The grinch on softwood, NAFTA and energy

Doest my ears deceive me? Are thoseRudolf’s paws prancing on my roof top already? Ahh no, my mistake, that was thesound of a federal party leaders’ jets touching down.

I guess it really is that time of year again; Justbefore Christmas and all the men in suits are hoping to buy us with their bagof goodies.

As our federal politicians try todistinguish themselves from one another in the run-up to the next generalelection on January 23rd 2006, they’re starting to deliver theirpackages of promises across Canada.

But the good ol’ Grinch in me questionswhether or not these promises of goodies and new directions are merely thenewest fancy wrappers concealing tired old rhetoric. I’m reminded of the oldSeinfeld episode on “re-gifting”where the same present is passed along with different wrapping.

Nowhere is this truer than in thevarious leaders’ positions on softwood lumber. In the typical “us versus them”theme of this election, all the leaders’ softwood speechifying perpetuates the age-oldfairytale that Canada is the innocent victim of the U.S. trade bully.

Now it is New Democrat Leader JackLayton’s turn to ratchet up the rhetoric to win political points. He is hammeringthe Liberal government for inaction, saying that “Martin has nothing to show for all his bluster about softwood duties.”

Energy retaliation is Mr. Laytonversion of tough talk. He thinks Canadashould impose duties on energy exports to the US.Canada is afterall the number one exporter of oil and gas to the US-giventheir consumption patterns you’d think the States would want to be a littlefriendlier).

Mr Layton says energy tariffs wouldget the Bush administration to change its position on softwood, in turn, recoupingCanadian self -respect.

Is this just rhetoric and toughtalk? Hmmm. The Grinch whispers something else in my ear.

No need to get all huffy and puffylike Tim Hearn, the CEO of Imperial Oil- Canada’s largest oil & gasproducer. The Imperial Oil CEO says that Mr. Layton is practicing “politics of division” if he supportsenergy retaliation. CTV reported Hearn saying that he “understands the importance of the softwood lumber dispute to Canada andhow emotionally charged the issue is, but he hopes a resolution can be foundwithout affecting trade in other sectors.”

Take a deep breath Tim.

For all his tough talk it seems Mr.Layton has overlooked a little known but important provision in our cute littleNorth American Free Trade Agreement (NAFTA). Signed and sealed in 1992 by thenPrime Minister Mulroney, NAFTA severely limits our ability to retaliate bylimiting energy exports. In fact, NAFTA locks in the percentage of oil and gas weexport to the US.As production rises, and is exported, the minimum percentage guaranteed to the USalso rises. This will become a problem when production levels drop or Canadaown energy needs increase.

The fine print of NAFTA attaches conditions to the use of export restrictions. Article 605 explicitly outlines that there can be no made in Canada energy retaliation.

Slappingduties on energy exports to the States violates subsection B, whichsays that we cannot impose a higher price on an energy export (by means”of any measure such as licenses, fees, taxation and minimum price requirements“), than that of which is charged for domestic consumption.

Itis noteworthy that Article 605 is applicable only between Canada andthe US. Mexico’s trade negotiators were smart enough to refuse to signthis provision of NAFTA.

I wonder why Conservative Leader Steven Harper hasn’t mentioned that his predecessors pushed this provision through?

Mr.Layton’s proposal for energy retaliation would require us to violateNAFTA. Perhaps that doesn’t concern the NDP, who believe NAFTA needs tobe renegotiated.

So I guess Canada could slap on some energy tariffs, ignore NAFTA and show our southern neighbors that we can be bullies too.

Ormaybe could move to build up trade with other nations as Mr. Harper’sof the Conservatives have suggested in his pitch to BC. But is makingnew friends and ignoring the bully really going to solve the problem?

Thetruth is that all this rhetoric is self-serving and avoids the realissue. The claim at the heart of the softwood dispute is that Canada isunfairly subsidizing its forest industry.

And who do these subsidies this benefit? Well, of course, the big timber companies that support the current Liberal government.

Andwho loses? Our forest dependent communities. And every Canadian thatrelies on general revenue to pay for health care and education.

IfMr. Layton wants to pitch the idea of a strong Canada, aself-respecting nation that stands up to bullies, perhaps he shoulddiscard the tough talk.

Mr. Layton often ridicules Liberal finger pointing. Before he points fingers on softwood, perhaps, as we have said before,he should do the courageous thing and open a Canadian dialogue on thereal issue: the true value of our forests and the perverse subsidiesthat promote unsustainable logging throughout the country.

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