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Why Canadian trade deals strike fear into U.S. Senators

U.S. trade representative Ron Kirk


U.S. Trade Representative Ron Kirk testified at the Senate Finance Committee on Wednesday. "Canada" was mentioned several times, but, thankfully, not in the context of lumber subsidies and an allegedly porous border.

Mr. Kirk is under pressure from several senators, including committee chairman Max Baucus, a Democrat from Montana, to complete trade negotiations with Colombia, which have languished for five years.

"It's pathetic," said Orrin Hatch, a Republican from Utah.

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Canada signed a free-trade agreement with Colombia in November, 2008, a fact that some senators are using to push President Barack Obama's trade agent to complete the Colombia talks. Canada and other countries are taking market share in Colombia from U.S. exporters, especially in agricultural commodities, according to senators from farm states such as Kansas.

Canada's merchandise exports to Colombia were worth about $644-million in 2010, a 44 per cent increase from 2005. (Canadian exports to Colombia peaked just before the recession at $709-million in 2008.)

The ironic thing is that Canada's gains in Colombia have nothing to do with the free-trade agreement. Mr. Hatch, himself, acknowledged during an exchange with Mr. Kirk that the Canada-Colombia agreement isn't expected to come into effect until June.

But the testimony is a window on the scramble around the globe to make bilateral trade agreements. With the Doha round of global trade talks in a coma, countries are scraping to grab market access wherever they can. It's taking on the look of a massive sporting event, the winner being the country that can claim the most agreements. A good number of senators feel like the U.S. is being left behind - and they don't like losing.

"I don't know why Canada can do this and we can't," exclaimed Mr. Hatch.

Mr. Kirk's response: "I've got a flag on my lapel, not a Maple Leaf."

The Obama administration is talking a hard line with Colombia over labour rights. Many say the White House is pandering to its supporters in the U.S. labour movement. Mr. Kirk told senators that U.S. opinion about trade is broader than the view from the wheat fields of Kansas and Texas and Montana.

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Americans in Detroit or the Carolinas, for example, are far from keen about their government pursuing more free-trade agreements. "We have to restore the faith of the American people about what we are doing," said Mr. Kirk.

The U.S. debate over the Colombia free-trade agreement is heading for a showdown. The Obama administration badly wants to complete a free-trade agreement with South Korea, a market whose potential is measured in tens of billions.

Mr. Kirk told the committee he was ready to start drafting Korea legislation immediately. The response from the leaders of the committee: sure, if you agree to pass Colombia and Panama - another potential agreement that is being held up the administration - at the same time. Mr. Kirk appeared unwilling to do a deal.

This has standoff has important ramifications for Canada in the great trade game. While the U.S. is on the verge of securing more market access to one of Asia's rising economic powers, Canada and South Korea still are far from an agreement after more than six years of talks.

"Negotiations are now well advanced, but resolving the remaining sensitive issues will be challenging," according to Canada's Trade Department.

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