‘How reliable is this further gringo to the north?'”

Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto in Mexico city on Oct. 12, 2017. Former diplomat Colin Robertson said that the countries had formed a strong alliance through NAFTA. (Alfredo Estrella/AFP/Getty Images)

Mexico has been a “hidden success story” of NAFTA, he said, with improvements in the democratic process and a growing middle class.

“When we went into the North American Free Trade Agreement it was about number 13 or 14 in the list of our trading partners,” said Robertson, who is now vice-president and fellow at the Canadian Global Affairs Institute.

“It’s now our third largest trading partner, we’ve got big investments in mining and banking and manufacturing.”

Robertson pointed to the country-of-origin labelling dispute over meat products in the late 2000s as an example of Canada and Mexico working together to win a dispute with the U.S.

“[Donald Trump’s book] The Art of the Deal is all about divide and conquer,” Robertson said, “and it would make no sense for us to separate from Mexico when together we have a much better chance of getting a good agreement.”

Prime Minister Justin Trudeau with U.S. President Donald Trump in Washington, where they discussed NAFTA on Oct. 11, 2017. (Jonathan Ernst/Reuters)

The elephant and the mouse

Seeing Mexico as an ally against the U.S. is a mistake, Francis argued, because Mexico and Canada represent only 7 per cent of the three countries’ combined GDP.

Comparing the U.S. and Canadian economies is like comparing an elephant and a mouse, she added — referencing Pierre Trudeau’s famous analogy from 1969.

“Now we’re aligned with another mouse, who’s toxic, and is actually kind of toxic to us.”

Ending the deal and pursuing separate agreements is the solution, she believes.

“I really think that we need to reorient ourselves, and get in the same space to a certain extent, as the Americans are, vis-a-vis Mexico,” she said.

Listen to the full conversation near the top of this page.

This segment was produced by The Current’s Idella Sturino and Pacinthe Mattar.

MORE FROM THIS EPISODE

Comments Off on Canada, Mexico and NAFTA

Colin Robertson, June 4th 2018 | Tags: , , ,
Posted in TV Interviews

Trade Retaliation

Canada ‘must fight for exemption on steel tariffs’

CBC Radio ·
Trump to impose new tariffs on Canadian steel and aluminum

 

00:00 00:41

 

‘It’ll be for a long period of time,’ says U.S. president 0:41

6 comments

Listen20:33

Read Story Transcript

Steel being imported to the U.S. will face a 25 per cent tariff, U.S. President Donald Trump announced last week, with aluminum to face a charge of 10 per cent.

While the move, designed to boost U.S. manufacturing, left many concerned, these are those who think it’s just the latest volley in a growing trade dispute.

Keanin Loomis, President and CEO of Hamilton Chamber of Commerce, told The Current’s Anna Maria Tremonti that Canada shouldn’t take the decision lying down.

“We need to fight for an exemption for Canada,” he said. “We also have to have a diversion strategy, because it’s anticipated that these U.S. tariffs will divert 13 million tonnes in steel.”

“That will be steel be looking for a home, and we are particularly susceptible to that.”

The government should also be preparing for retaliation, Loomis argued.

“We buy as much steel from [the U.S.] as they buy from us.”

“ArcelorMittal Dofasco buys a $1 billion worth of iron, ore, and coal from the United States to go into the making of steel.”

“So we need to think about those pain points within the U.S.”

At the top of this page you can listen to the full conversation, which includes the Toronto Star’s Washington correspondent Daniel Dale on how Trump’s decision surprised his own party; and Colin Robertson, who was part of the original team to negotiate NAFTA.

Canada ‘must fight for exemption on steel tariffs’

Guests: Keanin Loomis, Daniel Dale, Colin Robertson

SOUNDCLIP

VOICE 1: The trickle effect will be huge. The biggest concern is, is this is just the beginning. What other things are they going to start putting tariffs on? The biggest thing to me is I guess NAFTA is dead.

AMT: You can hear it in his voice workers in the Canadian steel industry are worried. Last week, U.S. President Donald Trump said he would impose a 25 per cent tariff on steel imports and a 10 per cent tariff on aluminium shipments into the United States — a move that one U.S. trade expert says would be the most protectionist trade policy in a century. So far, there is no indication that Canada the largest steel and aluminium exporter to the U.S. will be exempt, though many are still pushing for that. But yesterday, White House trade adviser Peter Navarro told CNN that Trump is unlikely to start excluding countries from the tariffs.

