Canada takes heat during U.S. trade official’s hearing

Keeping American politicians’ eyes on the real threats to American exports and jobs is a challenge that United States President Joe Biden’s administration and its international trade leaders will have to tackle.

That was clear to see in the Feb. 25 Senate confirmation hearing for Katherine Tai, Biden’s pick for U.S. Trade Representative.

On one hand, senators of both colours seemed to see Chinese transgressions against fair trading norms and rules, its theft of intellectual property and misuse of government support and control as the main threats the U.S. needs to confront in the next few years.

Tai, whose parents moved to Taiwan from mainland China before moving to the U.S., is clearly ready to jump into the role of pushing back against Chinese transgressions. She described her recent experience as a trade official as “chief enforcer against China’s unfair trade practices.”

And she pledged herself to get the U.S. back among a host of nations of free-trade friendly countries it once led.

“We must recommit to working with others,” said Tai in her opening remarks.

However, there seemed to be as much time spent by senators in the hearing discussing and denouncing supposed Canadian and Mexican breaches of NAFTA and CUSMA rules as there was to confronting China.

Canadian dairy and lumber were repeatedly brought up, as were Mexican potatoes and industrial products.

Most alarming was to hear country-of-origin labelling thrown into the discussion by South Dakota Senator John Thune.

“This remains an important issue to many producers in my state,” said Thune, referring to the World Trade Organization’s ruling against the measure in 2015.

“If confirmed, would you be willing to work with me on finding a path forward preferably in a WTO compliant manner on country-of-origin-labelling to help address the concerns of not only South Dakotans but livestock producers all across the country?”

Fortunately, the incoming USTR was suitably diplomatic but didn’t commit to much.

“This is an area where USTR and (U.S. Department of Agriculture) have a lot of good work to do together. If confirmed I look forward to working with Secretary (Tom) Vilsack (the new agriculture secretary) on this and I do commit to you to coming back to you to talk about the continued interest of yours and the industry in having (COOL) that will survive WTO challenge,” said Tai.

She seemed more passionate about bringing the U.S. back into alignment with its one-time allies in support of the WTO, which has suffered in the absence of U.S. support since 2016.

“We can’t afford to not be engaged and a leader in Geneva (where the WTO is based,)” said Tai.

“We must recommit to working with others.”

This will be the challenge for Tai, for the Biden administration, and for all those looking out for the U.S.’s strategic trade interests. As much as the existential and historical threat to the U.S. is Chinese industrial, trade and foreign policy, which takes advantage of gaps and flaws in global systems like the WTO, much smaller but much closer-to-home issues like Canadian dairy import restrictions, beef cattle exports and Mexican potato regulations will always be most likely to stir up emotions and provoke a political response.

The Biden administration and Tai will have to carefully tread the path between responding to regional upsets over issues like dairy and vegetables, and dealing substantively with overarching U.S. priorities like shoring up the U.S. economy against the flaws that have allowed China to steal so many marches on the U.S.’s former position of comfortable supremacy.

The best hope for Canada is probably in a thread that ran through some of Tai’s comments to the senators on a number of issues. She described herself as an enforcer of rules, and Canada and Mexico both have sets of rules that apply to their trade relationships with the U.S.

Tai said she intended to “implement and enforce” the terms of trade with Canada and Mexico under the new NAFTA, and that’s fair enough. That’s good, in fact.

All three parties made a treaty, so let’s stick to its rules.

It’s OK to have disputes, disagreements and misunderstandings between friends, but those disputes need to be kept within the realm of trade regulations and rulings. If we’re going to fight, let’s stick to Marquess of Queensberry rules.

Shunting explosive populist issues over to trade compliance panels is the best way to deal with issues of political heat but little light. When it comes to COOL, let’s hope it doesn’t crawl into U.S. legislation and set off another multi-year dispute and costly market disruption like last time.

If these populist issues, which aren’t strategically important to the U.S. but have great political significance in some states, can be kept on a non-political level, they can be dealt with in some way without taking over the U.S. trade agenda. That would allow Tai, her office, the Biden administration and the U.S. Congress to focus on the much bigger issues of rebuilding U.S. trade alliances, global trade institutions like the WTO, and confronting China’s transgressions against the world trading order.

What can Canada and Canadians do to help this? Not much, I’m sure.

But we can keep our heads down, work closely with Americans to make most of our relations good, respond to U.S. concerns quickly, and avoid being provocative, even when U.S. producers and politicians say outrageous things.

Tai seems the right choice to deal with the China issue. Let’s hope she gets a chance and doesn’t get dragged into a bunch of minor Canada-U.S. and U.S.-Mexico issues that don’t amount to much for the U.S. other than distraction and wasted energy.

The U.S. wasted a lot of time on the NAFTA renegotiations when it should have been focused on dealing with China. We can be hopeful for now that Biden and Tai won’t fall into the same mistakes.

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