Canada mustn't roll over on trade for America's bully-in-chief: Neil Macdonald

This is what Canada's representatives in Washington have to put up with:

"NAFTA was so one-sided. Both from the Canada standpoint and from the Mexico standpoint. So one-sided. Wilbur [Ross, the secretary of commerce] will tell you that, you know, like, at the court in Canada, we always lose. Well, the judges are three Canadians and two Americans. We always lose. But we're not going to lose any more. And so it's very, very unfair."

The speaker: President Donald Trump, bloviating last week to the editorial board of The Economist.

Seeking an expert evaluation, I called Gordon Ritchie, who helped negotiate the original Canada-U.S. Free Trade Agreement.

"That is one big lie. Everything in it is false."

Settlement panels

First of all, there are no "courts in Canada" composed of three Canadian and two American judges.

Trump is actually talking about the dispute settlement panels that adjudicate claims such as the eternal and fatuous American insistence that Canadian lumber exporters are unfairly subsidized by government.

It is true that the settlement panels have mostly ruled against the Americans on that question. But the panels always comprise two trade experts from each side, who then get together and choose a fifth. The Americans have absolutely equal representation; they would never participate in any system where they didn't.

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Furthermore, says Ritchie, the panel rulings have almost always been with at least some concurrence by the American panelists, or even unanimity.

So there are only two explanations for Trump's claim: Either the president and his secretary of commerce are seriously ignorant about the very essence of NAFTA, or Trump is choosing to tell yet another facile lie.

I'm betting on the latter. Remarkably, The Economist editors didn't call him on it. Maybe they thought he'd jump up and cancel the interview.

To boot, Trump told them the United States "has about a $15 billion trade deficit with Canada ... And it's beenit's been terrible for the United States. You know, it's just, it's just been terrible. So it's a real deficit. Now that's a NAFTA thing. Because everything in NAFTA is bad. That's bad, everything's bad."

Another lie.

A U.S. surplus

Ritchie points to data on the website of the United States Trade Representative itself.

In 2016, the last year for which figures are available, the website states that the "U.S. goods and services trade surplus (my emphasis) with Canada was $12.5 billion," meaning Canada bought more from the United States than the Americans bought from Canada, precisely the opposite of what Trump said.

Broken down, the Americans sold us $24.6 billion more in services, and we sold them $12.1 billion more in goods, but most of that was energy, and part of the reason for that, as Ritchie points out, was America's absolute insistence on unrestricted and assured access to Canadian energy.

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Ritchie says it was the Americans themselves who demanded that disputes be settled by ad hoc panels, and those panels are meant to ensure "you can apply your unfair trade law, but you have to apply it fairly, and they have failed that test every goddamned time."

If Ritchie sounds irritated, remember he has spent his life in the world of trade law, which by its very nature is usually unfair and self-serving, particularly when a superpower is involved.

Few other policy areas are so nakedly political. No wonder Trump is so comfortable with it.

In the case of softwood lumber, Canada quite simply produces shingles and other cedar products of a far higher quality than the stuff coming out of, say, Georgia.

During my time in Washington, I lived in a house roofed with American cedar. The woman across the street used more expensive wood imported from British Columbia.

My roof was within a few years an ugly mess of curled, warped shingles; so many finishing nails popped out of that roof that I had to check my driveway each morning. The roof of the house across from me, meanwhile, was still beautifully flat and even when I left the neighbourhood years later.

And yet, that crappy product on my house represented American jobs, belonging to American voters, and for an American-firster like Trump, it's easier to just lie and bully and bluster than to deal with facts.

Canada had hoped that the establishment of free trade deals with America would put an end to fraudulent tariffs, but of course it didn't, so Prime Minister Stephen Harper finally had to travel to Washington and surrender, and submit to voluntary softwood quotas.

Now Harper's arrangement has expired, and the new president wants even more. His administration has slapped a heavy new tax on Canadian lumber imports.

So far, Canada's ambassador to Washington, David MacNaughton, has taken a smart, grownup approach to the matter, reacting only to Trump's actions, refusing to be provoked by his lies and crazy shifts in rhetoric (he's also called Canada a fair trader).

But it was also smart to identify the dozens of states with a significant dependence on trade with Canada. There is three quarters of a trillion dollars in two-way trade between the two countries, basically split fifty-fifty, and it may be necessary to make Trump's supporters hurt to make them understand that protectionism has a price.

Canada won't win this. It's a truism that no one wins in a trade war. But if we roll over, the bloviator-in-chief will treat us like he treated his creditors when he was a real estate developer: He'll kick us, and hard.

As Ritchie puts it: "Retaliation is a vital piece in the toolkit, however distasteful. When dealing with a bully one sometimes has to be prepared to take a hit."

This column is part ofCBC'sOpinion section.For more information about this section, please read thiseditor'sblogandourFAQ.