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Prime Minister Paul Martin and GW had a conversation this week in which Canada attempted to re-open the lines of communication on this issue.

To date, over $5 Billion USD of extra tariffs have been levied against Canadian softwood lumber exports, despite repeated trade tribunals - including the last which was made up predominently of Americans - ruling in Canada's favour.

GW's response was to simply repeat his position that any settlement must be made under further negotiations. Canada's reaction is, understandably, "why do we have to negotiate when we won?"

So the sanctions continue, and the US lumber industry continues to fight the most recent setback by attempting to have NAFTA itself declared unconstitutional due to the nature of the section governing dispute settlement.

So, where does the oil come into this?

What happens if the lumber lobby win?

Well, a little-known fact is that NAFTA is also the governing document for all energy trade between it's members. These members, of course, include not just Canada and the US, but Mexico as well. In other words - two of the top three source countries for oil imports into the US.

NAFTA ensures that no extra duties are levied against energy trades between the member countries, and - more importantly - guarantees that the ratio exports to the US compared to total exports from Canada and Mexico remains constant. In other words, Canada and Mexico are BOUND to sell a good chunk of their oil to the US. This provides a stabilizing influence on the market to some extent, and certainly helps ensure a small measure of cost certainty to American consumers. And with the gulf region still under capacity after the huricanes, one would think that supply certainty would be a priority.

Not so it seems.

Should this lawsuit succeed, Canada and MExico will be free to market ALL of their oil to the highest bidder. Or they will be free to ensure their own supply certainty and nationalize their industries, or put export limits and remove ourselves from buying on the open market. This is, in the wake of recent price fluctuations, an idea that many Canadians might insist be considered should NAFTA dissapear. We produce more oil than we need. Why the hell should we pay inflted market prices for domestic consumption?

And as you consider the costs of rebuilding the Gulf Coast, bear in mind that some analysts have determined that the average cost to build a house will drop by nearly $1000 should the punitive duties on Canadian wood be removed. Do that math by the number of houses required, and ask yourself whether this tax does anything besides push equivalent costs onto the citizens of the US, especially as so much of the rebuilding will come out of the federal purse.

$5 Billion.

That is the total additional revenue recieved by the US on Canadian lumber during this trade spat.

How many days does it take before that is expended in Iraq?

And how does that stack up against a small measure of supply-side- and cost-certainty for oil in today's market?

You may just find out this winter.....

Canada doesn't WANT the type of ass-sucking that the House of Saud gets even if we do sell you more oil than them.

But we're a little tired of getting shat on too.

Originally posted to zeppomarx on Fri Oct 14, 2005 at 09:29 AM PDT.

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Comment Preferences

  •  I hear you (none)
    We have a little problem with the US ourselves here in Europe when it comes to trade (amongst other things...). Seems like they are afraid of true competition. How could that be, eh?

    Restore Democracy! Denounce the GOP (George Orwell's Party)!

    by high5 on Fri Oct 14, 2005 at 09:46:33 AM PDT

  •  Thank you for posting this..... (none)
    I don't think people REALIZE just how much oil Canada HAS or provides the US (and how much CANADIANS have to pay for their OWN oil, which is a SURPLUS in our country, because of 'fair trade').  It IS also quite funny that the 'treatment' that the House of Saud gets as a trade partner vs. what Canada gets..... we're 'friendly neighbours' so we've never really required ass-kissing you're right.  But the whole 'friendly neighbour' arrangement also used to come with a certain amount of mutual respect......

    Respect has been LACKING from this administration and its trade policies.... its even becoming near-hostile, with the constant 'ignoring' of certain trade issues.  I personally think when dealing with people LIKE this White House administration, it almost HAS to be 'tit for tat'..... so I hope NAFTA IS scrapped... and then BACK to the bargaining table they all should go.... and Canada should START dangling its oil infront of the White House like the Saud family does.... sigh....

