SPEECHES
June 9, 2005
HALIFAX, Nova Scotia
2005/25
CHECK AGAINST DELIVERY
NOTES FOR AN ADDRESS BY
THE HONOURABLE JIM PETERSON,
MINISTER OF INTERNATIONAL TRADE,
AT THE 66TH ANNUAL GENERAL MEETING OF THE
MARITIME LUMBER BUREAU
I will say a few words today about where we’ve been and where we’re going in softwood
lumber and how softwood lumber fits into Canada’s broader international agenda.
International Policy Statement
We can’t afford to miss opportunities in emerging economic powers, like China, India,
Brazil and South Korea.
Over the past four and a half months, I have led trade missions and have seen
first-hand the amazing opportunities for Canadian business in these markets. Brazil is
the leading economy in Latin America and we share a long history of commercial
engagement. India is an economic powerhouse whose economy is growing by eight
percent a year. China has driven down the cost of manufactured goods and has
become the workshop of the world.
This presents enormous challenges and opportunities for Canadian business. Our
companies have to link into these global value chains. They ignore having a China and
India strategy at their peril because Canadian jobs and prosperity depend on our
businesses being globally competitive.
For example, when I was in Shanghai, I toured Dream Home China, an innovative
partnership of the B.C. [British Columbia] forestry industry and the province promoting
Canadian wood products in China. The demonstration centre showed Chinese
consumers, architects, builders and government officials the advantages of building
homes using Canadian wood products.
Exploring new opportunities for Canadian forestry companies and opening up new
international markets for our wood products will allow the industry to thrive in the global
economy.
One of these new opportunities exists in South Korea, a high-growth, rapidly advancing
market, a gateway to northeast Asia and a region of strategic importance to global
value chains. Already it is our eighth-largest export market and in 2004 our bilateral
trade surpassed $8 billion. Even with these impressive numbers, we can and we must
do more.
As many of you know, Canada has been in exploratory discussions with South Korea
about pursuing negotiations on a free trade agreement. During our formal consultations,
no one has been shy in making us aware of shipbuilding sensitivities, but the vast
majority of businesses across Atlantic Canada are strong supporters of a free trade
agreement—an agreement that would deliver enormous benefits for the agriculture,
seafood, beef, pork, mining, energy, services and forestry industries. Beyond these
benefits, this government, led by the Industry Minister David Emerson, is in
consultations to find ways for Atlantic industries to be globally competitive and providers
of net new jobs.
Our focus on emerging economies cannot be an excuse to ignore our traditional
partners. We are pursuing a comprehensive and forward-looking trade and investment
enhancement agreement with the EU [European Union] and we are accelerating the
work of the Canada-Japan Economic Framework.
Make no mistake about it—the Doha Round is critical to our future because it is our
only hope for eliminating export subsidies, substantially reducing trade-distorting
domestic support and significantly increasing market access.
We must eliminate the obscene level of agricultural subsidies that plague our producers
in the EU and in the United States. We need a level playing field for Canadian
agricultural producers. We need to open up the world of trade to developing countries
and allow them to compete on a non-subsidized basis. We want an ambitious round of
negotiations in terms of opening up the world to goods and services that we are more
than capable of providing. Moving forward with trade deals will involve hard choices, but
we cannot afford to stand still. We must keep moving ahead on our priorities.
Canada - U.S. relations
Even in a changing global economy, our number one priority remains the United States.
Preparing Canada to face the future means reminding our American friends that free
trade actually means free trade. While it is true that over 95 percent of Canada-U.S.
trade is dispute-free and NAFTA [North American Free Trade Agreement] has been a
success, there remain some troubling issues—foremost among them the harassment
around our softwood lumber exports. Despite NAFTA Chapter 19, we continue to face
major problems in the form of repeated challenges under U.S. trade law. This persistent
litigation is destructive to our sectors and to those in the U.S. as well. Look at how U.S.
duties on softwood lumber are driving up the cost of American homes.
