Beware — Americans Are Getting Pragmatic

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Stephane Dion may not be a barrel of laughs, but the much-abused former Liberal leader may soon get the last one. That will be when the U.S. imposes a carbon tax – which in some form, is probably what it’s going to do – and Canada, no matter which party is in power, is forced to follow suit in order to maintain good trade relations with the U.S.

Not that it’s bad to be on the same side as the Americans – if that’s the right side to take. But having leaned toward the politics of George W. Bush and conspicuous consumption in recent years, leaning the other way just to stay on the good side of the Americans will make us look like the U.S. lap dog. It’s even more embarrassing if they switch sides before we do.

That’s already happening with greenhouse gas policy, and it happened to some extent this month in an area even closer to home for Canadian farmers.

For years, the federal government, encouraged by the Canadian cattle industry, has been fighting in tandem with the U.S. in a World Trade Organization (WTO) challenge to force the EU to accept beef from cattle treated with hormones. Canada and the U.S. claim that the ban is unscientific.

It doesn’t matter. The EU doesn’t allow its own farmers to use these hormones, so the odds of it allowing a different standard for imports are somewhere beyond slim to none.

However, there is a limited quota for imports of non-hormone beef. So earlier this month, the Americans did the sensible thing and effectively called a truce, signing a deal that will allow an additional 20,000 tonnes of duty-free hormone beef imports for the next three years, followed by 45,000 tonnes for the fourth year of the deal.

U.S. government and industry officials were at pains to say this was only a first step. True enough, but what it really means is that the two countries have decided not to argue over a relatively small issue.

Normally this might have left Canada looking a bit silly as the remaining litigant in the WTO dispute. Fortunately, this issue can reasonably be claimed as one to be left for the negotiations toward a free trade agreement with the EU, also announced this month. The timing is also good given Canada’s current stature in the economic world, having been the most pragmatic of all major nations in matters of debt, deficit and financial regulation. That gives us some leverage in establishing our own bilateral free trade deals. In that respect, the U.S. has also been more pragmatic than Canada. It’s been negotiating a series of bilateral trade deals while Canadians stuck to an idealistic if not naive assumption that everything would be worked out at the WTO. The beef truce between the U.S. and EU is another sign of that pragmatic approach.

If Canada and the EU can sign a deal reducing tariffs on the things that we want from each other, then that’s good for everyone. There’s no point in endangering the deal by getting on our high horse and threatening to take the EU to court to open its borders to things its consumers don’t want to buy, such as hormone beef or seal products. Some battles just aren’t big enough to be worth fighting, especially if you are never going to win.

Ironically, Canada will now have to cultivate the Europeans by getting closer to the U.S. position on some issues. Let’s just be careful we do so without being seen as simply bending with the U.S. wind.

Canada still has a valuable international “brand” based on our fiscal, social and environmental attitudes and policies. Let’s be careful the Americans don’t steal it.

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