How to End a Housing Boom?
Hi John,
I found that the recent decision by the Bush Administration to impose a 19.3% tariff on Canadian softwood lumber had me reflecting on the Smoot-Hawley crowd from a bygone era. And has me curious as to our commitment, as a nation, to the principles of the WTO "free markets" regime. Finally, one wonders if the imposition of the tariff is a case of the left hand not knowing what the right hand needs to do in the steering of our now fragile economy through the shoals of recession, or if rewarding the lumber interests who are expecting a return on their "campaign contribution" investment, is trumping the seeming common sense of keeping the home construction industry rolling with inexpensive lumber. Just some musings, nothing really substantive, sorry.
Here's an interesting article regarding the latest trade war spat from the perspective of our friends to the North:
thestar.com
Aug. 23, 02:00 EDT
New weapons needed in softwood dispute
Canada will need both muscle and shrewdness to deal with a United States administration that plays by its own trade rules.
The softwood lumber dispute, the first major skirmish of the Republican presidency, will set the tone of Canada-U.S. economic relations under President George W. Bush. That is why it is important that Ottawa get its strategy right.
The initial signals are encouraging. Prime Minister Jean Chrétien spoke to Bush personally, pointing out that the U.S. can't expect free trade in energy when it slaps punitive duties on Canada's lumber. Meanwhile, Trade Minister Pierre Pettigrew challenged the 19.3 per cent tariff before the World Trade Organization.
But it will take more sophistication than this to do business with Washington in the Bush era.
The president's response to Chrétien's lecture — he advised the Prime Minister to tell Canadians that he had "given him hell'' — suggests that Bush thinks the phone call was little more than a public relations gesture.
Likewise, the reaction of U.S. Trade Representative Robert Zoellick to Canada's WTO challenge — he insisted the whopping tax was legal and justifiable — suggests that trade appeals are regarded as little more than an expensive nuisance in Washington.
Certainly that has been Ottawa's experience. Four times, in the last 20 years, it has challenged U.S. treatment of Canadian lumber producers before international trade panels and won, only to see the U.S. ignore the results.
Canada needs a few new arrows in its quiver. For example:
A high-profile advertising campaign, pointing out that the cost of the lumber tariff comes out of the pockets of American consumers, in the form of more expensive homes and higher priced renovations might be effective. The U.S. Association of Homebuilders is already complaining loudly.
A willingness to speak out about the way Washington practises "free trade'' at forums such as next November's WTO meeting in Qatar might cause the Americans to think twice about their bully tactics.
A suggestion that Ottawa is prepared to delay the export of Canadian oil and gas until it has carried out exhaustive environmental hearings, negotiated a revenue-sharing deal with the government of the Northwest Territories or Yukon and satisfied the concerns of native people might be useful. Such measures would be perfectly legal — and frustratingly protracted.
Chrétien is right that provoking an all-out trade war with the U.S. would be a mistake. But there are plenty of other ways to send a message to Washington. |
