US Trade Tactics

taken from www.cfcnplus.ca

OTTAWA Â— Canadian business and government must play hardball with their American counterparts if they want to survive devastating trade wars with the United States, says an influential forest-products executive.

That aggressive approach involves hinging U.S. access to Canada's plentiful oil and gas supplies on fair access to U.S. markets for Canadian companies, said David Emerson, chief executive of lumber giant Canfor Corp.

Canada will gain strength if its industries stick together in trade disputes, Emerson said.

"I've always believed that Canada is a small country and if we start throwing up our sectors one at a time and going head to head with the Americans on agriculture alone, or on forestry alone, we're just going to get whacked," Emerson said in an interview.

"And we'll be whacked down one at a time."

Emerson's company is among those getting "whacked" by the softwood lumber dispute.

The idea of linkages between different sectors of the economy is wildly controversial.

Prime Minister Jean Chretien was pummelled by the Alberta oilpatch after he suggested two years ago that shutting down the flow of oil might force the Bush administration to solve the costly softwood dispute.

"You want gas, you want oil and you don't want wood?'' Chretien said he told U.S. President George Bush after a telephone conversation between the two in summer 2001.

"It's too bad, but if you have free trade, you have free trade. And I explained it very clearly."

Chretien's suggestion outraged the oil and gas industry along with Alberta Premier Ralph Klein, who argued it wasn't fair to drag other sectors into one industry's trade battles.

The power of fuel as a weapon in trade wars would be almost impossible to overstate.

Canada is now second only to Saudi Arabia as a source of imported oil for the United States, which imported 1.8 billion barrels per day from the Saudis in January and 1.6 million barrels per day from its northern neighbour.

When imports of natural gas are included, the importance of Canada as an energy source becomes even more apparent. Canada supplied about 94 per cent of American gas imports last year.

Emerson's suggestion isn't terribly popular outside the softwood lumber sector, which sees its annual $10-billion industry threatened by punishing American duties totalling about 27 per cent.

"We really don't think linkages are the way to go," said Greg Stringham, vice-president of the Canadian Association of Petroleum Producers.

It could even trigger infighting among Canadian industries as each tries to protect its own position in the U.S., added Charlie Penson, trade critic for the Opposition Canadian Alliance.

"Trading off one industry for another is going to lead to all kinds of problems, animosity between the sectors being traded off," said Penson.

But Emerson, who has been touted as a possible cabinet minister in a Paul Martin government, said provinces and sectors should put self-interest aside for the greater good.

"One region refuses to be drawn into another region's conflict is what it boils down to," complained Emerson.

"We have to recognize as a country that we've got to all pull together.

"Everyone is going to have to take a little water in the wine and recognize that sometimes we'll have to pay a short-term price in order for longer-term, broader-based gains."

The idea has never caught on with Trade Minister Pierre Pettigrew, who in the past has also given the idea of linkages a thumbs-down.

But subtle linkages might be possible if the next prime minister -- widely expected to be Paul Martin -- forges a better relationship with Bush, said Penson.

Relations have become shaky with Washington due to a definite coolness between Bush and Chretien, particularly after Canada refused to support the war on Iraq earlier this year.

"If we could rebuild that relationship, it could help (trade) a lot," said Penson.<

"Maybe then some gentle persuasion could be used."

That may be necessary, given the vast amount of trade across the 49th parallel -- well over $1 billion per day -- which makes the potential damage inflicted by trade disputes enormous.

Just last Friday, the U.S. Commerce Dept., announced hefty new duties on wheat exports to punish Western farmers for working cooperatively to sell their crops through the Canadian Wheat Board.

Washington says that amounts to an illegal subsidy.

Thousands of lumber jobs have been lost and mills closed in the softwood dispute, which has broken out in various forms for more than 20 years.

And energy could become a hot spot, as the two countries argue over delivery of natural gas from the far North.

A U.S. energy bill, now before the Senate, would provide tax breaks and price supports for an American pipeline to ship Alaska gas south.

That has unnerved Canadians who fear subsidies for an Alaska pipeline would distort North American gas market prices.

Emerson said Canada need not be alone in taking a tougher approach with the U.S.

Other like-minded countries could also be interested in forging links with Canada to fight American trade policies, said Emerson.

Already, almost a dozen countries plus the 15-member European Union joined Canada and Mexico last year to successfully challenge the so-called Byrd amendment at the World Trade Organization.

Named for a prominent U.S. senator, the American policy mandates that fines collected by Washington could be handed over to U.S. companies that lodge complaints against foreign exporters judged to be selling products at artificially low prices.

In the past two years, that has poured about $560 million US in the pockets of American firms, according to U.S. trade officials.

"The only way we can be effective is to put more pieces in play and perhaps to forge coalitions with other countries that have similar interests," Emerson said.

"And we need to do that much more aggressively and much more strategically than I think we have done."

[B]I think we should turn off the valve once in awhile. Is this a case where a bit of government regulation would be a good thing overall?
-Robair[B]

Imagine what you could accomplish if you strengthened the ties between all provinces.

Being bigger means little in this case. Being smarter is everything.

If Klein was looking out for Alberta he would be trying to diversify the economy. The second there are real alternatives (which are coming down the pipes) your local economy is going to be in trouble.

Oil exports probably should be regulated. Maybe we should join OPEC.

Klein might be changing his tune in a hurry...farmers vote and the US has just screwed Canadian farmers over...again. There are a lot of farmers in Alberta. The farmers are already fighting Monsanto and GM wheat, largely through the Wheatboard. That has a lot to do with the recent US attack on Canadian wheat...Monsanto is a major contributor to the Republican Party.

I think it's time to send Pettigrew packing and start fighting back...lumber, the foot-dragging on BSE, wheat...the US, under the unilateral and protectionist Bush regime, is increasingly unfair and predatory. Let's shut 'em down for a month...no gas, no oil, no electricity. Enough is enough.

Actually, most of the guys I know that work in the oil patch do it to support their farm. Which shouldn't be necessary. So I think I know how they would feel about this, how they would vote.

I think Ralph needs to understand that. You're from near Kindersley, Robair? I grew up mostly in Regina, but the farms are in Punnichy and Ituna. How are the crops out Kindersley way this year?

I went all the way to Maple Creek to watch a grown man ride a cow once. Took a canoe with me too...not sure why, but I'll remember trying to tie it back onto the truck with a massive hangover and a bitched shoulder for the rest of my life.

I used to know an artist chick from Lancer...Karen or Carrie or something. Big chest, small brain, no control over her mouth. I think she might have been blonde, at least that summer. Nice girl actually. Friendly and happy. I've never been to Lancer though.

Been to Kindersley a couple of times to buy cattle, or actually drive them home. Once your relatives realise you're willing to drive a clapped-out pick-up with an unlicensed trailer full of heifers you are doomed...

I think it is time for Ralph to go. He's way too connected to the oil boys to be effective in the age of Kyoto and a highly protectionist regime in Washington. Somebody who understands modern reality would be far better for Alberta and all of Canada.

As to the original article, I like the idea of cutting off the flow of oil, gas, electricity, or water to get the US's attention because I see no other way. Just don't be surprised if you wake up one morning to find yourself living in in the newly conquered 51st state.

I doubt the world would stand for that, at least at this point. That's part of the reason why it's so important that we do something soon...the world is fed up with George and his pals, so we've got some backing.