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Trade war may hit billions in U.S. imports
Canadian Press
Wednesday, August 24, 2005
OTTAWA -- Canadians could be faced with soaring prices for their favourite Napa Valley merlot, Florida orange juice or fresh vegetables from southern California if a trade war with the United States overheats.
Such a scenario could unfold on grocery shelves and kitchen tables if the federal government follows through on threats to retaliate against Washington for snubbing a major NAFTA ruling that favoured Canada in the softwood lumber dispute.
Several Liberal cabinet ministers say they're prepared to fight back with trade sanctions to force Washington to recognize Canada's victory and end the longrunning dispute that has so far cost this country's lumber industry more than $5 billion in penalties.
At national Liberal caucus meetings this week in Regina, ministers suggested Canadians are outraged at the idea the U.S. isn't following trade rules and want tough action to bring it into line.
But some trade experts warn that Ottawa could be biting off more than it can chew if it follows through on threats against the country's biggest customer.
"Retaliation is a mug's game," warns Ottawa-based trade lawyer Peter Clark.
"It's going to be very difficult to find things that we could do to them that are not going to hurt us."
Slapping duties on U.S. exports to make them more expensive and therefore hurt producers south of the border could drive up Canadians' grocery bills or hurt domestic businesses that use American materials in their products.
Besides, added Clark, it's a long, complicated process that could take the federal Trade department as long as two years to finalize a list of target products.
And it's expensive - Ottawa has already asked the World Trade Organization for permission to retaliate in the same amount as Washington's duties on softwood - $5 billion and rising daily.
That would means either targeting a lot of Florida fruit or California wine - or an export tax on energy sales south of border, said Clark.
"That would certainly get their attention."
But sideswiping Canada's oilpatch would also be playing with fire at home, putting a major industry at risk, warned Nancy Hughes Anthony, president of the Canadian Chamber of Commerce.
"We have to be very careful not to make a bad situation worse."
Federal officials have quickly ruled out any limits on energy exports, suggesting it would hurt the domestic oilpatch.
But as preliminary lists of possible targets are being drafted, some other consumers items are definitely on the table.
Foreign Affairs Minister Pierre Pettigrew suggested earlier this week that California wines could be a possible target.
"I do believe that we should do it in a way that will not go to the detriment of other Canadian interests," said Pettigrew, a former trade minister who dealt with the softwood dispute.
"We have to do it in a way that some U.S. interests will ring their senators and congressmen in Washington."
Trade lawyer Barry Appleton says Ottawa should fight the powerful American lumber industry on its home turf by challenging its softwood case in U.S. courts - the only arbiter the Americans will heed, he says.
"When you retaliate, who does that really help? You're just making goods more expensive at home," said the Toronto lawyer.
"They're holding our softwood industry ransom so we've got to think creatively."
The potential cost of retaliation to Canadian consumers is part of the reason Ottawa so rarely takes that step - especially against the mighty United States.
It took a small but similar step earlier this year, however, after the World Trade Organization authorized Ottawa to slap duties worth about $14 million on a handful of U.S. products including live swine, oysters and specialty fish.
That was part of a multination protest against a U.S. trade law.
Clark suggested much of the Liberal government's noise is mere posturing in the hopes of convincing the U.S. to resume negotiating a better softwood trade arrangement.
"The (Liberal cabinet) ministers hope it's possible to use the fuss and the pressure to do a deal."
Canadian Press
Wednesday, August 24, 2005
OTTAWA -- Canadians could be faced with soaring prices for their favourite Napa Valley merlot, Florida orange juice or fresh vegetables from southern California if a trade war with the United States overheats.
Such a scenario could unfold on grocery shelves and kitchen tables if the federal government follows through on threats to retaliate against Washington for snubbing a major NAFTA ruling that favoured Canada in the softwood lumber dispute.
Several Liberal cabinet ministers say they're prepared to fight back with trade sanctions to force Washington to recognize Canada's victory and end the longrunning dispute that has so far cost this country's lumber industry more than $5 billion in penalties.
At national Liberal caucus meetings this week in Regina, ministers suggested Canadians are outraged at the idea the U.S. isn't following trade rules and want tough action to bring it into line.
But some trade experts warn that Ottawa could be biting off more than it can chew if it follows through on threats against the country's biggest customer.
"Retaliation is a mug's game," warns Ottawa-based trade lawyer Peter Clark.
"It's going to be very difficult to find things that we could do to them that are not going to hurt us."
Slapping duties on U.S. exports to make them more expensive and therefore hurt producers south of the border could drive up Canadians' grocery bills or hurt domestic businesses that use American materials in their products.
Besides, added Clark, it's a long, complicated process that could take the federal Trade department as long as two years to finalize a list of target products.
And it's expensive - Ottawa has already asked the World Trade Organization for permission to retaliate in the same amount as Washington's duties on softwood - $5 billion and rising daily.
That would means either targeting a lot of Florida fruit or California wine - or an export tax on energy sales south of border, said Clark.
"That would certainly get their attention."
But sideswiping Canada's oilpatch would also be playing with fire at home, putting a major industry at risk, warned Nancy Hughes Anthony, president of the Canadian Chamber of Commerce.
"We have to be very careful not to make a bad situation worse."
Federal officials have quickly ruled out any limits on energy exports, suggesting it would hurt the domestic oilpatch.
But as preliminary lists of possible targets are being drafted, some other consumers items are definitely on the table.
Foreign Affairs Minister Pierre Pettigrew suggested earlier this week that California wines could be a possible target.
"I do believe that we should do it in a way that will not go to the detriment of other Canadian interests," said Pettigrew, a former trade minister who dealt with the softwood dispute.
"We have to do it in a way that some U.S. interests will ring their senators and congressmen in Washington."
Trade lawyer Barry Appleton says Ottawa should fight the powerful American lumber industry on its home turf by challenging its softwood case in U.S. courts - the only arbiter the Americans will heed, he says.
"When you retaliate, who does that really help? You're just making goods more expensive at home," said the Toronto lawyer.
"They're holding our softwood industry ransom so we've got to think creatively."
The potential cost of retaliation to Canadian consumers is part of the reason Ottawa so rarely takes that step - especially against the mighty United States.
It took a small but similar step earlier this year, however, after the World Trade Organization authorized Ottawa to slap duties worth about $14 million on a handful of U.S. products including live swine, oysters and specialty fish.
That was part of a multination protest against a U.S. trade law.
Clark suggested much of the Liberal government's noise is mere posturing in the hopes of convincing the U.S. to resume negotiating a better softwood trade arrangement.
"The (Liberal cabinet) ministers hope it's possible to use the fuss and the pressure to do a deal."
