More economic uncertainty could be on the way for Canadians after President Donald Trump sent a letter to U.S. Congress asking to reopen and renegotiate a trade deal between Canada, USA and Mexico.
Often a bone of contention for the American president, Trump frequently railed against the North American Free Trade Agreement (NAFTA) during the election.
The letter sets a 90-day buffer period to initiate negotiations between the three countries.
“In particular, we note that NAFTA was negotiated 25 years ago, and while our economy and businesses have changed considerably over that period, NAFTA has not,” reads the letter. “Many chapters are outdated and do not reflect modern standards.”
Chrystia Freeland, the Canadian Minister of Foreign Affairs, said in a news release that the President’s letter to Congress was long expected.
“NAFTA’s track record is one of economic growth and middle-class job creation, both here in Canada and throughout North America,” Freeland said. “Nine million American jobs depend on trade and investment with Canada. Our integrated economies and supply chains support millions of jobs across the continent.”
Though negotiated by the governments of the three countries, whatever potential changes occur to NAFTA will carry an impact to the region, particularly in regard to softwood lumber, says Kootenay Columbia MP Wayne Stetski.
“I think, when Canada is looking at what to do to try and ensure we get a good deal, is to take a very holistic approach and look at the other products that currently go across the border and in both directions — what the Americans are sending to us, as well as what we export across the border, beyond softwood lumber.”
The current iteration of the long-running softwood lumber dispute began at the end of April when the US slapped a 20 per cent countervailing duty on softwood lumber products.
A bilateral Softwood Lumber Agreement between Canada and the US expired in October 2015.
“What we need is a new agreement that hopefully parallels or is better than the last agreement in terms of tariffs on our lumber heading across the border,” Stetski said.
Many local and regional mills send some of their products directly across the border into the US — a percentage that can be up to 90 per cent, Stetski added.
Forest industry groups are hoping the federal government will release an interim support package, which Stetski hopes will include guaranteed low-interest loans, opportunity for retraining, and potential guarantees for extended unemployment insurance.
Whether negotiating new terms for NAFTA or a new softwood lumber deal, Stetski says there must be a focus on exploring other markets such as in Asia.
“We need to be looking at China, India, potentially Japan,” Stetski said. “Other places where our lumber could go, so that our mills aren’t so reliant on what happens across the border in the United States.”
One of the best ways to help apply some pressure on the American side is to have local mills contact their buyers and have them lobby their elected officials in the Senate and in Congress, Stetski said.
“There are a lot of homebuilders on the American side of the border who currently use Canadian lumber that will be potentially impacted by any additional duties that are added on,” he said. “It will increase the cost of housing on the U.S. side of the border, so it is in their best interest to ensure that Canadian lumber can continue to cross the border at a reasonable price point.”