Friday, February 11, 2005

Time to hit back at U.S., despite risks

VICTORIA - It's time to go to war with the U.S., even if we're going to take some heavy economic casualities at home.
Federal Trade Minister Jim Peterson has just taken the first steps towards retaliating in the softwood dispute, preparing to throw up barriers to U.S. products. Ottawa wants to slap duties on U.S. imports into Canada equivalent to the U.S. softwood duties; the theory is that American producers will be hurt, and pressure their government to settle the softwood dispute.
It's time, says Forest Minister Mike de Jong. But he's warning that Canadian consumers are going to get caught in the crossfire.
Trade wars are inherently destructive, and in this case Canada has the most to lose from an escalating battle. But given the U.S. refusal to settle the dispute, or to agree to refund more than $4 billion in duties if Canada wins the legal battle, there appear to be few alternatives.
Peterson plans to ask the World Trade Organization for permission to impose duties that would push up the costs of targeted goods from the U.S. by some $4 billion. De Jong said likely targets would include food and alcohol products from the U.S.
About time, people in forest communities might say.
But the duties don't just make life tougher for California wineries and Washington apple growers. The $5 billion in duties may hit sectors of the U.S. economy, but it comes out of your pocket too.
Slap a 50-per-cent duty on Gala apples from Yakima, and the producers will absorb some of the extra costs and then raise prices enough to pass the rest on to Canadian consumers. Canadian growers, with less competition, will take advantage of the chance to raise their prices. Those apples you put in the kids' lunches - which they probably throw away - will cost more.
That makes it critical for the federal government to come up with a strategic approach. The aim is to inflict the maximum pain on the most politically influential producers in the U.S., without hurting Canadians too badly.
It's a high-risk move. Canadian consumers - and businesses that face higher costs on U.S. products they need because of duties - are going to becoming unhappy quickly.
And a trade war, like any other war, can escalate rapidly and destructively. The U.S. government has so far sided with its lumber industry every step of the way. One response to Canadian duties might be more duties on our exports, or border barriers that slow the movement of goods from Canada.
Canada needs access to the U.S. market much more than the Americans needs us. Canada exports about $300 billion worth of goods to the U.S., against $200 million worth of products that flow northward. Given the scale of the two economies, it's easy to see who is going to take the bad beating in any full-on trade battle.
But it's hard to see any other option at this point. Canada has prevailed in most of the WTO and NAFTA decision in this dispute, without winning any softening of the American position.
Now, U.S. politicians are talking publicly about hanging on to the $4 billion duties collected so far even if they are found to be illegal.
Canada's not rushing to do battle. Winning TO approval for the retaliatory duties will take at least six months. Ottawa will then consult with Canadian industry on a proposed list of target products, to give companies a chance to argue against levies on American products they need.
The delay is useful. Canada can begin urging American companies who may be hurt by new duties to lobby their government to resolve the dispute.
A trade ware should be a last resort, after negotiations and legal efforts to find a solution have been exhausted.
But given American intransigence, and increasing signs that the U.S. government is unwilling to accept legal decisions, it's time to take the risk.
Footnote: The B.C. forest industry, which has paid about half the duties so far, naturally welcomed the tougher stance. De Jong and Premier Gordon Campbell are heading to Ottawa this week to meet with Prime Minister Paul Martin, hoping to convince him to meet with George Bush on the issue.

Wednesday, February 09, 2005

Liberals go green, centrist with Throne Speech

VICTORIA - There are going to be an awful lot of meetings if Gordon Campbell wins a second term.
The Throne Speech this week set out the Liberals' plans, mostly bathed in golden light and slightly out of focus like a TV commercial filmed on a California beach. That is the nature of Throne Speeches.
It's also appropriate, if Campbell is to be believed. For we are heading into a 'Golden decade,' the speech promised. (Fool's gold, said NDP leader Carole James, but then that is her job.)
All in all the speech like a big Liberal hop towards the middle, a greener, more caring party than we have seen since 2001.
The government that removed all controls on university and college tuition fees - which resulted in annual increases of up to 30 per cent for B.C. students - has changed course. From now on, tuition increases will be limited to the inflation rate, about two per cent these days.
The speech promised the insitutions would get about three per cent a year more from the province as well; the unanswered question is whether the allowable tuition increases, and provincial funding, will be enough to pay for the promised 25,000 new post-secondary spaces.
But an effective tuition freeze - already proposed by NDP leader Carole James - is a good vote-getter.
So are commissions and councils and task forces, the Liberals hope.  The Throne Speech announced at least five major new ones.
A BC Competition Council will bring together organized labour, employers, academics and regional representatives to address productivity and international competitiveness issues. (That does seem lifted from James' playbook; the Liberals have not been keen to involve unions.) An Asia-Pacific Trade Council will oversee new BC Trade and Cultural Centres overseas.
An Alternative Energy and Power Task Force will help harness the winds and tides, and a Pacific Salmon Forum will worry about the fish. (Take that, Green Party.) A  Premier's Council on Aging and Seniors' Issues will look at getting rid of mandatory retirement, among other issues. And a Provincial Congress on Public Safety  will tackle crime.
They're all good ideas. But they all would have been good ideas much earlier than barely three months before the election, and some - like the seniors council - replace similar bodies killed by the Liberals.
The Liberals also made a big attempt to paint themselves Green in this Throne Speech, a prudent move when close races may be decided by where Green voters settle. There's the alternative energy task force, a BC Conservation Corps program which will hire young people to work in parks, the salmon forum and talk about protecting rivers.
But there were still gaps in the speech.
Health care was the most glaring. The speech promised a welcome focus on improving our diets and exercise practices, an important way to create a healthier population and cut medical costs.
But that's long-term, and the speech offered little to address the immediate concerns of many British Columbians about waits for treatment and the expansion of two-tier health care. (The speech did, sort of, acknowledge that the Liberals have abandoned the campaign promise of 5,000 new long-term care beds for ailing seniors by 2006. Only 100 beds have been added, according to Health MInister Shirley Bond, and Campbell confirmed the promise won't be kept.)
There was also little mention of B.C.'s regions. Two years ago, the Throne Speech focused on about the Heartlands. This time, the word wasn't used. Campbell says that's because big actions have already been taken to help the regions; voters will decide if they've worked.
And the government offered no vision for the troubled and under-funded ministry of children and families.
The speech did promise valuable attention to the economy, promising a review of every sector to see how B.C. would be affected by tougher global competition - a necessary exercise.
The Liberals appeared to be trying to persuade voters they have moved closer to the centre. Carole James is making the same pitch for her party.
The test will be who can win swing voters decide they can believe.
Footnote: There were at least three specific promises aimed at regional voters. The Liberals said they would work with communities to find a way to re-open closed schools as drop-in centres or clinics, said a regional tourism initiative would come this month and promised action to help communities and families deal with the coming shortage of timber once the pine beetle infestation wipes out existing stands.

