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Chretien rules out an energy ‘war’ in lumber feud with U.S. Retreats from tough talk, including warnings to U.S. to forget about cooperation on a gas pipeline route through Canada; Alberta and industry rebuke federal politicians Gary Park PNA Canadian Correspondent
A blazing Canada-U.S. brawl over softwood lumber threatened to get out of control in August, possibly endangering passage through Canada of any future Arctic gas pipeline.
Faced with C$2 billion a year in duties, widespread mill closures and the possible layoff of 30,000 forestry workers, Canadian cabinet ministers threatened to drag C$50 billion a year of oil and gas exports into the fray.
Herb Dhaliwal, the federal fisheries minister who comes from British Columbia, issued the toughest ultimatum: If the United States continued to restrict imports of Canadian softwood it should forget about cooperation on routing a pipeline from Alaska through Canada.
“If the Americans want to continue on this path, it’s not going to be business as usual,” he said.
Prime Minister Jean Chretien, Trade Minister Pierre Pettigrew and Natural Resources Minister Ralph Goodale all joined the offensive, until Chretien abruptly softened the rhetoric by agreeing Canada would not attempt to use energy as a weapon.
He backed off after Alberta Premier Ralph Klein said linking energy and lumber could be “disastrous” for oil and gas producers, cautioning that blocking a pipeline from the North Slope or Mackenzie Delta to the Lower 48 would deny Alberta’s petrochemical industry a chance to benefit from Arctic gas liquids. Industry opposes energy as lever Petroleum industry leaders reacted swiftly to talk of using energy as a lever to resolve the lumber spat. J.C. Anderson, chairman of Anderson Exploration, said retaliation would be “madness.” Gwyn Morgan, chief executive officer of Alberta Energy Company, said it would be “imprudent in the extreme.”
Chretien said he had told President George W. Bush in an August 20 phone call: “You want gas, you want oil and you don’t want wood? It’s too bad, but if you have free trade you have free trade. And I explained it very clearly.”
Pettigrew climbed on that bandwagon, telling the United States: “You don’t hit a guy with a two-by-four on the forest front before asking him for help on the energy front. Canadians will feel like helping on the energy front if Canadians are happy in general.”
Goodale chimed in by saying the U.S. was “dead wrong” to meddle with Canada’s lumber exports and described the American actions, in the context of free trade, as “offensive.”
Having been mildly rebuked by Klein, Chretien adopted a more conciliatory tone, saying there was “no need” to go as far as Dhaliwal suggested and block pipeline approvals.
“It’s a war when you do that. I believe in taking (one trade) file and resolving that file.
“We are free traders and they (the Americans) are free traders and they want to have oil and gas and we want to sell oil and gas to them. But it is difficult to understand that they are free traders for everything but softwood lumber.”
By late August, Canada’s political leaders seemed in agreement that the lumber should be tackled through a challenge to the World Trade Organization, where Canada received two favorable rulings in the 1990s, although Pettigrew, while insisting the U.S. Commerce Department is wrong in finding Canada’s unfairly subsidizes its lumber producers, said a WTO ruling could take years to obtain.
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