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US Lumber Exporters Fear That Canadian Demand Will Reduce Their Share of the Market

Two of the world’s most powerful media organizations have decided to side with the Canadian government on the controversial Trans-Pacific Partnership Agreement (TPPA). As usual, U.S. news media has turned its nose up on the deal. Some articles have referred to the pact as the “NAFTA on steroids.” In truth, however, the pact is no more harmful to the interests of Canadians than the North American Free Trade Agreement (NAFTA). The differences are in scale, not content. In fact, the new pact does more to protect Canada’s economy than all other pacts put together by the US and other western countries combined.

The main complaint is that the pact will increase Canadian protectionism at the expense of the US. The fear is that the pact will somehow deny the benefits of trade to the new Asian economic powerhouse. As the economic analyst argued in a recent column, “if Canada wants to win market share in Asia against Japan, South Korea, Taiwan, and China, then it needs to become more competitive in the labor market and more welcoming to workers from outside the country’s borders.” As he notes, “this does not mean that Canadian policies now or in the future will be more protectionist than in the rest of the world.”

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Two decades ago, Canada was in the same boat as the US on issues of globalization. The following year saw the signing of the North American Free Trade Agreement. At the time, it was a happening deal. The following few decades saw it erode. Now, free trade deals no longer enjoy the same level of popularity in the US as they did back then. That doesn’t mean the deal is a bad one it just means that two different countries, two different policies, two different agendas are competing for the same audience.

The prime reason behind the US’ embrace of Nafta is the hope that it would increase Canadian exports by reducing imports from the US and Europe. As has been noted by the usual suspects, not every country benefits equally from this. So, while the US may see an increase in its exports, other countries (including some of the European Union’s members) will feel the loss of potential markets.

It seems as if Canada’s desire to join the US-led negotiations is primarily to protect its dairy and poultry farmers from competition from the US. And, although the government claims otherwise, it appears as though they have negotiated well. In fact, the Competition Bureau has stated that its examination of the Canadian dairy industry found “no evidence” to support the claim that the sector is being targeted unfairly. So, at least as far as the dairy industry goes, Canada appears to be doing well in the negotiations.
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And yet, another segment of Canada’s population does not share these sentiments. The members of our House of Commons represent two of the provinces with the most at risk from reduced tariffs. New Brunswick Premier Brian Martin recently told the House of Commons that “if the United States goes into another recession and seeks a re-settlement [of tariffs on] our dairy farms, I will personally take a very hard line with them.” And while the comments are eyebrow-worthy, perhaps they are not far from the truth.

What exactly is causing the US to fear? Well, both the Canadian government and the US appear to be concerned about a lack of jobs. In addition, there are fears that the lumber trade is in danger of drying up altogether. So, while Canada is a major exporter of lumber, the country’s economy depends almost entirely on its own lumber reserves. More than half of Canada’s total annual production comes from its province. And the third-largest exporter of lumber is British Columbia.

At the same time, the United States is also feeling the pressure from lumber producers in Canada and the United States. Recently, the US House passed a bill encouraging the Obama administration to work more closely with Canadian provinces on trade issues. But this bill has yet to make its way through the US Senate. Meanwhile, in Washington D.C., the battle continues. Hopefully, when the dust settles, Canadians will end up on the winning side of this debate.

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