Wednesday, August 08, 2007

Softwood Lumber Deal already falling apart

Last year, I argued that the softwood lumber deal we signed with the United States was a bad one that we should have never signed. The fact the United States is already planning to take legal action against Canada, for its claims that we are not following the agreement after only 10 months just proves my point. I argued that if the United States wouldn't follow NAFTA, what makes one think they would follow this deal if it didn't suit their interests. While it may have been politically expedient to get a deal on softwood lumber, it was bad in the long-term. What we should have done is pursued the issue in domestic courts, where we may have won and if we didn't, then consider retaliation. While some say as a small country we cannot afford retaliation, this precludes the possibility of seeking alliances with others. Had we agreed with the EU and Japan to support them in their trade disputes against the United States in exchange for them supporting us, the United States would take notice and would have a much tougher time continuing with its current tactics. As I have said all along, we need to diversify our trade. No smart investor would put 87% of their investments in one stock, and likewise no country should put 87% of their trade towards one country. That doesn't mean the United States won't continue to remain our largest trading partner, which there is nothing wrong with, but 87% with any one country is too much regardless of who it is.

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