Canadian agriculture officials fear an increased wave of U. S. trade protectionism following last week’s election of a Democratic president and a heavily Democratic Congress.
Fairly or otherwise, Democrats are viewed outside the United States as much more protectionist than free -trade Republicans. The temptation to protect jobs at home becomes especially strong as the U. S. economy slides into a potentially deep and protracted recession.
President-elect Barack Obama enhanced his party’s reputation during the election campaign by vowing to renegotiate NAFTA, tighten regulations, safeguard labour rights and toughen environmental standards.
All of which raises concerns that trade with the U. S., Canada’s largest trading partner, may become more difficult.
“I can’t see it getting any easier for us at the border with this administration,” said John Masswohl, international relations director for the Canadian Cattlemen’s Association.
Obama’s promise to reopen
NAFTA with Canada and Mexico sounds the biggest warning for some Canadians.
The newly elected president pledged to work with NAFTA partners to strengthen labour and environmental protections under the trilateral pact.
Canada’s trade with the U. S. has increased exponentially under NAFTA and any threat to change the agreement should be taken seriously, said Kevin Grier, an analyst with the George Morris Centre in Guelph, Ontario.
“We should be concerned about these things. They said them. We have to assume that’s a starting point,” Grier said.
“Nobody knows whether it’s rhetoric or not. We have to assume, based on past trends, that the Democrats tend to be more protectionist, with the exception of Clinton.”
Grier noted, however, that Obama made his comments during the Democratic primaries, when candidates appeal most directly to local interests. Obama directed his remarks primarily at rust-belt states such as Ohio, which severely lost manufacturing jobs post-NAFTA. There wasn’t much actual trade talk on the campaign trail itself, said Grier.
Even so, the election produced “a very partisan Congress” which Obama will have to keep happy, said Jared Carlberg, a University of Manitoba agricultural economist.
“Without speculating that things will necessarily get worse, it’s obvious that a Democratic presidency and an increased Democratic presence in Congress are more threatening than would otherwise be the case,” said Carlberg.
“Nothing would surprise me, given the strongly protectionist leanings of United States Democrats.”
Canada’s livestock producers are already chafing under U. S. country-of-origin labelling rules for meat and other food products. Some U. S. packing plants are refusing Canadian hogs and cattle until uncertainty over COOL subsides.
Masswohl called it significant that, although a Republican Congress included voluntary COOL provisions in the 2002 U. S. Farm Bill, COOL became mandatory only after Democrats took control in 2006.
He called COOL a thinly veiled example of trade protectionism masquerading as food safety and predicted similar measures will continue.
“I don’t think that the sentiments of some people with ulterior motives in the U. S. Congress have subsided.”
However, one U. S. trade official said concerns about renewed trade protectionism under the Democrats are probably overblown.
Nick Giordano, vice-president of international trade with the National Pork Producers Council, said trade actions in the U. S. normally originate with industry, not government.
Giordano noted it was hog farmers, not politicians, who petitioned for an anti-dump and countervail case against Canadian live swine in 2004. A U. S. trade regulator eventually dismissed the case the following year.
The way the U. S. views Canadian programs as potentially trade actionable won’t change, regardless of who is in the White House, Giordano said.
“I don’t think the U. S. government is going to be any less or more welcoming to concerns raised by U. S. hog producers. I think they’ll listen to us just as the Bush administration did,” he said. “These things, by and large, are not political.”
Canada could benefit in a perverse way if Obama does implement his promises, said Grier. If the administration raises taxes, becomes more union friendly and adds to the regulatory burden, it could make the U. S. less competitive against its trading partners.
“I would suspect if Obama fulfils his pledges to increase regulation and increase the ability for unions to organize, it will make the American packing industry, for starters, less competitive.”
Some Canadian industries say they’ve already fought and won their trade battles with the U. S. and don’t expect a repeat.
Larry Hill, Canadian Wheat Board chairman, recalled the CWB’s successful NAFTA challenge to U. S. attempts to keep out spring wheat from Canada occurred under a Republican administration.
“We shouldn’t be going back over those grounds,” Hill said. [email protected]