What do dairy and softwood lumber have in common?

Dairy access remains ‘great frustration’ in bilateral trade ties: U.S. representative

Katherine Tai also calls softwood lumber dispute a ‘fundamental’ difference

Christian Paas-Lang · CBC News · Posted: May 08, 2022 4:43 PM ET | Last Updated: May 8

U.S. Trade Representative Katherine Tai, shown in Washington, D.C., in February 2021, met with her Canadian counterpart, International Trade Minister Mary Ng, on a trip to Ottawa this week. (Bill O’Leary/The Washington Post/The Associated Press)

United States Trade Representative Katherine Tai says the status of access to Canada’s dairy market remains a “source of great frustration,” which, along with the decades-long softwood lumber dispute, represent “fundamental differences” between the Canadian and American approaches.

At the tail end of her trip to Canada, Tai said in an interview on Rosemary Barton Live, which aired on Sunday, that rising housing costs made the softwood lumber challenge even more difficult.

“The two of us remain committed to talking and thrashing out the details for how we might be able to make some progress. But it’s been a thorny issue for decades, for sure,” Tai told CBC chief political correspondent Rosemary Barton.

Tai was referring to her Canadian counterpart, International Trade Minister Mary Ng, with whom she met this week.

WATCH | U.S. trade representative discusses irritants in Canada-U.S. ties:

How strong is the Canada-U.S. trade relationship?

1 day ago

Duration 8:50

Chief political correspondent Rosemary Barton speaks with U.S. Trade Representative Katherine Tai, on her first visit to Canada, about the state of the two nations’ trade relationship. Tai says dairy and supply management remain a point of contention between Canada-U.S. economies. 8:50

During a news conference in Ottawa on Thursday, both repeatedly praised the two countries’ ability to work through disputes and have productive talks.

Canada has launched a challenge to existing U.S. duties on Canada softwood under the new North American free trade deal’s dispute resolution process. It’s just the latest development in a fight that has lasted for decades.

Dairy difficulties

Another provision of the Canada-U.S.-Mexico Agreement (CUSMA) that was seen as a win by the Americans were changes to access to Canada’s dairy industry. Tai challenged Canada’s interpretation of the deal’s provisions, arguing it was not properly implementing them.

A dispute panel found in January that Canada was not living up to its promises under the deal, and the Americans claimed victory. Canada has proposed a new import allocation system, but it’s been criticized by U.S. producers. The dairy industry in Canada has defended this country’s ability to set its own import framework.

But Tai told Barton that improved market access “has not been realized,” which was “a source of great frustration” for American dairy farmers and elected representatives who supported CUSMA in part because of the dairy provisions.

Asked about the dairy dispute during their Thursday news conference, Ng told reporters that Canada’s trade obligations were “something that we take very seriously” and that “Canada will certainly implement the findings of the panel report.”

But she also noted that the federal government knows “how important this issue is to our farmers, to industry and to the workers they employ.”

“Of course, in a relationship as large as the one between Canada and the United States, there are going to be issues. The question really is how we’re going to work on those issues,” Ng said.

Mary Ng, right, Canada’s international trade minister, and U.S. Trade Representative Katherine Tai speak at a joint news conference in Ottawa on Thursday. (Adrian Wyld/The Canadian Press)

Possible drawdown of China tariffs

Tai was also asked about the possibility that the U.S. would remove some import tariffs on goods from China, first put in place under former president Donald Trump.

Tai has signalled that removing the tariffs may be one tool for mitigating the effects of inflation in the U.S.

But she told Barton that this was the beginning of the process, and while rising prices were “anxiety inducing,” decisions needed to be made in the wider context of China-U.S. trade considerations.

“Whatever we do in the near term to address the pressures and the challenges that we are facing in the near term cannot, in my view, undermine or lock us into a path that would make us more vulnerable and less strong in the medium term coming out of these turbulent years,” she said.