Softwood deal was close, but Canada gambled on better terms from Trump, former U.S. trade rep says

Softwood deal was close, but Canada gambled on better terms from Trump, former U.S. trade rep says

A former U.S. trade representative says the Obama administration was on the verge of signing a new softwood lumber deal with Canada but the pact fell through when someone on the Canadian side felt a better deal could be reached with the incoming Trump administration.

Michael Froman made the remarks in an interview on CBC News Network's Power & Politics one day after U.S. Commerce Secretary Wilbur Ross said Canada is dumping softwood lumber south of the border.

"We worked very hard, particularly over the course of the last year, at Prime Minister [Justin] Trudeau's request to try and find a solution to that, find an agreement," Froman said.

"I think we could have gotten one, but a judgment was made late in the year that since President [Donald] Trump was... from the building industry, he might be more receptive to the interests of builders and the Canadian government preferred to take their chances with him and we'll see how that plays out," Froman told Power & Politics host Rosemary Barton.

Froman said the negotiations petered out after the election, when "some on the Canadian side, whether it was the government or whether it was the industry," preferred to take their chances with Trump.

Alex Lawrence, a spokesman for Minister of Foreign Affairs Chrystia Freeland, said: "This notion is completely false. The proposals were never anything that would be acceptable to Canada."

On Tuesday, Ross held a news conference to announce the Commerce Department's decision to levy countervailing duties of between three and 24 per cent on Canadian imports of softwood lumber.

The full extent of the potential damage to Canada's industry won't be known until a parallel anti-dumping investigation is complete. More duties are expected when that report comes back in June, and then a combined duty rate will be determined in the fall.

The range of these preliminary countervailing duties — three to 24 per cent for five major importers, with all other companies facing duties of 19.88 per cent — is not wildly off the 19.31 countervailing duties imposed in the last round of this dispute in 2001. The eventual combined duty rate in that round was about 27 per cent.

It's too early to conclude that it will be higher this time, although some fear it will be.

Steel could be next

Froman said that there are some "serious problems" in the trade relationship between Canada and the U.S. including, but not limited to, dairy and lumber.

"I think there are some other issues that they are focusing on that may have an effect on Canada such as steel or aluminum to the degree that those issues are now being reviewed, or might be reviewed, from a national security perspective."

Last week Trump signed a presidential memorandum directing the Department of Commerce to investigate the national security implications of importing foreign-made steel.

Froman said the U.S. does not import a significant amount of steel from China or other countries that could raise security concerns, but it does import a lot of steel from Canada.

The former trade representative said that Canada should be proactive in trying to find "good pragmatic solutions" to the dairy and lumber issues that have continued to be trade irritants between the two countries.

"They are not going away," he said. "They are getting more and more attention. And one thing we've seen from this administration is they are really, when they get a bit in their mouth on some of these issues, they will run with it."