As a report suggests that the U.S. is considering reimposing national security tariffs on Canadian aluminum exports, the Canadian co-chair of the Canada-U.S. Inter-Parliamentary Group said Ottawa should persuade American officials against taking trade action away from the public eye, and should continue its outreach efforts to members of the U.S. House of Representatives and Senate.
Liberal MP Wayne Easter (Malpeque, P.E.I.), who also serves as the chair of the House Finance Committee, said it’s “absolutely critical” to create support for Canada’s position on Capitol Hill, but there are questions if this time around it will prove to be as effective as the last effort to remove tariffs.
Bloomberg reported on June 22 that the Trump administration was considering reimposing a 10 per cent national security tariff on Canadian aluminum entering the U.S. market.
“Within diplomatic circles, official circles, and unofficial circles, the word has gone out in a fairly quiet way,” Mr. Easter said. “We’ve overcome this problem once, let’s not get into that kind of problem again where both countries are hurt, especially American consumers.”
“At least at this stage, it’s better to work the backrooms, work the players that have some influence with the White House, and try to ensure that such a threat doesn’t become a reality,” he said.
Mr. Easter said he has been having discussions at the Congressional level, but wouldn’t reveal who he has had those discussions with.
After national security tariffs were levied on Canadian steel and aluminum in the midst of the NAFTA renegotiations, the Canadian government lobbied White House officials, but also influential lawmakers on Capitol Hill, such as Republican Senator Chuck Grassley—the second-highest ranking member of the Senate and chair of the Senate Finance Committee—who penned a Wall Street Journal op-ed in April 2019 urging U.S. President Donald Trump to end the tariffs on Canada and Mexico.
After Canada and the U.S. came to an agreement to remove the tariffs in May 2019, then-foreign affairs minister Chrystia Freeland thanked the “many Americans who understood that 232 tariffs were hurting both the U.S. and Canada” in a tweet, particularly noting the work of Sen. Grassley.
More recently, the Iowan Senator had pushed to curtail the power of the White House to enact tariffs on national security grounds, but the effort has lacked support among fellow Republican Senators.
Mr. Easter said Congressional Republicans do not want to challenge Mr. Trump, especially in an election year.
“There’s certainly a reluctance to speak out against Trump,” he said, but added there is “a lot of sympathy” to the Canadian position.
Although encumbered by not being able to meet face-to-face due to the COVID-19 pandemic, Mr. Easter said he is able to rely on relationships that he has built up over a dozen years with many trips to D.C.
NAFTA council member Hassan Yussuff, president of the Canadian Labour Congress, said he was briefed in a council call on June 26 on the government’s engagement with the U.S. to ensure the tariffs are not placed on Canadian exports.
Ms. Freeland (University-Rosedale, Ont.) has been talking to U.S. Trade Representative Robert Lighthizer and the White House, Mr. Yussuff was told.
“The president has been very vocal about the renegotiation of NAFTA and the accomplishment he achieved, and to simply go in and (use) sanctions immediately after the (new NAFTA) agreement takes effect, I’m really not sure what message he’s trying to convey to the American people, to American workers, and American industry,” he said. “That’s kind of troubling. At the end of the day, I’m hoping these conversations will lead to some success. In the past, we were able to get sanctions off steel and aluminum and I am hoping again that wisdom and effort will prevail.”
Conservative MP Randy Hoback (Prince Albert, Sask.), his party’s international trade critic, told The Hill Times that there needs to be a full-court press in Washington, citing that the U.S. aluminum industry isn’t in agreement for the imposition of tariffs on Canada.
Mr. Hoback said the issues that are emerging are issues that the Conservatives were trying to address at the House International Trade Committee’s study of the new NAFTA implementation bill and why the study should have been extended to have a better understanding of the consequences of the new trade deal.
“One of the frustrations I have is, in this deal they have taken away one of the tools in the tool chest and that’s the ability to put tariffs on products other than the product accused of being dumped into the U.S.,” said Mr. Hoback, adding strategic tariffs would have a better chance to influence U.S. trade behaviour than tariffs on American aluminum exports.
“We’re relatively handcuffed by this new trade agreement and, having said that, I don’t see any answers coming from the government on how they are going to progress or move forward,” he said.
When the tariffs were removed last year, Canada and the U.S. agreed that if a country takes tariff action, resulting retaliatory tariffs can only be “in the affected sector” of aluminum or aluminum-containing products.
Former U.S. diplomat Sarah Goldfeder, an Earnscliffe principal with a focus on trade, said since the aluminum surge complaint came from an aluminum smelter association and not a monitoring body, Canada could argue that the U.S. had not upheld the conditions of the May 2019 agreement and then Canada could argue that it doesn’t have to uphold to its side of the agreement to not slap retaliatory tariffs on strategic, and not reciprocal, goods.
“That would be the playing field you have moving forward and that would be the nastiness that could come in to play,” she said.
Under the 2019 agreement, Canada and the U.S. were supposed to “establish an agreed-upon process for monitoring aluminum and steel trade between them.”
Mr. Easter said the Canadian government has to work on a strategy in case it needs to respond to a reimposition of tariffs, which could include countervailing measures similar to the ones Canada placed on the U.S. during the NAFTA renegotiations.
He said that if the U.S. isn’t playing by the rules, Canada shouldn’t be forced to.
“One ridiculous policy approach could lead to another ridiculous policy approach,” he said. “One side can’t play by all the rules and the other side not. That doesn’t make sense.”
A spokesperson for Ms. Freeland’s office didn’t respond to a question if the government has the authority to put retaliatory tariffs on unaffected goods.
Trade committee to resume work on July 9
Mr. Hoback said the International Trade Committee will meet in the coming weeks. A spokesperson for Liberal committee chair Judy Sgro (Humber River-Black Creek, Ont.) confirmed that the committee will meet on July 9.
The committee last met on March 11, when it began a study on Canada’s efforts to reform the World Trade Organization.
Mr. Hoback said he wants to hear from the industry on what it will face in a post-COVID-19 world.
“There’s a new reality … in the world and that is supply chains are shifting drastically,” he said. “How does Canada fare in this new reality where you’ve got countries like the U.S., Australia, New Zealand, Japan, India, all basically forming their own cartels to take care of each other and we’re not part of any of those cartels. We’re kind of on the outside looking in.”
“It’s more of a fact-finding mission than to try to bring the minister and hold her to account,” Mr. Hoback said. “That wasn’t the objective of the meeting.”
The Hill Times
Neil Moss is a reporter at The Hill Times covering federal politics, foreign policy, and defence.
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