Canada Says Disagreements With US on Auto ROO, Softwood Lumber 'Being Dealt With'
Canada's Trade Minister Mary Ng, under questions from parties to the left and right of her Liberal party, as well as the Québécois party, said the fact that there are outstanding disagreements between Canada and the U.S. on U.S. trade remedies on softwood lumber, on auto rules of origin and on Canadian dairy import restrictions does not mean that Canada will get big-footed in the free trade review.
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MP Tony Baldinelli, a Conservative from Niagra Falls, cited U.S. Trade Representative Katherine Tai's remarks at a Washington think tank earlier this year (see 2403070067) to argue that Tai (or her successor) will see the review as a moment of leverage to get its way in disputes. Tai, at that appearance, didn't admit that the U.S. had not complied with the auto rules of origin panel decision, saying rather that Canada and Mexico have not hiked tariffs on U.S. exports to try to convince the U.S. to reach an accomodation on the disagreement.
Ng said at the hearing in Parliament that in a trading relationship this large -- there was $1.9 trillion in three-way goods trade in 2023 -- there will be issues.
"Those issues are being dealt with," she said, and said that the government is proud to have protected Canada's cultural industries, intellectual property and the dispute settlement system in the NAFTA renegotiation.
The CUSMA (or USMCA in American parlance) has a functioning dispute settlement system -- parties cannot block the formation of a panel -- but the U.S. feels Canada has not fulfilled the spirit of its dairy obligations, and the U.S. has not complied when it lost a case on rule of origin calculation methodology.
Baldinelli also argued that Canada is going to be a dumping ground for Chinese electric vehicle imports, since it has not raised tariffs on those cars, while the EU and the U.S. are about to.
"Canada is not going to be a back door to the U.S. market or a dumping ground for unfairly traded goods," Ng replied.
MP Richard Cannings, a New Democratic Party representative from British Colombia, told NG that he hopes that the removal of Investor State Dispute Settlement when NAFTA became CUSMA will be preserved.
Ng said that the 2026 review is not a renegotiation. "We were very proud of the work that was done when it was renegotiated" in removing ISDS, she said. "That position for us hasn't changed."
In Ng's opening remarks, she said that 2026 is "not a negotiation but rather it's a focused check point to make sure CUSMA remains relevant and continues to strengthen our region's competitiveness and resilience, all while serving Canada's interests."
MP Maxime Blanchette-Joncas, of the Québécois party, complained that nothing has improved in regard to the U.S. trade remedies on softwood lumber, which he said hurts Quebec the most, as its exporters face higher countervailing duties than those in other provinces.
Ng replied: "I had a meeting yesterday with the entire softwood lumber industry in Canada [on] how we can bring the Americans to the table, how we can arrive at some negotiated settlement."
She said that from the prime minister on down, Canada is telling the Americans how unjustified the tariffs are, and she said the issue is at the top of Canada's trade priority list.
Cannings, whose NDP is to the left of the governing Liberal party, asked Ng about the EU's carbon border adjustment mechanism, and whether Canada might impose a similar tariff.
Ng said, "We are pretty confident" that Canadian exports in the sectors covered by CBAM will not have to pay a tariff because Canada puts a price on carbon, and that is good for Canadian competitiveness. On whether Canada will impose its own program, she said consultations are ongoing.