On principles

Since the softwood lumber deal seems to be headed down to the wire, there's no time like the present to keep pointing out the folly of entering into the deal from Canada's perspective. Having already dealt with the problems with the process here, let's take a look at the principles at stake - and how Harper has managed to sell Canada out on all counts.

The two main issues are free trade and other principles of fair treatment, and Canadian sovereignty. The dispute as currently phrased arises entirely out of alleged tension between the two: CFLI claims that Canada's sovereign choices as to forestry policy impede on its members' right to be treated fairly in matters of international trade. And no matter how many panels rule otherwise, CFLI has consistently kept a stream of allegations of preferential treatment before the U.S. Commerce Department, which has in turn happily ignored higher rulings to order duties to make up for supposed advantages held by Canadian producers.

(Not that CFLI or another pressure group wouldn't likely find another excuse to try to suppress imports if this weren't the most obvious one. But that's a story for the next round of litigation.)

But then, the alleged "advantages" to Canadian producers in the form of lower stumpage fees come at a price, including benefits to workers and tax differences. In other words, Canadian governments have decided to take a lesser amount in stumpage fees in exchange for other social benefits. And NAFTA tribunals have consistently concluded that this exercise of legitimate authority doesn't give rise to any valid retaliation on the part of the U.S.: that Canada's choice to exercise its sovereign will doesn't make for an unfair playing field.

But then the Cons stepped in.

One can dispute all day long which is the more important principle: Roy McLaren takes the position that free trade should trump all, while I tend to the view that the more important question is the ability of Canadian policymakers to make meaningful decisions rather than having their hands tied. But there shouldn't be any doubt that whichever of the principles one wants to value most, the deal agreed to by the Cons is an unmitigated disaster.

On the free-trade side, the deal is substantially worse than the status quo. Rather than being able to trade fairly freely subject only to whatever U.S. duty is in force at any given time, Canadian producers will now be subject to specific limitations on the amount of lumber they're able to send south of the border, in addition to facing an export tax and other restrictions. In sum, the deal amounts to a trade suppression agreement - which is rightly raising the ire of those who fully believe in unfettered free trade.

On the sovereignty side, the deal limits the freedom of action by Canadian provinces through the much-discussed "veto" over forestry policy changes. But perhaps even more importantly, it involves a Canadian concession to the position that anything which in any way deviates from U.S. policy must be in some way wrong.

In the comments to this post, Olaf asked why Canada couldn't simply adopt the U.S.' policies in order to resolve the existing dispute. And I've wondered to some extent whether a similar solution might work - perhaps involving an export tax in the amount of the existing duties, without the rest of the baggage that comes with the Cons' deal.

But in addition to the likely result that CFLI would only find new excuses to try to close off the border, such an action would put Canadian producers at a tangible disadvantage - unless, of course, Canada also adopted every other U.S. policy surrounding forestry, including lesser protection for workers. The question is ultimately whether Canada has any freedom to balance priorities differently from or independently of the U.S. - and both a solution based on adopting U.S. policies and the Cons' deal itself answer that question with a stark "no".

Now, Canadian policymakers are most certainly free to conclude that measures similar to those applied in the U.S. are worth applying here as well. But they equally certainly shouldn't be prevented from exercising legitimate judgment as to what type of policy to apply within the range of policies fair to all parties involved. And the effect of the Cons' sellout is to open the door for other industries to similarly challenge any area where Canada has taken an independent view as to the policies which best suit Canadian interests.

In sum, both free and fair trade and Canadian sovereignty can readily coexist. But rather than seeking an outcome that moves toward such an end, the Cons have managed to sell out Canadian interests on both issues. In the end, the partial return of money being wrongly held by the U.S. is coming only at the cost of Canada completely abandoning both of the principles at stake in the deal. And that amounts to a statement of Con principle which should make all Canadians wary of Harper and his troops.

(Edit: revised wording.)