Clinton weighs in on the softwood lumber dispute

This is a follow-up to two earlier posts on the Canada/USA softwood lumber dispute, American government shows contempt for the rule of law and a later update.

The issue is still front-page news here in Canada, but I gather that it receives little attention in the US media. The Wall Street Journal is a notable exception; it has repeatedly supported Canada's position, most recently a couple of weeks ago.

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Former US President Bill Clinton spoke in London, Ontario, last night, and offered his thoughts on the Canada/USA softwood lumber dispute.

According to the Globe and Mail, Mr. Clinton "strongly endorsed Prime Minister Paul Martin's tough public stand on softwood lumber and implicitly criticized Washington's refusal to abide by a NAFTA panel ruling on the issue."

Canadian Prime Minister Paul Martin has, indeed, been talking tough. Earlier this month, the Prime Minister implied that that the USA may be jeopardizing its access to abundant Canadian energy supplies. On October 8, the Globe and Mail reported:

Paul Martin won kudos from The Wall Street Journal for his tirade against U.S. tariffs on softwood lumber while he was in New York, but George W. Bush's spokesman conceded he wasn't even aware of the Prime Minister's public relations blitz south of the border.

"I haven't seen his comments," White House spokesman Scott McClellan said yesterday.

In a New York speech Thursday, and later in a brief afternoon interview on CNN, Mr. Martin hinted at using Canadian energy as a trade weapon and called the U.S. refusal to lift the roughly 20-per-cent duty "nonsense."

In an editorial yesterday, 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.

"President Bush's vision of a strong North America depends upon the integrated market being allowed to work. That's as much in the interest of Americans as Canadians."

Mr. Clinton says that Prime Minister Martin had no other option. "If I were the Canadian prime minister, that's what I'd say."

At the same time, Mr. Clinton echoed the line taken by senior U.S. officials in recent days, repeating that both sides should get back to the bargaining table. …

Mr. Clinton repeatedly called for a return to negotiations, saying the North American trade relationship is simply too important to do otherwise.

"If I were [Mr. Martin], I'd be very firm in public and try to work on it behind closed doors," he said.

Mr. Clinton believes that the NAFTA ruling harms American states. Nonetheless, he implied that the US government should abide by it:

He spoke at length about U.S. states' concerns over Canadian stumpage fees — payments to provincial governments for cutting trees — which U.S. lumber producers say are unfairly low.

However, he repeatedly suggested, without going into specifics, that he strongly believes in bilateral and multilateral agreements, and that countries should enter into and adhere to those agreements, even if they occasionally sustain rulings not in their favour.

"I believe in institutional co-operation, even if it means you disagree with the occasional decision now and then."

In my view, that last paragraph is exactly right.

Of course the US government doesn't like the fact that the NAFTA panel ruled against it:  no one likes to lose in arbitration. But the free trade agreement is a package deal. On the whole it is in the best interests of both countries. For that reason, the USA should respect the NAFTA ruling, even though they don't like it.

It may seem absurd for Canada to get into a trade war with the USA. It seems obvious that Canada needs the USA more than the USA needs Canada.

But not so fast:  Senator Orrin Hatch doesn't see it that way. According to today's Ottawa Citizen:

Utah Senator Orrin Hatch, one of the most influential Republicans on Capitol Hill, said yesterday Canada is poised to surpass Saudi Arabia as "the world's oil giant," and that energy-hungry Americans can ill afford to alienate their northern neighbours.

"Neither of us can afford to kick the other one in the teeth," Mr. Hatch, a 29-year veteran of the Senate, said ….

Mr. Hatch said the U.S. will increasingly need to tap into the huge supply of Canadian oil from Alberta's oilsands.

"Anyone watching what is happening up north will recognize that, before long, Canada will inevitably overtake Saudi Arabia as the world's oil giant," Mr. Hatch said.

"What does this all mean for the United States? … It means that the United States can enjoy a new gigantic source of oil from a friendly neighbour." …

Canada ranks second to Saudi Arabia in proven crude oil reserves, including an estimated 174 billion barrels from the oil sands.