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Feb 10, 2005
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Editorial: The China factor / Canada's new customer may end U.S. bullying
Thursday, September 15, 2005

Pittsburgh Post-Gazette

Chinese President Hu Jintao paid his first state visit to Canada last week, romancing Ottawa in hopes of supplying the world's fastest-growing economy with energy from Alberta's oil sands. Canada is becoming very popular with energy-hungry nations, as its political stability and reputation for playing well with others make it a "low-risk" supplier.

Canada's oil reserves are estimated to be second only to Saudi Arabia's, and rising demand and prices have strengthened the Canadian economy as production of oil, electricity and gas increase. China is Canada's second-largest trading partner, after the United States, and Mr. Hu's overtures come at an awkward time in U.S.-Canadian relations.

* Canada didn't buy the rationale for going into Iraq and didn't join the Coalition of the Willing, provoking diplomatic chilliness from Washington. In April, former House Speaker Newt Gingrich was asked to apologize for repeating the myth on Fox News that some Sept. 11 hijackers entered the United States from Canada. Mr. Gingrich did say he was sorry for perpetuating the "widespread inaccuracy."

* A group representing U.S. cattle producers is seeking to reinstate the ban on Canadian cattle imports, imposed after a mad cow was found in Alberta in 2003 and recently eased to allow the import of young Canadian cattle. The Canadian beef industry has already lost about $6 billion.

* Perhaps the largest grievance that Canada has with its powerful neighbor right now is over the trade in softwood lumber. Though it has gone virtually unnoticed in the United States, the conflict is a huge issue to the Canadian public and is kindling anti-American sentiment.

Canada is the world's largest producer of softwood lumber; the United States is the world's largest consumer of it. American builders and retailers favor unrestricted trade, but U.S. lumber companies, not surprisingly, want protective tariffs averaging 20 percent to remain in place. The Bush administration imposed these tariffs in 2002, and Ottawa responded with two dozen lawsuits filed with trade-arbitration organizations.

Last month, a panel from the North American Free Trade Agreement, functioning as a court of final appeal, ruled that Canadian practices were no threat to U.S. lumber producers. Washington ignored the ruling and is still arguing its case to the World Trade Organization. This was seen by Ottawa and the Canadian people as bullying. Now they want to fight back with a tax on energy exported to the United States, tariffs on Florida orange juice and California wine, or even Canadian withdrawal from NAFTA.

A trade war would be costly to Canada, as 86 percent of its total exports go to the United States. Cool heads are reluctant to risk one. But with Canada's economy gaining strength and a big customer like China looking to do more business, a trade war may be less unthinkable than it once was.

If the U.S. continues to squander Canada's good will, it could be forced to compete with China for Canadian oil and energy. By then, it will be too late for Washington to stop its bullying, respect Canada's sovereignty and treat it like a true partner instead of the 51st state.

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