    Sometimes like when dealing with an unruly child, you have to put 'rational discussion' aside, and start telling them; "you won't get what you want, till you play fair"....

    An eye for an eye only ends up making the whole world blind--Gandhi (-9.38, -7.59)

    by hopefulcanadian on Fri Oct 14, 2005 at 09:47:16 AM PDT

    •  Canada has done well under NAFTA (none)
      so it's removal would not be a good thing as protectionism runs rampant and both our economies take some heat in various sectors.

      But indeed, we seem to still be paying for the sin of not joining the Coalition of the Coerced.

      I think ... therefore I'm probably overqualified for public office

      by zeppomarx on Fri Oct 14, 2005 at 10:12:19 AM PDT

      [ Parent ]

  •  a short P.S. (none)
    you might want to give your diary a 'sexier' title; lol... I just don't think people do anything but ignore 'softwood' and 'oil'.....

    maybe something like "Canada is SICK and TIRED and NOT going to take it anymore"   :)

    An eye for an eye only ends up making the whole world blind--Gandhi (-9.38, -7.59)

    by hopefulcanadian on Fri Oct 14, 2005 at 09:50:21 AM PDT

  •  Martin is a corporate hack. He will do nothing. (none)
    There are many things our government can do to get the attention of the Bush Administration. Some of those things are:

    1. Expell all US diplomatic personnel. No permission needed from anyone for this action.

    2. Impede efforts of US companies to buy into the Alberta oil sands. It's the paperwork and environmental impact reports, hiring practices, tax and royalty compliance, pipeline scheduling, etc.

    3. Issue public invitations to China to participate in the oil sands. Announce potential limitations of exports to the US.

    4. Use the retaliation authority issued by the WTO to target politically sensitive areas - Pennsylvania, Florida, Colorado, etc.

    These are just off the top off my head - I'm sure others can think up more effective actions. But Paul Martin will do nothing because he is a corporate tool in Liberal clothing. I would remind Martin fans that it was Martin, as Finance Minister under Chretien, who balanced the federal budget deficit by reducing healthcare transfers to the provinces by about 80% and forcing the Liberals to break their promise to end the highly regressive GST.
    •  Sleeping next to the elephant (4.00)
      5 billion dollars isn't a big enough dollar value to upset trade relations over.

      On the other hand, the "softwood lumber dispute" thing has been dragging on as a news story for a decade or more in Canada, and the end result is that it's achieved mythic size as a political issue.

      Bush appointed an ambassador that hadn't even been to Canada previously, and the American public isn't aware of how nasty a political issue this is in Canada.

      If the U.S. was smart, they'd settle this pronto.  However, they aren't, and aren't aware that there's going to be a "quiet backlash" that's going to adversely affect the way American business interacts in Canada -- as Canadian politicians search for ways to "look tough" without actually kicking off a trade war.

      Most Americans don't realize how tightly integrated Canada is into the North American economy.  Overall, the economic effects of any rollback in economic integration are going to have a bad net effect to everbody that participates in the economy.

    •  yeah.... but all of those 'suggestions' (none)
       you made are outright hostile.  I get your point, that there are MANY sort of 'in your face' choices that could be made by Canada, but they would HARDLY be productive... they would just be inflammatory.

      Say what you will about Martin, but Canada is in a rather GOOD place financially right now...... there is NO other party BUT the Liberal party under Martin that has managed the country so well fiscally...... I'm just saying, the current SURPLUS is huge; they're not even going to truthfully SAY how much of a surplus there IS for certain 'international trade' reasons.  Its been an incredibly organized government in terms of fiscal management(despite whatever 'scandal of the day' politics are on display from time to time on the TV).  MULRONEY was a hack... MULRONEY was the corporate sell-out who handed our country over to the US on a silver platter when that ASSHOLE signed that free trade agreement......... if things keep going the way they are going, Martin will carefully, legally and TACTFULLY get us OUT of NAFTA if he must.  Don't underestimate him, just because he doesn't do things with a certain "IN YOUR FACE" machismo, doesn't mean he's not getting shit DONE.  I have more faith in him and his party than THAT.