SOUNDCLIP

VOICE 1: As soon as you exempt one country then you have to exempt another country and so it’s a slippery slope. So in the aluminum case we have a situation now where import penetration is over 90 per cent, we are literally on our last legs and Canada is 40 per cent of the market and if you exempt Canada then you have to put big ,big tariffs on everybody else.

AMT: And now Donald Trump’s advisors are also saying there could be individual companies that could apply for exemptions. It’s not really clear what that means. Ottawa is vowing to retaliate if the tariff does apply to Canadian products. And all this as the seventh round of NAFTA renegotiations wrap up today in Mexico. Many Canadian livelihoods and communities depend on the steel and aluminum industries. And steel is a vital part of life in Hamilton, Ontario, the traditional heart of Canada’s industry, where it provides jobs for thousands of people directly and indirectly. For more on what’s at stake for Hamilton and Canada, I’m joined by Keanin Loomis. He is the president and chief executive of the Hamilton Chamber of Commerce, and he joins us from our Hamilton studio. Hello.

KEANIN LOOMIS: Good morning, Anna Maria.

AMT: So I’m just looking at President Trump’s tweeting early today. He says, “We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for USA. Massive relocation of companies and jobs. Tariffs on Steel and Aluminum will only come off if new and fair NAFTA agreement is signed. What do you make of that?

KEANIN LOOMIS: Well it’s hard to keep up that’s for sure. But in this case it’s simply not true. Certainly when it comes to Canada we are fairly balanced across all industries, but specifically within the steel industry. We buy almost as much steel from the United States as they buy from us. So, Canadian steel is balanced. It’s fair. We adhere to the highest environmental and labour regulations. And it’s so deeply integrated into so many North American supply chains that it’s going to be very, very difficult to disentangle the Canadian steel that goes into U.S. products and it’s going to cause huge disruptions in the United States as a result.

AMT: What have you heard from Hamilton steel workers and their bosses over the weekend?

KEANIN LOOMIS: Well, everybody is very concerned. The Canadian steel industry has been at a tipping point for a while now. The input costs of making things here in Canada are just higher than they are anywhere else in the world. Labour costs, environmental regulations, and the cost of electricity here as well. So the industry has been insecure for a long time now and this could be the thing that just puts it over the edge.

AMT: How big of an employer and how big of a part of the city’s economy is the steel industry in Hamilton?

KEANIN LOOMIS: Well a lot of people don’t understand that as a result of the decline in domestic manufacturing we’ve had to diversify and gain strengths in a whole lot of other things and we are now Canada’s most diversified economy, according to the Conference Board of Canada. So we’ve developed great strengths in life sciences, education, creative industries, agriculture, and we have a renaissance happening downtown that’s leading to a building boom. But nonetheless steel directly employs 10,000 people here in Hamilton and through $2 billion in local procurement supports another 30,000 jobs. And more importantly of course is that Hamilton’s identity is built upon steel and Hamilton built Canada and we’re fiercely proud of that. And it’s important to maintain that legacy.

AMT: So what would you like to see the federal government do at this point?

KEANIN LOOMIS: Well there are number of things that can be done. First of course — I think this is happening fiercely right now — we need to fight for an exemption for Canada. We also have to have a diversion strategy because it’s anticipated that these U.S. tariffs will divert $13 million in steel, that will looking for a home and we are particularly susceptible to that. The government should also be preparing for retaliation. Again, as I said we buy as much steel from Canada as they buy from us. ArcelorMittal Dofasco buys a $1 billion worth of iron, ore, and coal from the United States to go into the making of steel. So we need to think about those pain points within the U.S. And then finally we do need to create a by-Canada government procurement policy. If there was a carbon element to the procurement of steel in Canada, Canadian steel would win every time. The carbon footprint of Canadian steel is about five times lower than that of a tonne of steel made in China.

AMT: So President Trump has tweeted that trade wars are good. What do you say to that?

