Cedar chip on Canada's shoulder
RECONCILING a fervid commitment to ``free trade'' and public calls for ``protectionism'' has never been easy in the post-World War II period, when nations have become so economically interrelated. Reconciliation becomes all the harder when two particularly close trading partners are involved -- as are the United States and Canada in the current dispute involving Canadian cedar shakes and shingles.
This wood-products tug of war has become the most serious trade dispute between the two nations in recent years. It would be unfortunate if it kept Ottawa and Washington from reaching an accord on a new US-Canadian free-trade pact -- a pact eagerly sought by political and business leaders in both nations.
The US -- in a move that to some observers carries political overtones -- imposed a stiff 35 percent tariff on cedar shakes and shingles from Canada. The US action followed an investigation by the International Trade Commission, which determined that the Canadian products were injuring the US shake and shingle industry. Now, Canada has retaliated against the US, showing how sensitive the issue of trade restriction is and how quickly events can get out of hand. Canada is imposing import duties against US books and publications, as well as computer parts and semiconductors.
Canada's share of the shake and shingle industry is now 73 percent, compared with 40 percent back in 1978. Meanwhile, the US lumber industry is calling for federal action to ameliorate what it claims is injurious action by ``subsidized'' Canadian lumber companies.
Imposing the stiff tariff on Canadian shakes and shingles stunned the government of Prime Minister Brian Mulroney. Mr. Mulroney dispatched a personal message to President Reagan calling the US tariff ``pure protectionism.'' The US action, announced by President Reagan May 22, cannot help undercutting Mulroney's efforts to build a closer relationship with the US.
The US lumber industry has been hit hard by imports in recent years, particularly in the Pacific Northwest. Moreover, the Northwest has also been hit by declines in other resource-based industries, such as mining and agriculture. Consequently, unemployment in the region has tended to remain high.
Although having relatively few electoral votes, the area has political significance for Republicans. The GOP dominates Senate seats in the Washington-Oregon-Idaho axis. One of those GOP senators, Bob Packwood of Oregon, happens to be chairman of the Senate Finance Committee, which is leading the charge for tax reform, the main item on President Reagan's domestic agenda.
However the US and Canada finally resolve the red-cedar dispute, there must be no disruption of efforts to reach a free-trade accord. Sad to say, the US tariff decision somewhat belies White House claims that the administration is committed to free trade with Canada. Some fence-mending seems in order.