Canada’s softwood lumber and livestock producers are being targeted by Donald Trump’s transition team, which is advising the president-elect to extract terms more favourable to the United States in these areas in a renegotiation of the North American free-trade agreement.
The head of Canada’s largest business group says a transition team memo obtained by CNN suggests Washington is about to embark on an “aggressive, protectionist approach to trade both with Mexico and with Canada.”
Perrin Beatty, president of the Canadian Chamber of Commerce, said statements Mr. Trump made during the campaign suggest every aspect of Canada-U.S. trade is up for negotiation.
“Everything in theory is on the table in the relationship, and we’re going to need to get clarity from him as to what he is looking at,” Mr. Beatty said.
The memo, which outlines a plan for Mr. Trump’s first 200 days in office, shows Mr. Trump on Day One would begin an effort to reshape U.S. trade policy with NAFTA – which he promised during the campaign he would “entirely renegotiate” or “terminate.”
The memo says on the first day he takes office – Jan. 20, 2017 – he would order the Commerce Department and International Trade Commission to study the ramifications of withdrawing from NAFTA and what would be required legislatively to do so. NAFTA has been in force since 1994.
The memo, as described by the U.S. cable network, also says Mr. Trump would then have the U.S. trade representative, his cabinet appointee in this area, notify Canada and Mexico that the United States intends to propose amendments to the accord that could include lumber and country-of-origin labelling. Other areas might include currency manipulation as well as environmental and safety standards.
The transition team has zeroed in on two of the most contentious trade issues between Canada and the United States.
The country-of-origin dispute centres on U.S. meat labelling rules that require foreign beef and pork to be sold with stickers detailing its origin. U.S. feedlots and packing plants are also required to keep Canadian livestock and meat separate.
The World Trade Organization as recently as last year said the U.S. labelling rules violate international trade rules and called for their removal.
Mr. Beatty said trying to revive country-of-origin labelling in NAFTA talks would be a “bit like redoing the presidential election because you don’t like the results.”
Last year, a WTO arbitration panel calculated the annual damage to Canadian cattle, pig and hog producers was $1-billion. It also found the mandatory labelling cost Mexico $227.8-million (U.S.) a year.
The Canadian beef industry directly or indirectly sustains about 228,800 jobs and depends on the United States for more than 70 per cent of its exports.
In the case of softwood lumber, hefty U.S. duties could be slapped on Canadian timber exports to the United States by early 2017 after a one-year standstill period expired in October in the long-running dispute.
U.S. forestry companies want to limit Canadian timber shipments to the United States and allege provinces subsidize companies through below-market rates for harvesting from Crown land.
Adding softwood to NAFTA would presumably mean setting a quota or limit for Canadian timber shipments.
About 230,000 Canadians work in forestry, and about 70 per cent of softwood lumber exports go to the United States.
Mr. Beatty said the direction it appears the United States will take should spur Canada to build new markets. “It highlights the importance of diversifying our trading relationship.”
John Masswohl, director of government and international relations for the Canadian Cattlemen’s Association, said he expects a U.S. Commerce Department study of NAFTA will conclude the deal “has been beneficial to the U.S. economy and created jobs.” It will also, he presumes, conclude that some areas have “unfinished business.”
It’s here where industry interests appear to have influenced Mr. Trump’s team as it fleshes out its protectionist agenda.
“Somebody, somewhere, seeing their chance, has whispered ‘country-of-origin labelling,’” Mr. Masswohl said.
He expects Canada also has trade matters it would like addressed.
Mr. Masswohl said the U.S. meat industry also opposed the mandatory foreign-labelling rules because they add to its costs.
Separately, Finance Minister Bill Morneau told a London audience Canada is prepared for joint trade talks.
“We will work with the U.S., and this would go with any U.S. administration, in order to show the benefit of that relationship,” he said. “We expect Mexico will be part of that discussion.”
CNN said the transition team did not respond to a request for comment on Mr. Trump’s thoughts about the document.
With a report from ReutersReport Typo/Error