KEANIN LOOMIS: Well, they’re not. Certainly, not in this case. Certainly, not when it comes to a long-time ally. We’ve had a special relationship for a really long time. What’s happening here is they are using Section 232, which ostensibly is about national security purposes. But they’re stretching that definition to include economic security and jobs. They’re ignoring the fact that, again, we’ve been allies and fighting in wars for a long time. We’re deeply embedded into the defence supply chain. So in fact they are undermining their national security by doing this.

AMT: Keanin Loomis, thank you for your thoughts on this today.

KEANIN LOOMIS: Thank you so much, Anna Maria.

AMT: Keanin Loomis is the president and chief executive of the Hamilton Chamber of Commerce. He was in our Hamilton studio.

SOUNDCLIP

VOICE 1: We are immediately going to go and reopen our shut production at Hawesville, Kentucky. That’s the plant that makes the military grade aluminum amongst other products hire back a couple hundred folks um invest $100 million in some new technology in that plant so as far as we are concerned as you might suspect we think this action is a long time and coming.

AMT: Not everyone is upset by the tariff announcement. That’s Michael Bless, the chief executive of Century Aluminum in the U.S., discussing his plans if President Trump follows through with a tariff. And while he says President Trump’s announcement was a long time coming, many in the U.S. government didn’t in fact see it coming, according to media reports. Since they heard the news, some Republicans have been clear that they don’t support the president on this one. For his thoughts on what drove Trump’s surprising move and how it’s going down in Washington we’ve reached Daniel Dale. He’s the Toronto Star’s Washington correspondent. Hello.

DANIEL DALE: Hello.

AMT: What tensions have you seen in Washington since this announcement late last week?

DANIEL DALE: Well its intra-Republican Party tensions. You know trade is one of the only issues on which Trump is better aligned with many Democrats than he is with his own party. And in the Senate especially Republicans are still very much pro-free trade and tariff skeptical. And so we’ve had very strong and usually sharp push back from members of the Republican Senate Caucus who have said, “This is unwise. This is going to hurt the economy rather than help.” And so it’s been sharper push back than we’ve seen from the party on almost anything else.

AMT: What about the Democrats? They’ve been mixed. There’s been some criticism. But some of them are quite tariff friendly. People like Senator Sherrod Brown of Ohio. Even Chuck Schumer, the Democratic Senate leader, has encouraged Trump to get tough on what they say is unfair dumping of low cost steel by China. And even though China is only the 11th largest source of steel imports to the U.S., even though Canada is number one, Democrats are much more favourable towards it on the ground that it still will punish China in some way.

AMT: So what’s the story behind how this decision came to pass?

DANIEL DALE: Well it was just pure chaos. I don’t think we can really say it was a surprise because Trump has been talking about tariffs certainly for his entire campaign and even beyond that. If you go back to the 1980s he was talking about using tariffs and protectionism to re-balance what he called “unfair trade relationships.” But the way he imposed these last week was just — there was no process. He seemed to be angry for some reason or another on Wednesday night and decided he was going to announcement the next day. No one was ready. The State Department hadn’t been told. The Treasury Department hadn’t been told. There was no paperwork ready. There was diplomatic plan ready. Trump just by all accounts said, “I want to do it and I want to do it tomorrow.” Even after his advisers told the media, “No, no. There would be no announcement even though he says there will be.” He went ahead and made the announcement. So we just don’t see something as important as tariffs announced this way, but that’s the way Trump operates.

AMT: And what role does Mr. Navarro play in this as a trade adviser?

DANIEL DALE: It’s hard to tell. I mean by all accounts he’s back on the rise in the White House. He’s been put back closer to Trump’s side than John Kelly, the chief of staff, had pushed him for a while. And we know that he’s an influential voice in Trump’s ear in general. In this case by all accounts this is what Trump has always wanted to do himself. This is one of the few things in which he has his own strong policy views. So you know whether it’s Navarro when Commerce Secretary Wilbur Ross or just Trump being Trump we don’t exactly know.

AMT: And you know he’s tweeting today. I’m sure you’re already well aware of his trade tweets [laughs]. You have a little Trump tweet alert every morning I’m guessing. But he’s kind of linking it now to the NAFTA talks and to farmers. He’s saying, “Canada must treat our farmers much better. Highly restrictive. Mexico must do much more on stopping drugs from pouring into the U.S.” He’s got a lot of different trade issues on his mind there.

