Politics Briefing newsletter: Horgan takes softwood-lumber talks to Washington; Petronas calls off $11.4-billion LNG terminal

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B.C. Premier John Horgan and Prime Minister Justin Trudeau are pressing for an end to the softwood-lumber dispute before NAFTA renegotiations begin. Mr. Horgan met with the Prime Minister yesterday in their first get-together since the NDP took power in B.C., and both said the long-running softwood dispute, which erupted in April after the United States imposed countervailing duties on Canadian exports, needs to end. Mr. Horgan will take that message with him today when he arrives in Washington, where he plans to meet with U.S. Commerce Secretary Wilbur Ross. Mr. Horgan says it would make sense for both countries to get softwood "off the table" as they turn their attention toward NAFTA.

The issue landed in the middle of the B.C. provincial election campaign, with Mr. Horgan and former premier Christy Clark each claiming to be best positioned to stand up to the Trump administration. Ms. Clark called for retaliation targeting American thermal coal exports through B.C. ports; Mr. Horgan has backed away from that idea, saying any measures linking other trade issues to softwood lumber should be left with negotiations. Mr. Trudeau also avoided addressing the possibility of sanctions against the United States.

This is the daily Politics Briefing newsletter, written by Mayaz Alam and Eleanor Davidson in Toronto and James Keller in Vancouver. If you're reading this on the web or someone forwarded this email newsletter to you, you can sign up for Politics Briefing and all Globe newsletters here. Let us know what you think.

CANADIAN HEADLINES

Malaysian company Petronas has thrown a wrench into Canadian efforts to be a global supplier of liquefied natural gas (LNG). The company was planning to build a $11.4-billion LNG terminal in B.C., but announced yesterday that they will no longer be building the site. The LNG terminal was slated for Lelu Island, near Prince Rupert, on the B.C. coast. Petronas acquired the land in northwestern B.C.when it bought Calgary-based Progress Energy in 2012. The company spent $400-million at the coastal site and an average of $20-billion a year drilling for gas. B.C's New Democrats criticized the Liberal government's enthusiasm for the LNG sector during the provincial election campaign this spring. Now that the NDP are in power, however, the province's new energy minister, Michelle Mungall, says the government is interested in prospective jobs that the LNG industry could create — as long as it meets environmental standards. The BC Liberals, who are now in Opposition after 16 years in power, wasted no time blaming the NDP government, though the company says that wasn't a factor. Federal Natural Resources Minister Jim Carr's office said the project was initially based on evidence and consultations with communities affected and that yesterday's decision was "a business decision" made by Petronas.

Ontario Premier Kathleen Wynne will testify this fall at a trial for her former deputy chief of staff and a fundraiser for the Ontario Liberal Party. Pat Sorbara and Gerry Lougheed are accused of attempting to bribe a candidate for the Liberal nomination in Sudbury to ensure that Glenn Thibeault, now the energy minister, would run unopposed. If you're interested in how we got here, The Globe's Adrian Morrow documented how the whole affair went down back in 2015.

B.C.'s NDP government says it's committed to stopping Kinder Morgan's Trans Mountain pipeline expansion – but it isn't saying just how it will do that. The fate of the pipeline came up yesterday after Mr. Horgan and Mr. Trudeau's meeting in Ottawa, though both politicians largely steered clear of the issue. Mr. Horgan refused to say whether he was considering using permits or other procedural maneuvers to block the pipeline expansion. But his attorney general appears to have ruled out permit delays. David Eby says the province would face costly lawsuits if it attempted to deliberately staff permits needed for construction, which the company plans to start by the fall. Instead, Mr. Eby says the government can ensure permits impose conditions requiring construction to be done in a way that minimizes spills and protects the environment.

A moment of clumsiness during Mr. Horgan and Mr. Trudeau's news conference yesterday provided a moment of levity – and a perfect metaphor for the pipeline debate. Mr. Horgan knocked over a glass of water, prompting him to quip: "Spills can happen anywhere." Mr. Trudeau responded, "We'll get people to clean that up right away," to which Mr. Horgan replied: "There's a federal response for that."

And the funding model for First Nations is changing, Indigenous Affairs Minister Carolyn Bennett said at the annual Assembly of First Nations meetings. The changes will enable First Nations governments to roll over unused funds from year to year — previously, they had to spend all the allocated funds before the end of March each year or have the funding returned to the federal government.

The Globe and Mail editorial board on Conservative unity in Alberta: "If there's anything anyone should have learned from the last few years in Alberta politics, it's that the unexpected is always on the menu. Time and again, the best laid plans of the powerful have gone awry, certainty has been stood on its head, and the inevitable has turned out to be entirely evitable. This is not the first time that Wildrose and the PCs have tried to become one. A mere two and a half years ago, when the PCs were still the permanent leadership of an erstwhile one-party state, then-premier Jim Prentice persuaded nine Wildrose MLAs, including leader Danielle Smith, to cross the floor."