The bottom line is that NAFTA cannot lead to North American solutions if settlements
under its provisions can be overturned by special interests. We cannot let this stand.
We will not let up in our efforts.
In March, the Prime Minister [Paul Martin], President [George W.] Bush and President
[Vicente] Fox signed the Security and Prosperity Partnership of North America. The
agreement declares that it is in our shared interests to respond to the rise of China and
India by forging a more integrated North American economy. Among other things, it
aims to enhance our collective competitiveness and productivity through increased
regulatory compatibility, including mutual recognition of professional qualifications,
convergence of product standards and improved cooperation in agri-food sectors.
But this will only work if the Americans refrain from violating the spirit of the trade
agreements that unite us in commerce. NAFTA needs a dispute settlement mechanism
that is objective and binding, one that brings things to a conclusion in a reasonable
period of time—and whose decisions governments are prepared to be bound by.
Softwood lumber
I am always delighted to work with the softwood lumber industry, which accounts for
290,000 jobs and $6.8 billion worth of exports across Canada, and is an especially
important economic generator right here in Atlantic Canada.
I want to re-emphasize to you today that the Government of Canada is 100 percent
committed to working with the provinces and your industry to ensure a durable
resolution to this dispute that is in the best interests of Canadian workers in every
region of the country.
We will continue with our three-track approach of negotiation, litigation and retaliation.
Litigation
As all of you will know, the federal government, along with industry and provincial
governments, is pursuing litigation aggressively at the World Trade Organization, under
the North American Free Trade Agreement and before the U.S. Court of International
Trade.
We have met with many successes in our [softwood lumber] litigation. But the litigation
could continue well into 2007, and in the absence of a durable resolution of the dispute,
there is nothing to stop the U.S. industry from bringing further trade actions.
Negotiation
I continue to work closely with industry leaders and my provincial counterparts to secure
a pan-Canadian approach to further discussions with the United States. And I believe
that this approach could well lead to a negotiated resolution. To help us reach this
result, Paul Tellier and Gordon Ritchie have joined our team as special advisers. I am
pleased to have their experience and wisdom on our side.
On March 8, 2005, I submitted a proposal to the U.S. Secretary of Commerce that
would bring an end to the dispute. The proposal involved the following elements:
• revocation of the U.S. duties;
• full refund of cash deposits;
• a temporary export charge on lumber shipments to the U.S.;
• exits for provinces that have carried out reforms to their timber management
programs; and
• an exclusion for Atlantic Canada.
I want to take a minute here to assure you that securing an exclusion for this region
from any border measure remains a top priority for the federal government in a
negotiated deal.
The United States has responded to our proposal with both industry and government
papers that have been circulated to Canadian industry and provinces.
As you are aware, Canadian industry is also engaged. In early April, Canadian and U.S.
lumber CEOs outlined their respective positions during discussions in Chicago. On
May 3, 2005, members of Canadian industry met to discuss negotiating positions and
scenarios. The U.S. papers are being analysed in anticipation of another possible
meeting.
In the last two weeks, my officials met with the provinces and the members of the
Canadian industry to continue our consultations. We will continue these efforts to
ensure that we are working together to find the best solution for all Canadians.
Retaliation
The most egregious of our outstanding issues with the United States is the so-called
Byrd Amendment.
The Byrd Amendment has rightly been declared illegal by the WTO, but continues to be
in force. It encourages U.S. producers to launch trade cases, subjecting Canadian
exporters to double jeopardy. Canada, in coordination with the European Union and
others, has unfortunately had to take retaliatory measures.
Retaliation is not our preferred option, but it is a necessary action. International trade
rules must be respected.
On May 9, 2005, I was the first foreign minister to meet with Mr. [Rob] Portman, [U.S.
Trade Representative,] [USTR] after he was appointed. He assured me that the
administration supports the repeal of the Byrd amendment, but there is little support in
Congress. This is why advocacy in the United States is so important to our efforts.