      An eye for an eye only ends up making the whole world blind--Gandhi (-9.38, -7.59)

      by hopefulcanadian on Fri Oct 14, 2005 at 10:12:32 AM PDT

      [ Parent ]

    •  In a trade war, (4.00)
      the US gets bloodied, but we get creamed.

      And $5B isn't worth that.

      Still, if the US lumber lobby succeeds in it's effort to nullify NAFTA, then things will get downright interesting in a real hurry - without Martin needing to do anything to force the issue at first.

      I think ... therefore I'm probably overqualified for public office

      by zeppomarx on Fri Oct 14, 2005 at 10:16:12 AM PDT

      [ Parent ]

      •  Sometimes one has to stand up to bullies. (none)
        How do you deal with an administration that ignores the treaties it signs? Submit? Turn the other cheek? Hope for the best? We've tried all those things and been laughed at.

        That $5 billion you dismiss so lightly represents about 12,000 jobs here in BC. Entire towns have died, people thrown onto social assistance, along with the accompanying increases in substance abuse, domestic violence, etc. Try telling those people they aren't worth standing up and fighting for.

        Expelling US diplomatic personnel is a definite attention-getter and would convey the seriousness of the situation. If the US considers it a hostile action, so much the better. I would guess that the Bushites would decide they have enough problems and resolve the issue, but they won't do anything unless they are the recipients of PUBLIC criticism.

        My beef with Martin's approach to the economy is that he doesn't hesitate to impose pain on the poor and middle classes but is barely constrained by his caucus from doling out the taxpayer-funded goodies to his corporate buddies.

        If I learned anything from living and working in the US for over 30 years it is that they do not respect wimps. If you punch them in the nose, they may get mad, but they will also begin to take you seriously. Until Canadians decide to throw a punch, we will be laughed at in the states. I know this goes against the grain of most Canadians, but it is true, IMHO.

  •  I'm confused...... (none)
    Why on earth would we want to STOP Canadian wood from coming in? Most of their wood is grown TO be cut....

    Seesm absurd that we'd RATHER cut the hell out of our own National Forests - and the results are pretty awful if you've seen the results.

    Doesn't make ANY sense in a RATIONAL world.....

    Higher prices, limited supply AND more cutting of US forests

    •  It's all about "be just like us" (none)
      Despite repeated tribunals looking at tha actual costs to industry and determining that Canadian lumber is NOT unfairly subsidized, our system of how stumpage fees are applied (the fee charged to the lumber company to cut down a tree on crown land) is markedly different from yours.

      So the mantra from the White House has been: regardless of actual trade fairness, we insist that you adopt OUR fee system before the tarrifs go away.

      Forced conformity IS, after all, the Bushco way.

      I think ... therefore I'm probably overqualified for public office

      by zeppomarx on Fri Oct 14, 2005 at 11:08:02 AM PDT

      [ Parent ]

    •  Its so a very small amount (none)
      of very strong Bush supporters keep a 'monopoly' on the wood prices in America.  Bush is seriously standing on this issue for a VERY small minority of people.  Even an editorial in the Wall Street Journal has expressed the opinion that this dispute should be settled in Canada's favour:

      The Wall Street Journal said the duties on Canadian lumber are at odds with Mr. Bush's professed belief in an integrated North American economy.