Angela Campbell (The Globe and Mail) on the polygamy ban: "The ban is outdated, rarely and inequitably applied, and redundant. It fails to achieve the ends it claims to serve, that is, the protection of women and children. Parliament would be wise to get ahead of the appeal courts on this matter and repeal the sections of the Criminal Code that outlaw this practice. In so doing, our lawmakers would show prescience and courage, rather than waiting on the possibility that an appellate court may force their hand to do what is right."

NAFTA UPDATE

With NAFTA renegotiations set to officially begin in less than a month, Prime Minister Justin Trudeau says that in any revamped trade deal, a dispute-resolution mechanism (also known as Chapter 19) must be an essential feature. The White House, in objectives for the negotiations released last week, said it wants Chapter 19 of the existing agreement to be scrapped. The Trudeau government said it is willing to walk away from the negotiating table if the U.S insists on removing the dispute panels. The Globe has also learned that the White House has asked Canadian and Mexican officials to deal directly with U.S. Trade Representative Robert Lighthizer and not Commerce Secretary Wilbur Ross during the talks. Mr. Lighthizer has also told Foreign Affairs Minister Chrystia Freeland that he only answers to Mr. Trump and Congress.

All the time and effort the Trudeau government has put into American outreach before the NAFTA talks comes at a price: $96,000, to be precise.  That figure covers 29 trips by a dozen cabinet ministers from mid-January of this year to the end of May. While some of the trips were for high-profile events like the inauguration of U.S. President Donald Trump, others were to build relationships outside the White House, with members of Congress and other Washington insiders who will ultimately determine the fate of any new free-trade agreement.

Robert Wolfe (Policy Options) on leverage in the talks:"It would be foolish to pretend that the US has no leverage in the NAFTA renegotiation. Their tough negotiators will have a lot of weight behind them, but they will have to listen to Canada and Mexico and accommodate their interests if they want to achieve a quick outcome and an effective deal. Since the results may look like the outcome of the TPP negotiations — most of which would have been acceptable to Canada — the prospects look good for a reasonable outcome, at least among negotiators. Their challenge will be to find something that can be presented as a political victory for President Trump."

INTERNATIONAL HEADLINES

The threat of a North Korean missile strike against the continental U.S. could be closer than expected. The Pentagon's Defence Intelligence Agency found that North Korea could have the ability to attack the United States with a nuclear-capable ballistic missile as early as 2018. U.S. President Donald Trump has vowed to would confront the North Korean regime "very strongly" in order to stop any missile advances.

Palestine's envoy to the U.N. warned the Security Council yesterday that the crisis over Jerusalem's al-Aqsa mosque is at a tipping point. The mosque faces the Dome of the Rock, and is a holy site for people of both Jewish and Muslim faith. How did the situation become so heated? On July 14, three Israeli citizens of Arab descent opened fire near the mosque, killing two Israeli policemen. The attackers were shot dead during the gunfight. The following day, Israel shut down the al-Aqsa compound, and cancelled Friday prayers for the first time in nearly 50 years. Before reopening the mosque, metal detectors and security cameras were installed around the site, and Muslim men under the age of 50 were forbidden from entering for prayers. Protests over the new security measures were dubbed the "Day of Rage" and drew thousands of people, leading to clashes between protesters and Israeli security forces. The new metal detectors caused many to vow not to pass through the barricades, with large groups gathering to pray outside the mosque instead. Early yesterday morning, Israeli security forces began removing the metal detectors. However, Muslim worshippers in Jerusalem are continuing to boycott the mosque. Jordan's King Abdullah II and Palestinian president Mahmoud Abbas have both called for a return to the security conditions that were in place before the July 14 attack.

After years of conflict, Libya's two rival leaders have agreed to a nationwide ceasefire. French president Emmanuel Macron hosted the talks in Paris this week, which ended with a 10-point declaration between Libya's Prime Minister Fayez Serraj and military commander Khalifa Haftar. The declaration called for fighters on both sides to be demobilized and integrated into Libya's regular forces. However, there was one major — and vague — caveat to the agreement: both sides will continue using armed forces when fighting against "terrorist" groups. Elections in Libya could be held next spring.

With four congressional committees investigating Russian meddling in the 2016 election, it's easy to get confused as to who is being investigated for what. We broke down everything that's happened so far.

And another Australian politician has been caught in the crosshairs of a constitution clause that states a "citizen of a foreign power" is not allowed to hold office. Resources Minister Matt Canavan resigned from Cabinet after his mother told him he might be Italian. A senator resigned last week after finding out that she was a dual citizen of Canada.

Elizabeth Renzetti (The Globe and Mail) on Boy Scouts: "Donald Trump chose to stand in front of thousands of Scouts and talk about 'the hottest people' at a New York party, the fake-news media, the size of his electoral college win and how he might fire the secretary of health and human services, Tom Price, who just happened to be on stage with him. 'Who the hell wants to speak about politics when I'm in front of the Boy Scouts?' he asked, before doing exactly that."

Noah Smith (Bloomberg) on where China went wrong with stimulus: "There's a lesson here for future policy makers. When recession threatens, forcing banks to lend money cheaply is a very dangerous form of fiscal stimulus. Countries would be well-advised to stick with Keynes' original idea, and simply have the government spend a bunch of money on infrastructure when the economy falters."