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Trump and Biden differ on U.S.-Canada trade tensions

Posted in Canada, Featured

Published on October 06, 2020 with No Comments

Canada has plenty at stake in this uncertain moment for American trade policy.

The anthology of catchphrases summarizing the Canada-U.S. relationship runs the gamut from John F. Kennedy’s solemnity  to Pierre Trudeau’s  comedy.When it comes to trade these days, perhaps the best example of the genre manages to be a bit of both.

“The Americans are our best friends,” Robert Thompson, a Canadian MP in the 1960s, once told the House of Commons. “Whether we like it or not.”

Canada is extraordinarily dependent on the U.S. market, which buys nearly three quarters of our exports. That means decisions in American trade policy at this  highly unpredictable moment hold considerable consequences.

U.S. President Donald Trump’s agenda is transformative, while Joe Biden’s is more restorative. But even Biden’s attitude toward trade presents challenges for Canada.

He is threatening prolonged paralysis at the WTO while demanding  several sweping changes  at the world body — namely, reduced tariffs in developing countries; limits on trade deals between countries that don’t share a border; a crackdown on Chinese state-funded capitalism; and less powerful dispute mechanisms.

For all the complaints about U.S. protectionism, American tariffs are among the lowest in the world and Lighthizer wants a more even playing field.

Canada is directly affected by this WTO standoff. Canada recently won a case at the WTO over softwood lumber duties. Yet the process appears to be sabotaged.

That’s because the U.S.is appealing  the case to a panel that will perhaps never meet: the WTO appeals body. The reason it can’t meet is that the Trump administration, unhappy with the WTO, started blocking the appointment of its judges. The Canadian government says it’s “surprised” and “deeply concerned” about what the U.S. is doing to the global trading system.

Lighthizer has made clear he’d be perfectly fine with the WTO appeals body being gone forever.

Based on his Foreign Affairs essay, Lighthizer’s view of trade can be boiled down to this: In order to preserve manufacturing jobs that sustain stable working-class communities, an ideal trade policy sacrifices some of the efficiency of international imports, even if it occasionally increases the cost of goods.

Lighthizer’s main point is that the ideal is a middle path between free trade and protectionism, “somewhere between the openness of the 1990s and the barriers of the 1930s,” he wrote in a subsequent essay in Foreign Affairs.

“Neither old-school protectionism nor unbridled globalism.… Instead, as the United States confronts future trade challenges, it should chart a sensible middle course — one that, at long last, prizes the dignity of work.”

A former Obama White House official criticized Lighthizer’s essay, saying the current administration is great at breaking systems but hasn’t shown much interest in fixing anything.

“I would expect it to be more of the same [in a second term],” said Chad Bown, now a senior fellow at Washington’s Peterson Institute. “Highly disruptive, really unclear as to what the end game would look like.”

Bown countered in an essay of his own that there are better ways to support workers than Trump’s approach to trade, which he said does more harm than good.

Charles Benoit, a Canadian-born trade lawyer who lives in Washington, said Canada should not instinctively recoil at some of the things Trump is doing. 

 

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