Some surprising news late this afternoon — the United States has formally complained to Canada about softwood lumber — accusing Canada and the provinces of paying illegal subsidies. You may have thought softwood lumber disputes were supposed to be a thing of the past but critics of the deal signed in late 2006 will be saying this is just what they predicted would happen.
The U.S., late this afternoon, alleged that $2-billion worth of aid that Canada and the provinces are providing to the softwood industry in Ontario and Quebec is illegal. So, the U.S. is seeking either more restrictions on the amount of Canadian lumber that can be exported to the Canadian market or they want more export taxes slapped on the wood. In any event, it's a sharp negative for the industry which thought it had won some lumber peace with the U.S. when it and Canada agreed to the controversial deal.
What may be even more frustrating is that Canadian industry gave up certain rights in the softwood lumber agreement that might help it win the current dispute. For example, the years leading up to the softwood lumber deal, Canada and Canadian firms won one victory after another in a variety of American and international courts. But Canada agreed to throw all those judgements out as part of the softwood lumber deal so if any Canadian company wants to use the courts to challenge the American view, they will not be able to use those earlier judgements to buttress the case.
Expect some political fallout on this news. Prime Minister Harper made a great show of proclaiming peace with the Americans on this issue and clearly there is none. His political opponsents on this issue will say his attempts to forge a relationship with Washington that was different from the Liberals seems to have been for naught. Harper’s first trip as Prime Minister, of course, was down to Washington to get U.S. President George Bush to personally put his weight behind the negotiations.
International Trade Minister David Emerson's reaction tonight — and I should say this was in a press release issued at 7:10 pm (Ottawa time) a Friday night — a time when organizations will often announce bad news that they hope gets ignored — Emerson's reaction is that this is an administrative issue and, as he said in a statement, “We expected that such administrative issues would arise.” But some say that’s like saying, “Pk, tomorrow I'm going to punch you in the face” and then tomorrow, after you get slugged, you you shrug it off by saying, “well, ok, that was to be expected.”
This news is really not going to go over well in the communities where there where layoffs and mill shutdowns before and after the deal. Those communities were mostly in Ontario and Quebec where Harper and the Conservatives are hopeful of building support that will take them to a majority. It may even be the sort of issue that re-energize the Bloc Quebecois.