September 20, 2005
Kamloops Daily News



He should have talked with his boss, Paul Martin, before
speaking in Kamloops.  If International Trade Minister Jim
Peterson had consulted with the prime minister, he might
have been less candid.  Peterson's remarks likely reflect
the true federal strategy for solving the softwood lumber
dispute with the U.S. - - basically nothing.

Martin is talking tough but no action, so far.  Peterson's
comments are more revealing.  A few weeks ago, he told a
group of mangers in Kamloops that he prefers to continue
talking with the Americans.

Talk about what?  The fact that, for more than
three years, the U.S. has slapped countervailing duties on
our lumber and collected about $5 billion?  The fact dispute
panels have consistently ruled in Canada's favour?

More talk is not going to help.  We need more stealth.  But
first, we need to understand how U.S. politics is played,
says Peter Donolo.  He should know.  Donolo was director of
communications to the shrewd Prime Minister Chretien.

"The first step is to understand that the U.S. positions
aren't based on trade or economic policy, or on rules of
international law or diplomacy," says Donolo.  They are
based on raw power politics.  U.S. President Bush will
happily shun the law if it means gaining favour from a
senator or representative. 

Bush has made it clear that the U.S. is a law unto itself;
where bullying fails, brute force will get results.  Gone is
the even the pretense of being law-abiding.

We're playing the wrong game.  What we need to do is build
allegiances with U.S. groups who support duty-free Canadian
lumber, groups such as home builders and buyers.  We have
natural allies in U.S. citizens who don't want to pay higher
prices for homes.

The Canadian embassy in the U.S. is taking the first step. 
They are developing a software database that will organize
our U.S. allies into lobby groups.  It identifies groups
that rely on Canadian investment and trade and sorts them by
congressional district.

Once a focused U.S. grassroots network is established, it
can be rapidly mobilized to protect consumer interests that
coincide with ours.  Once we understand how favours are
traded, the influence of common interest groups can be
effective.

Then there are the power politics of calamity.   Without
being crass, Canada needs point out how much the U.S. needs
our lumber to rebuild New Orleans.  We should be generous
when tragedy strikes but quick to remind our neighbours that
we can play the game according to their rules.

International markets work both ways.  If the price we pay
for our own gasoline goes up because of the Bush
administration's failure to prepare for disaster, then the
price of Canadian lumber can go up as a result of increased
demand for building materials.

The next strategy will take some discipline by Canadian
lumber producers - - the lumber supply must be reduced while
the U.S. demand goes up.   Reduced supply would increase
cost, even without any U.S. lobby by Canadians.

There is another big stick we can carry.  It's a little
known provision of the North American Free Trade Agreement
called Article 1905.  This article would allow Canada to
trigger a dispute process on the grounds that the U.S. is
violating NAFTA, says the Canadian Centre for Policy
Alternatives.  A win, which is very likely, would give
Canada the right, to begin to withdraw benefits that we
extended to the United States under NAFTA.

The most obvious candidates for the withdrawal of benefits
are the ones that allow U.S. corporations to sue Canadian
governments over alleged breaches of NAFTA.   That's what
U.S. Ethyl Corporation did when Canada tried to stop the
importation of the gasoline additive MMT.  Not only did we
have to accept a chemical that the government thought was
toxic, we had to pay them $20 million because we tried to
stop the importation. 

The same NAFTA benefit obligates Canada to share its energy
resources with the U.S. in times of shortage.  Without
NAFTA, we could refuse to ship energy to the U.S.  As a
result, we wouldn't have to pay high prices for our own
energy because of disasters elsewhere, such as the flooding
of New Orleans.

Trade Minister Peterson wants us to tread softly when it
comes to the U.S.   I would add to that message: tread
softly and carry a big stick.

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