The NAFTA Splinters In Softwood Lumber Dispute

Let me be clear on one thing right from the start: I have never been in favour of the North America Free Trade Agreement (NAFTA). I don’t see how opening our borders to American produce and manufactured goods in any way assists the development of our manufacturing base. The clear winners are always going to be the importer of natural resources.

Canadians have been, and are still, primarily hewers of water and cutters of wood. Our very roots as a colony were based on the fur trade and providing lumber for the British shipping industry. Even the onset of the industrial revolution did little to change the face of our economy.

Initially we were home to British-owned manufacturers, but post World War II saw the government open the doors for American investment. In what falls under the “it seemed like a good idea at the time category”, instead of subsidising Canadian entrepreneurs, a market was created to favour the foreign investor.

Take a look around Canada these days and notice how many of the major industries have titles ending in the words Canada Inc. or some such similar appendage. The term branch plant was created, it seems, for Canada’s economic relationship with American business.

There have been attempts to curtail this tendency over the years, but with implementation of NAFTA the chances of any Canadian company attempting to compete with their American counterparts are slim to non-existent. With a smaller home economy and no history of a manufacturing center, the resources are simply lacking.

This only makes the American government’s response to the finding of NAFTA’s extraordinary challenge panel concerning softwood lumber even more galling. For the third time they have found in favour of Canada; that our industry is not causing harm to the American industry.

In the Globe and Mail today the U.S. government is quoted as dismissing the ruling as irrelevant. To make matters worse, the Coalition for Fair Lumber Imports is now calling the resolution process unconstitutional, or, at the very least, constitutionally defective.

Where does this leave NAFTA, if one of the members refuses to recognize the dispute resolution process when it finds against them? Obviously your opinion would be coloured by whatever side of the border you find yourself on, but the opinion stated by Lawrence Herman in today’s Globe and Mail pretty much summed up the attitude north of the border:

‘For the U.S. government to deny the effect of this process weakens respect for the NAFTA and for the rule of law internationally, something the U.S. espouses when it suits its purposes,’ said trade lawyer Lawrence Herman of Cassels Brock in Toronto

When the softwood dispute is coupled with what seems excessive caution being exercised over Canadian beef by government and lobby groups, it’s bound to make Canadians wonder why they signed the treaty in the first place. Where are the supposed benefits to our economy that were supposed to be the result of this deal?

All that seems to have happened is that our economies are even more irrevocably linked. Given the precarious nature of the American economy – the size of the deficit, the continued spending on what seems to be a war without end, and the preoccupation with terrorism at the expense of the economy – it is not the dividend we had been promised.

Canadians opposed to the NAFTA always said that the agreement was slanted in favour of the U. S. This was before there were any disagreements to be resolved. Now that there seems to be little or no respect for the agreed upon conflict resolution process from south of the border, our worst fears are being played out.

If it’s not the softwood lumber agreement it will be something else further down the road. Unless our biggest trading partner shows some serious change of attitude, it may be time to give our six months’ notice and go back to the way things used to be. The cards can’t be stacked against Canada any worse than they are now.

Ed/Pub:LM