International Trade Relations, USA/Canada

International Trade Relations, USA/Canada

As global economic conditions continue volatile, even unstable, Canada is in the midst of negotiating several trade agreements, and is also suffering some trade complications. For the past several years the governments of Europe, Asia, and the Americas have been embarking on multi- and bi-lateral trade deals, with varying levels of success.
Chief among these is the Trans-Pacific Partnership (TPP)  — involving countries covering 40 per cent of the world economy —  currently in meetings in New York City. The TPP seems to be getting only more complicated as talks progress; this round of talks is addressing more sensitive files like agriculture. A ministerial round is expected sometime in February.
The Office of US Trade Representative website describes the TPP as “a 21st century trade agreement that will boost US economic growth, support American jobs, and grow Made-in-America exports to some of the most dynamic and fastest growing countries in the world.”
Canada’s Foreign Affairs, Trade, and Development website says of the TPP, “[it] is a key pillar of Canada’s pro-trade plan because it will deepen Canada’s trading relationships with dynamic and fast-growing markets in the Asia-Pacific region, as well as strengthen Canada’s traditional partnerships in the Americas.”
US Trade Representative Michael Froman testified before the Senate Finance Committee Tuesday in Washington, DC, that the ambitious trade deal with Asia could be finished in the next few months. Chief negotiators in New York this week include those from twelve Pacific Rim nations, and hope to secure signatures by the middle of March.
Some American interests are criticizing the deal as it is being shaped. One analyst told Global Trade Review this week that what’s emerging looks like a bilateral treaty between America and Japan, and “less attractive side deals for everyone else.”
Other critics point out that Congress could issue any tough demands in its Trade Promotion Authority legislation, according to Forbes Monday.

And Beyond

Meanwhile, Canada’s contentious stance on supply management and pharmaceutical protection came under heavy fire this week from frustrated American senators and congressional members eager to finalize a deal, said iPolitics Wednesday.
When it comes to supply management, Froman has said repeatedly Canada knows where the US stands, “This has been a high priority for us, and before Canada joined the TPP we had a dialogue with them about this and how this was going to be an important part of a successful outcome. We are engaged with them on a whole range of outstanding issues.”
Probably aware a Canadian federal election is on the horizon, Froman wasn’t setting the bar high Tuesday for increased protection for pharmaceuticals, either.
For his part, Republican Paul Ryan said Tuesday at the Senate hearings, “Canada won’t negotiate.”
Ryan’s home state of Wisconsin accounts for 13 per cent of American milk production and 25 per cent of the country’s cheese.
Speaking of Made-in-America, it seems that disagreements over this policy have resulted in the cancelling of a highly-anticipated new Alaska ferry dock at Prince Rupert, BC, US officials announced Sunday.
This high-level dispute is over US-Canada trade policy. Alaska officials say Canada’s stance on the project will mostly hurt Canadian workers, according to Alaska Dispatch News Sunday.
A federal law called the Buy America Act requires that steel for projects funded by the Federal Highway Administration must be made in the US. The dispute is over who will make the steel for the dock’s pilings and walkways. The ferry terminal is unusual – a US-funded project on land leased from a federal port authority in Canada.
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The way the arguments were going, any contractor willing to take on the work would have faced the impossible choice of running afoul of either US or Canadian law, said Barrie McKenna in the Globe and Mail Sunday.
“If Canada and the United States can’t work out the easy stuff, how are they ever going to overcome the larger challenges confounding a vast, complex and increasingly strained relationship?” asks McKenna, rightly.
In an editorial piece to the Globe and Mail Tuesday, Laura Dawson, PhD, President of Dawson Strategic and an expert in international trade and cross-border issues, said, “succumbing to petty squabbles misses the larger point. Canada and the US are not going anywhere in the global economy if we don’t do it together.”
Elsewhere this week, there was good trade news for Canada’s lumber industry with Mexico agreeing to recognize Canada’s heat treated lumber certification program.
The trade and movement of lumber and wood products are often a pathway for the spread of plant pests, according to the Canadian Food Inspection Agency (CFIA). In Canada, lumber is heat-treated under the CFIA-administered program to reduce this risk and to meet the import requirements of foreign countries.
Under this new arrangement with Mexico, Canadian lumber producers accredited under a heat treatment program overseen by the CFIA are now able to export wood such as spruce, pine, and fir to Mexico without a phytosanitary certificate, said a CFIA press release Monday.
Canadian lumber exports to Mexico were valued at almost $6 million in 2013. In contrast, Canadian sawmills exported $4,752 million in softwood lumber to the US in 2013.
Given current global uncertainty, the importance of emerging markets as future new customers, and the various constraints to Canadian and US lumber producers (most notably concentrated around a lack of quality sawlog supply in the BC interior), it is hoped that the two countries will work together to promote the use of North American softwoods in international markets. Rather than squabbling with each other over relatively minor issues.
Tropical hardwood exporters from southeast Asian and north African countries are continuing to adopt globally-recognized certification and sustainability standards (prompted by the imposition of the EUTR legislation for Europe’s forest products importers in early 2013). Emerging markets, especially in India, are gobbling up supplies of hardwood, while Canadian — and even US — softwood lumber exporters are having great difficulty finding volume customers in these regions.
The forest products industries of Canada and the US should be working together to promote the use of softwood lumber in new and emerging markets, rather than arguing with each other over bi-lateral lumber trade issues.

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