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CETA, NAFTA, softwood and beyond – So little time, so much for Canada to do on the trade front

Globe and Mail reporter Barrie McKenna.

Maybe it's the cloud of geopolitical uncertainty hanging over the world. Or the lingering economic unease at home. Perhaps it's all the rain.

But the buzz surrounding Canada's 150th birthday bash pales in comparison with the national euphoria that marked the celebration of the first 100 in 1967.

And now a symbolic milestone that Prime Minister Justin Trudeau hoped would coincide with the big anniversary has been quietly put off. Implementation of the free-trade deal with the European Union did not happen as planned on Canada Day, bogged down by European angst that Canada may backtrack on key concessions on cheese imports and drug patents.

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The two sides recently resumed discussions to get the deal – already a decade in the making – over the finish line.

Mr. Trudeau insisted last week that his government was "working hard to get this deal in place."

It's unfortunate that Canada is still grappling with the Canada-EU Comprehensive Economic and Trade Agreement (CETA), because the to-do list facing federal trade negotiators looks long and daunting. It's doubtful Canada has been hit with so many complex trade files, all at once, in 150 years.

At the top of the list is the pending renegotiation of the North American free-trade agreement – the cornerstone of Canada's relationship with its dominant trading partner. These negotiations will consume the energies of federal and provincial trade officials when they get started in mid-August.

Beyond NAFTA, Ottawa is also grappling with a multibillion-dollar fight with the United States over softwood lumber, the Bombardier-Boeing commercial aircraft dispute, exploratory talks to revive a massive Pacific Rim trade agreement, the prospect of post-Brexit trade talks with Britain and continuing efforts to get trade deals with China, Japan and India.

Each of these endeavours could take years. Taken collectively, they could push Canadian trade officials to the brink.

"Yes, it's a pretty busy time," said Kirsten Hillman, Canada's top negotiator, in a recent interview with trade publication Real Agriculture. "Our goal as trade negotiators is always to try to set stable, predictable environments for our trading industries, and right now that's something that we're working on pretty hard."

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A published report this week suggested "signs" are pointing to a possible resolution of the on-again, off-again softwood lumber dispute amid renewed political will.

It would obviously be convenient for Canada to resolve the dispute before the NAFTA renegotiations begin.

That is probably wishful thinking. Canada and the United States can't yet see the forest for the trees on this never-ending dispute. They remain far apart on what a deal would look like. Even within Canada, there is no agreement among the provinces and industry players on whether to continue challenging new U.S. lumber tariffs through litigation or try to reach a settlement. Complicating matters, Canada's largest lumber-producing province – British Columbia – is engulfed in political turmoil and could be headed into another election. Until it has a stable government in place, consensus within B.C. will be tough to get.

And the United States is pushing for a hard and permanent quota on Canadian lumber imports – a demand that does not sit well with B.C. producers, who account for more than half of Canadian output.

Then there is the government's commitment to trade diversification. Worried that reopening NAFTA and increased U.S. protectionism could disadvantage Canada, Ottawa is pursuing efforts on multiple fronts to diversify its trade patterns. The United States accounted for 76 per cent of Canada's exports and 52 per cent of imports in 2016. To create more balance, Canada is engaged in free-trade talks with India and Japan, as well as exploratory discussions with China. It has also met with other members of the Trans-Pacific Partnership to see if the deal can be revived now that the United States has pulled out. TPP negotiators are slated to meet this month in Japan to plot the way forward for the agreement, which was signed in 2016.

But for Canada, those efforts will inevitably take a back seat to NAFTA and lumber.

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In a clear sign of where the federal government is placing its priorities, Ms. Hillman, an assistant deputy minister at Global Affairs Canada, has temporarily relocated to Washington to direct negotiations with the Trump administration.

The last thing Canadian officials should be doing these days is constantly looking in the rear-view mirror, including the free-trade deal with Europe.

Video: Softwood lumber tariffs ‘consistent’ with U.S. approach: Trudeau (The Canadian Press)
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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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