Advocacy
We have engaged American officials at the most senior levels—the Prime Minister
discussed the dispute with President Bush, most recently at Crawford, Texas. I have
discussed it with Commerce Secretary [Carlos] Gutierrez and U.S. Trade
Representative Portman. I will raise it at the earliest possible opportunity with the new
U.S. Ambassador to Canada, David Wilkins, who hails from South Carolina—an
important player in the American softwood business.
It is important that Canada have a strong presence in the United States. We have
opened seven new consulates, upgraded two and appointed 20 new consuls. We are
now serving Canadians in the United States from 23 different bases. We’ve also
opened a Secretariat in Washington to coordinate the efforts of Canada’s provinces,
territories and parliamentarians.
On March 1, 2005, I led a delegation of more than 30 of my parliamentary colleagues,
provincial counterparts and industry representatives on an advocacy day in
Washington, D.C., to effectively lobby members of Congress on pressing international
commerce issues. Enhancing and improving Canada-U.S. trade relations and resolving
disputes like lumber and BSE [bovine spongiform encephalopathy] are the focus of
these efforts in Washington. I am grateful to all parties who accompanied me to
Washington, and I am committed to future visits.
But much more needs to be done. The bottom line is that we have to make the lumber
dispute a local issue. U.S. politicians need to hear from their districts and their
constituents about the effect of the dispute on lumber costs, about the added cost to
the price of a new home, for example.
We need your help to turn up the volume.
We need your help to get to your customers, and they need to get to their customers.
We need them to talk to their congressmen and senators about the high cost of lumber
and U.S. duties and the negative impact it has on the average, hard-working American.
As all of you will know, we have named a new Canadian Ambassador to Washington,
someone with whom you will all be familiar, former New Brunswick Premier Frank
McKenna. Ambassador McKenna is doing a superb job getting the Canadian story told.
We are working hard with Ambassador McKenna to discuss the lumber dispute with key
congressmen and senators as well as White House staff.
Ambassador McKenna is raising the profile of Canada and Canadian issues in
Washington—and we think he is doing a fantastic job.
His work couldn’t come at a better time. During last year’s U.S. election there were
protectionist rumblings from both sides reflecting the growing protectionist sentiment in
the U.S. A key indicator of whether the U.S. will rise above the thrall of narrow
protectionist interests will emerge when the Central American Free Trade Agreement
[CAFTA] goes to Congress next week. President Bush is supportive, but it will take
Congress to realize that the CAFTA is unambiguously in its interest, that protectionism
protects no one and that free trade can be beneficial to all.
I am confident that Secretary Gutierrez and USTR Portman have got this message and
will work hard to break down barriers to free trade. I know the Secretary understands
how important the softwood lumber issue is to our relationship, and USTR Portman’s
impressive legislative experience will help our efforts in overturning the Byrd
Amendment. I believe these new leaders recognize that protectionism undermines their
economy, hurts their relationships around the world and detracts from their role as
global leaders.
In Atlantic Canada this protectionism sideswiped our forest industry with unwarranted
dues. Your forest products have always been different and should be treated that way.
In my mind, securing an exclusion in a negotiated deal for the Maritimes is not
negotiable.
From my first day on the job to this one, resolving the softwood lumber dispute has
been my number one priority.
We know it will take cooperation at all levels.
I will work along with Premier [John] Hamm and my provincial counterparts to continue
our strong efforts with American legislators and advance the interests of your industry
with the highest level of American decision makers.
We will continue to work with you to bring about durable resolutions and respect for the
international rules of trade.
We will continue to work with you to pass a budget that brings new opportunities to
Atlantic Canada and all Canadians.
And we will continue to work with you to expand Canada’s presence in the rapidly
changing world of international trade and investment so that all Canadians will continue
to have increased opportunities and prosperity in the months and years ahead.
Thank you.
| 