      "Americans have a stake here too, since the duties add about $1,000 (U.S.) to the cost of a new home and affect thousands of jobs in industries that depend on lower-cost Canadian lumber," the editorial said.

      sigh..... are we at all surprised as Canadians?  No.  Are we surprised that more of the media on the American side of the border aren't stressing this?  YES... considering it seems like its now getting to the near-ridiculous stage of a 'hold-out'.  Panel after panel has awarded Canada with favourable decisions, and now even the NAFTA 'Supreme Court" has rendered a decision and STILL Bush is saying 'negotiations must continue...." ON WHAT when a decision has been MADE?????  Bush's COMPLETE disregard for fairness on this issue has had Canadian feathers ruffled for a while... but we all know nothing happens till AMERICAN feathers get ruffled, the PUBLIC has to be made aware of this issue....

      at a time when SO much rebuilding in the south will need to be done, and on a day like TODAY with Bush rejecting Canada's claims once again (Bush and Martin talked once AGAIN today on the issue it seems) its hard not to be completely at wits end about the issue now.

      An eye for an eye only ends up making the whole world blind--Gandhi (-9.38, -7.59)

      by hopefulcanadian on Fri Oct 14, 2005 at 11:15:08 AM PDT

      [ Parent ]

  •  Bushco (none)
    is into punishment, and Canada is being punished on softwood because of a few policies... Iraq, pot, gay marriage. If Canada pulls out of NAFTA, they will loose a 300 million consumer base that they have now. Being next door to the world's largest economy has some major advantages and not alot of drawbacks.... 88% of Canada's good go south of the border, with relatively little cost involved, compared to say, shipping that softwookd lumber to China by boat, or by rail to Halifax so it could be sent to Euroland. Canada has 300 million  customers added to their consumer base, without having to pay for their health insurance, education, and other costs associated with a national consumer base.
    If Canada starts imposing duties on California wine  or other items, Bushco would escalate the war and neither side will benefit. Instead, Canada should impose a " Kyoto Equalization Fee" on all cars, ships, trucks and planes that enter Canada from non Kyoto nations, to off set the pollution that these countries are adding to Canada's amounts that have to be reduced. When a Euro plane lands in Toronto, its emmisions have been factored in on the other end. This is not the case from anything entering from the US. Of course, China and India would have to pay these fees also, but the majority of the fees would be from the US... so its not a "retaliatory" thing, but an " equalization" fee. Since the Americans havent signed Kyoto, Canada can pass this off as something that all Kyoto nations are going to do, and encourage the Euros to impose the same tarifffs.. to "equalize emmissions cost" with countries that didnt sign. Canada needs to step outside the box when it comes to dealing with the US, and throw a curve ball into the whole something the US would have problems responding to..... but then of course you still have Martin who is Canada's Corporate PM.. anyone keeping track of what his steamship company is carrying these days or where to? It would be interesting to know...
    •  Interesting idea... (none)
      and yes, I have never advocated trade war. What I find interesting is that this may be out of either of our hands if the US lumber lobby is successful in their lawsuit in which case both sides will suddely find themselves operating in a void.

      As to Paul's shipping line.... it is, of course, carefully tucked away in a blind trust..... run by his son. So of course he has no idea how it's doing....

      Yes, it's called The Frist Defence. And it sucks. Canada is suffering from almost as bad a dearth of effective, strong leadership as the US is right now.

      I think ... therefore I'm probably overqualified for public office

      by zeppomarx on Fri Oct 14, 2005 at 12:35:12 PM PDT

      [ Parent ]

  •  Bush (none)
    isn't the US president.. he is the Corporate President for all corporations of the world.. he just happens to be based in the US, and has the US military at his disposal, -his corpoarte army.

    As an American who spends half his time in BC, I think the Kyoto idea could fly.....Canadians would, I think, be all for the idea, as its a way to get back at the US, without being retaliation.. and its a tax Canadians wouldn't have to pay. One of my other ideas is for someone like Jack Layton to propose a natinal referendum that makes all major waterways in Canada " National Parks" so the water cant be whored off by each province to the highest US bidder.. by locking up the water in a National Referendum so it cant be sold, it would take another referendum to undo it... though I must admit I am not that in tune with how referendums work in Canada.. just the idea came to me while enjoying some of BC's major export. ( and we aren't talking lumber) I would think the average Canadian would embrace the water idea, though the coporations and provinces would scream bloody murder.

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