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Greg Keenan, Auto, Steel, & Airline Industry Reporter
Washington & Toronto
June 13, 2018 – Globe and Mail
A bloc of Republican senators is vowing to push forward with an attempt to lift President Donald Trump’s tariffs on Canadian steel and aluminum and end a mounting trade war between the United States and its northern neighbour.
The pledge came on Wednesday as Foreign Affairs Minister Chrystia Freeland led a full-court press to rally opposition to the tariffs in the U.S. capital and find a way forward in deadlocked North American free-trade agreement negotiations.
Ms. Freeland met with the Senate foreign relations committee, whose chairman has been leading congressional efforts to stop Mr. Trump’s tariffs. She was scheduled to speak with Robert Lighthizer, the President’s trade chief and NAFTA point-man, on Thursday.
Ms. Freeland condemned the tariffs in some of her strongest language to date, calling them “protectionism, pure and simple” and warning that the United States was attacking the liberal international order it has led since the end of the Second World War.
“The idea that we could pose a national security threat to you is more than absurd – it is hurtful,” she told a dinner held by Foreign Policy magazine, which gave her its diplomat of the year award at a Washington hotel on Wednesday evening. “They are a naked example of the United States putting its thumb on the scale, in violation of the very rules it helped to write.”
Finance Minister Bill Morneau, meanwhile, sat down with Treasury Secretary Steve Mnuchin, who is said to favour a quick resolution on NAFTA. And Flavio Volpe, the head of Canada’s auto parts industry lobby, met with the staff of Mr. Trump’s economic adviser.
Mr. Trump imposed tariffs of 25 per cent on steel and 10 per cent on aluminum imported from Canada, Mexico and the European Union this month. The President used Section 232, an obscure trade rule that allows him to impose levies for “national security” reasons.
Bob Corker, a Tennessee Republican who last week tabled legislation that would give Congress the ability to stop Mr. Trump from bringing in national security tariffs, invited Ms. Freeland to the committee.
Mr. Corker’s initial attempt to bring the legislation forward as an amendment to an unrelated bill appears to have floundered as Republican leaders refuse to bring it to a vote for fear of angering the President. But on Wednesday, Mr. Corker said he was determined to try again.
“It’s an abuse of presidential authority to use the 232,” he said after emerging from the afternoon meeting with Ms. Freeland in the U.S. Capitol. “I am looking to have a vote and take action, and so we’re beginning to think of other ways.”
Mr. Trump’s tariffs touched off a trade war, with Canada vowing equivalent tariffs on American goods starting next month, and drove bilateral relations to a historic low, with Mr. Trump and his aides unleashing a string of personal insults on Prime Minister Justin Trudeau last weekend.
The United States is using the tariffs as leverage in NAFTA talks, demanding that Canada and Mexico agree to a revised trade pact – with new protectionist measures benefiting the United States – as a condition of having the levies lifted.
Arizona Senator Jeff Flake, also a Republican, said his party was solidly behind Canada and had to find a way to get a vote on Mr. Corker’s legislation. “I know that the majority of Republicans feel this way, agree with us on tariffs,” he said.
Democrat Bob Menendez said he told Ms. Freeland that Americans do not agree with Mr. Trump’s actions and that it was wrong for the United States to “give the back of your hand to some of your closest allies.”
Meanwhile, one lobby group called Republicans Fighting Tariffs launched an ad campaign on Fox News declaring the levies a “tax on Americans” and calling on viewers to sign a petition demanding Senate Majority Leader Mitch McConnell bring Mr. Corker’s bill to a vote. “These tariffs are terrible for our businesses, for your communities, for our workers and for our economy,” an announcer says over images of factories.
NAFTA talks have been deadlocked over U.S. demands for a “sunset clause” that would terminate the deal in five years unless all three countries agree to extend it, and the abolition of Chapter 19, a dispute-resolution process Canada has successfully used to challenge U.S. tariffs on softwood lumber. Canada has said it will not agree to either proposal.
— Foreign Affairs Minister Chrystia Freeland
Mr. Volpe, who met with representatives of Mr. Trump’s key economic adviser Larry Kudlow in Washington on Wednesday, said Mr. Kudlow’s staff told him that Canada, the United States and Mexico are close to agreeing on new automotive content rules – one of the toughest parts of the NAFTA talks.
He said U.S. officials assured him the two countries will weather the current rough patch in Canada-U.S. trade relations. But he said he got “no indication of when we pick back up” on negotiations.
Antonio Ortiz-Mena, a former Mexican trade official who helped negotiate the original NAFTA, said Canada and Mexico have worked hard to get to a deal and it was up to the United States to show flexibility to break the logjam.
“I do believe that if the U.S. maintains impossible demands, it will be impossible to reach a deal. I don’t think there’s bluffing going on here,” he said in a trade roundtable at Washington consultancy Albright Stonebridge Group last week.
Ms. Freeland’s visit is part of Canada’s chief trade strategy of putting pressure on the administration directly as well as mobilizing trade-loving Americans to push the White House to change course.
Saskatchewan Premier Scott Moe, who visited Washington last week to meet with White House officials and members of Congress, said the main message is that the United States is hurting itself with the trade fight. He used the example of a piece of slab steel manufactured by the Evraz plant in Regina: The steel is shipped to Oregon to be turned into a plate, then to Alberta to be formed into oil and gas pipeline, then shipped back to the United States.
“We have product waiting on the docks in Western Canada. We have projects in Oklahoma and Texas that are ready to go, waiting for their product and it’s not arriving because they’re trying to figure out who’s going to pay this tariff,” he said in an interview at his Washington hotel. “Who is impacted by that? The U.S. economy. They are not getting this infrastructure built.”
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