DANIEL DALE: He does. This is the first time that he’s linked the steel tariffs to the outcome of NAFTA negotiations. Canada has been demanding an immediate exemption and threatening retaliation if it does not get an immediate exemption. Trump’s now saying, “No exemptions right away. We’ll see what happens with NAFTA.” That’s interesting. You know it sort of throws a good deal — extra pressure — into NAFTA negotiations. But it also means that if Canada follows through in its threats, we’ll have a trade retaliation while NAFTA negotiations are still going on and so it really, really complicates the relationship at least in the short term.

AMT: Ok. Daniel Dale, thanks for your time today.

DANIEL DALE: Thank you.

AMT: Daniel Dale is the Toronto Star’s Washington correspondent. He was in Washington. Trade has of course been a contentious issue in Canadian politics too over the years. And the disputes around trade negotiations have had their fair share of dramatic imagery, including in this famous Liberal 1988 election ad, where the border between Canada and the United States is removed with a pencil eraser, by a fictional American official.

SOUNDCLIP

VOICE 1: Since we’re talking about this free trade agreement, there’s one line I’d like to change.

VOICE 2: Which line is that?

VOICE 3: This one here, it’s just getting in the way.

VOICE 4: Just how much are we giving away in the Mulroney free trade deal. Our water, our health care, our culture? The line has been drawn — which side do you stand on.

AMT: Of course, Brian Mulroney’s Progressive Conservatives won that election, and the Liberals have since come on board with North American free trade. The Canada-U.S. Free Trade Agreement from that time went on to grow into NAFTA., but not without a lot of political drama on the public stage, and diplomacy behind the scenes. Our next guest knows firsthand how sensitive trade negotiations can become. Colin Robertson had a long career in Canada’s foreign service. He was part of the team that negotiated the Canada-U.S. Free Trade Agreement and NAFTA. Colin Robertson joins me from our studio Ottawa. Hello.

COLIN ROBERTSON: Good to be with you, Anna Maria

AMT: Well where do we start here. Maybe let’s go backwards. Let’s just start with what Trump is tweeting today. Is he linking now steel to these NAFTA that are supposed to wrap up today?

COLIN ROBERTSON: It certainly appears that way, yes. And of course it comes on what would be the final day of the Mexico round — the seventh round of the NAFTA negotiations. It will be disruptive, as disruptive as was the announcement in the Ottawa round last year that they were going to take action in support of Boeing against Bombardier. That of course — we saw that through. That was a bump. So this has been probably one of the most remarkable one of talking with my friends who are negotiators — one of the most remarkable trade negotiators they have been involved with. I thought the Canada-U.S. Free Trade Agreement had its ups and downs with shakes and shingles and softwood lumber and strawberries and steel and walkouts around dispute settlement and having to stop the clock at the last hour. But this one will certainly rival the first Canada-U.S. Free Trade negotiations for drama.

AMT: So you’re saying that President Trump has done this before like raising an issue of tariffs?

COLIN ROBERTSON: Yes. Whether, it’s simply an impulse or by design that’s really hard for us to tell. The president — if there’s one thing that’s predictable about him it is unpredictability and as Daniel just pointed out not informing those around him. Normally the president of the United States acts with some process after having gone to the National Security Council into an agency process. This president does not do that and that makes things complicated not just for Canada but for all of America’s allies and the rest of the world.

AMT: So what kind of an impact can an unexpected announcement like that have on the actual discussions?

COLIN ROBERTSON: Well I think in this case the negotiators — keep in mind the negotiators know each other really well. Many of them were part of the teams that negotiated the Trans-Pacific Partnership now called the Comprehensive Progressive Trans-Pacific Partnership at Canada’s request. But this had been an Obama administration initiative. And so the negotiators themselves know each other. There are 30 tables of which we’ve probably made big progress and about 15 — these tables turn into the chapters. Things like technology, safeguards, and anti-corruption for example. And we’ve made a lot of progress on these because in fact we’re going over territory that was discussed in as I mentioned the Trans-Pacific Partnership. Does this kind of thing have a chill? Absolutely. Especially because the American chief negotiator probably doesn’t know where his president is coming from and will have to seek guidance from his boss. And that is part of the reason why we have not made progress on a lot of the truly contentious issues what call the big three: the dispute settlement, rules are origin relating to autos, government procurement the sunset clause, and some other issues as well; because we’re not exactly sure where the Americans are coming from. We’ve put forward what we think are creative solutions often in tandem with Mexico who we really have joined together. And that is one of the actually positive I think coming out of this negotiation that the Canada Mexico relationship is really pretty strong.