Monday, February 07, 2005

Corky's back, a parachute problem and Liberal headaches

VICTORIA - Notes from the front: the return of Corky Evans, hard feelings over Liberal parachute candidate Mary Polak, and some political headaches for the Liberals as the legislative session begins.

NDP leader Carole James should be pleased at the return of Corky Evans, who has just won the party's nomination in Nelson-Creston, which he represented in the previous government.
Mostly the return of the gang of 1996 is bad news for James. Voters rose up in anger to boot them out of office; their reappearance will remind voters how dismal the NDP record was.
But Evans is an exception. Partisan, sure, and a member of cabinet, but he managed to remain apart from the scandals and mismanagement that plagued the Clark government. He took on the role of the populist politician willing to speak up for people outside the Lower Mainland.
It's a pitch that plays well, and will be useful in the election campaign.
Evans should have some time to venture outside his riding to support other candidates. His opponent, Blair Suffredine, only managed to capture 39 per cent of the popular vote in 2001, fourth lowest of all the Liberal candidates. Green party deputy leader Colleen McRory was a big factor, with 22 per cent of the votes. Evans looks a good bet to take the riding, and have some time to lend support in close races. (The news was less good for James in nearby Kootenay East, where former MLA and Clark loyalist Erda Walsh took the nomination. Liberal Bill Bennett should be able to hold on to the seat.)

Meanwhile, the Liberals' bid to parachute controversial candidate Mary Polak into the Langley riding is causing problems. Polak is best known for being on the Surrey school board when trustees spent $1 million trying to keep three books out of schools because they depicted same sex parents.
Polak was recruited to run, and then crushed, in the Surrey-Panorama Ridge byelection. Despite brave talk of running again there on the night of the defeat, she started looking for a safer seat and began eying Langley, where Liberal Lynn Stephens isn't running again.
Parachute candidates are always controversial, Polak especially so. Stephens criticized Polak for not knowing about the riding issues and being too far right.
But what's really angered some Liberals is a perception that the provincial executive wants to make sure Polak wins. The local riding executive wanted a nomination meeting in the fall, but the party brass said no. They asked for a date in January, and February, to no avail. Now the party has set March 9, meaning the cut-off date for new members was last week. The perception is that the delay was engineered to give Polak more time to sell the memberships she needed to win. The Liberals will hold the riding no matter who wins the nomination, but the illwill will be there.

Finally, big headaches around the spring session for the Liberals as a result of the fixed election date.
The budget comes next week, and the legislature is scheduled to sit until April 19, when the official election campaign starts.
But that's a lot of time to answer questions from the three New Democrats on the budget and other issues, and a lot of time for Liberal MLAs to be in Victoria when they could be home campaigning.
The Liberals have the ability to cut things short. But unless they allow a full budget debate, including questions on each ministries' plans, then they would have to pass a special law to let the government spend billions without the required legislative approval. That approval would wait until June, when the legislature returns after the election.
If they do go that route, the Liberals face big criticism. Governments aren't supposed to spend money without legislative approval, especially if the reason is because the party in power wants to avoid tough questions.
Footnote: Headline writers are eagerly waiting to see if the Liberals succeed in recruiting Olympic gold medal wrestler Daniel Igali to run in Surrey-Newton, the seat now held by Tony Bhullar, giving them a chance to use a whole new wave of sports cliches. (Bhullar plans to move to Surrey-Panorama Ridge.) Igali's decision is expected within days.