The following alert is the fourth installment from Birgit Matthiesen for a planned series of cross-border trade updates.
Dateline: Halifax, NS, June 10, 2015
Nova Scotia is known for its beautiful seacoast and some of the most welcoming and gracious communities in Canada. Each summer, thousands of Americans flock to the province to enjoy the warmth of a close neighbor they consider “like family.” I got to enjoy that hospitality when I was invited to speak to a group of NS business leaders at the US Export Day hosted by the incredible staff at Nova Scotia Business Inc. or NSBI.
As is often the case at these types of forums, I was asked for my thoughts on the state of the relationship between Canada and the United States, or more specifically, between the Prime Minister’s Office and the Oval Office. Very few people really know the answer to that question but the fact that so many are asking leads me to think that Canadians have grown nervous about our cross-border ties.
The speeches all remain the same of course — “world’s largest trading relationship” or “we are neighbours and friends” — but many in the business community wonder if the relationship has possibly gone off track. From the delay of State Department permits for the XL pipeline to new Buy American constraints in US spending bills, Canadians wonder whether there is in fact a commitment to a North American cross-border marketplace.
In the weeks to come, we may see yet another indicator of the health of the relationship when Washington is faced with responding to the World Trade Organization’s (WTO) ruling on US country of origin labeling (COOL) laws. Since nearly the day they were implemented, those rules have almost destroyed a vibrant cross border meat industry.
For years Ottawa argued that COOL violated international trade rules. The WTO agreed. And four times Washington has appealed and four times they lost. What’s ahead is now the question everyone is asking – in Ottawa, in Washington and surely in every major capitol of the trading world.
Ironically, as negotiators in Ottawa and Washington set their sights on the next round of the multilateral Trans-Pacific Partnership Agreement, they must first deal with this festering bilateral trade irritant right here in their own backyard.
The ball is in Washington’s court. More specifically, it is in Congress’ court. And everyone is waiting and watching. A key committee of law makers on the US House Agriculture Committee voted in May by a 38-6 vote to repeal the offending COOL law. The full House is set to vote on the matter later this month. That may be the easy part. If it passes that chamber, it will face a far more uncertain future in the Senate where consensus will be hard to find.
Washington insiders will tell you that COOL was and remains all about domestic farm politics. That may be so, but the ramifications go far beyond the ranches of America’s heartland. Official Ottawa is making it very clear that Canada will react swiftly. No ambiguity there. Unfortunately for Canadian businesses executives, the unpredictability of the US political machine is certain to mar summer time plans.
Meanwhile, the “feel good” needle in the relationship barometer will continue to lurch and possibly even stall.