AMT: When you say you’re not sure where the Americans are coming from. You teach diplomats headed to the U.S. how to deal with American officials now. What do you tell them?

COLIN ROBERTSON: Well relationships are a big part of it. And we have put big emphasis from the prime minister and the president on down. Certainly this government has gone all out to not just use the administration as an entree into American policy-making, but on Capitol Hill as well. Every cabinet minister goes down also stops up on Capitol Hill. Of course the forays into Trump territory and the rest of America have been unprecedented. And it’s not just the liberal government. We’ve heard Andrew Sheer down there. Rona Ambrose when she was leader of the Conservative Party. This has been at Team Canada Inc. The premiers have all been involved in this. Businesses have been down. Labour unions who have been talking to their counterparts and that of course will play into this latest dispute because the steel workers on the Canadian side are affiliate of the bigger union in the United States and in fact the American CEO of the steel workers is a Canadian and who was instrumental in getting an exemption for us when he was national director of the Canadian affiliate back in the early 90s in the Mulroney government. So that that is what we need to do is engagement. We have many, many allies in the United States. I think we have a good shot at getting an exemption because there will be so many people in the United States who will say this makes no sense just as an agriculture where the farm community has said, “Do no harm.” We’ll see I think similar on a lot of the manufacturing industries, certainly from the auto industry.

AMT: Now we’re also seeing stories today that suggest that individual companies can apply for exemptions as opposed to countries getting an exemption. What do you make of that?

COLIN ROBERTSON: Well that’s standard. There’s usually under the process. The U.S. does have — being a very litigious society – it also has a process. So the process in this case seems to have been moved along fairly quickly. But whatever the president announces this week assuming he does make an announcement then there will be inevitably an opportunity for exemptions. So Canada is applying for a kind of wholesale exemption saying that we are a reliable ally use of this national security approach which is relatively unprecedented especially to apply against a close ally like Canada would be a first. The industry is deeply diversified as your first guest pointed out. And there will be a lot of those in the United States who will be making an application as well because normally this process to seek exemption would then involve those on the American side as well as you say companies and countries.

AMT: Can Canada diversify enough if Trump goes solid with this? Can Canada find enough of a diversion?

COLIN ROBERTSON: I think what will happen is that the tariffs will apply just as we’re finding with softwood lumber. There hasn’t really been much falloff in what we’re exporting in terms of softwood lumber because there is big demand in the United States. The other person you spoke to said well he’s going invest $100 million to improve his aluminium capacity. That takes time. In the meantime the American industry especially its defence industry or the aircraft industries need that aluminium and Canada is the reliable supplier. So we will simply pass the cost on to the United States. Are we seeking diversification? Of course. This government, the last government the Canada-Europe trade agreement, the new Pacific agreement, looking at the Pacific Alliance and the Mercosur in Latin America, there is strong bipartisan support in Canada for further trade diversification because of the unpredictability now of the U.S. market.

AMT: Colin Robertson, we have to leave it there. Thank you.

COLIN ROBERTSON: Thank you, Anna Maria.

AMT: Colin Robertson is a former Canadian diplomat and one of the negotiators of the original NAFTA agreement. We reached him in Ottawa.

In trade retaliation, Canada won’t wait for WTO’s blessing

Open this photo in gallery: The Associated Press

Maple syrup from Vermont and perhaps California wine may be on Ottawa’s hit list in response to U.S. President Donald Trump’s proposed tariffs on steel and aluminum.

Lisa Rathke/The Associated Press

Steven Chase and Greg Keenan
OTTAWA and TORONTO
For Subscribers

Canada will need to either bend or break international trade rules to take quick retaliatory action should the United States slap hefty tariffs on Canadian-made steel and aluminum, but experts say Ottawa has been forced into this position by an exceptionally protectionist White House.

Canadians should expect to pay more for iconic U.S.-produced goods if a trade war breaks out. Ottawa could slap import charges on goods from California wine to Vermont maple syrup – the sort of items that Canada has targeted in previous trade conflicts with Washington.

Canada has not released any lists of products – and the Trudeau government is staying mum on possible retaliation while it continues to seek an exemption from the Trump action. But experts suggest looking back at past trade spats with the United States – such as a 2014 dispute over meat labelling – to see what Canada has been prepared to hit.

Canada will be in good company in this trade fight, however, because more than 20 other countries or trading blocs will be taking similar countermeasures.

The European Union has already outlined a list of U.S. exports it would target after President Donald Trump said he will levy a tax of 25 per cent on imported steel and 10 per cent on aluminum.

U.S. President Donald Trump told a joint news conference that he still backs the idea of adding tariffs to steel and aluminum imports, linking them to a new NAFTA deal. Trump said he will straighten out trade in a “loving, loving” way.

Normally, Canada is supposed to seek retaliatory authority from the World Trade Organization to impose countermeasures on foreign countries but this process can take years. But, unlike past quarrels with the United States, Canada will be hard-pressed to act immediately – regardless of what the rules say.

“I don’t believe any countries affected by these tariffs will wait for WTO procedures to be completed before acting,” international trade lawyer Lawrence Herman said.

“Politics will drive this. Governments, including Canada, will be forced to respond immediately. That’s the dangerous precipice we’re facing, thanks to Mr. Trump.”

Colin Robertson, a former Canadian diplomat, writing in The Globe and Mail, says Canada and other countries threatened by the Trump tariffs should be drawing up a common list of U.S. exports that they could target with retaliatory action.

The EU has already warned it plans to target key Republican leaders with import taxes on items such as Kentucky bourbon – a product from the home state of Senate Majority Leader Mitch McConnell – as well as cranberries and dairy products from Wisconsin, home to House Speaker Paul Ryan.

Mr. Trump threw cold water on hopes for a Canadian exemption this week when he warned Canada would not be spared unless it agrees to U.S. demands for changes to the North American free-trade agreement – a series of protectionist U.S. requests that both Ottawa and Mexico City have characterized as unreasonable.

He said Tuesday that the tariffs will be applied in a “loving way.”

Mr. Ryan, the most powerful member of the U.S. House of Representatives, said the proposed tariffs are too broad and open the country to possible retaliation. Mr. Ryan named China, rather than Canada, as a problem.

The steel tariffs will be raised Wednesday at a meeting between auto industry leaders and officials in Prime Minister Justin Trudeau’s office, said Jerry Dias, president of Unifor, who will attend the meeting.

Auto industry executives sought the meeting to urge Mr. Trudeau to halt Canada’s participation in the Trans-Pacific Partnership trade agreement, which will eliminate Canada’s 6.1 per cent tariff on vehicles imported from Japan.

One U.S. trade expert estimates the annual cost to Canada of the steel and aluminum tariffs could be US$3.2-billion. Chad Bown, a trade adviser to former president Barack Obama, wrote in an article for the Peterson Insitute for International Economics that this amount would be roughly what Canada could justifiably expect to seek compensation for in retaliatory action against the United States.

Former Canadian government officials have said it’s very difficult to pick retaliatory targets. In 2005, when Canada was angry at a U.S. law that funnelled cash collected from tariffs on foreign goods to U.S. companies, Ottawa drew up a list that targeted the states where U.S. politicians voted for the legislation. In that case, Ottawa was forced to abandon some retaliatory targets – such as U.S. motorboats – because of push-back from Canadian industry. Its final list was narrowed down to a few items, such as tropical fish.

Laura Dawson, director of the Canada Institute at the Wilson Center in Washington, said Canada’s best bet to head off the tariffs may be to wait for the U.S. system of checks and balances to run its course, including a likely court challenge of steel tariffs by companies that buy steel.

“People are already talking about how court challenges will be launched, what would the courts be asked to adjudicate; would they be asked to adjudicate what constitutes a national security threat?” Ms. Dawson said.

Comments Off on Trade Retaliation

Colin Robertson, March 7th 2018 | Tags: , , , ,
Posted in Uncategorized