Trump says U.S. will renegotiate trade pact with Canada, Mexico

By Ayesha Rascoe and David Lawder



WASHINGTON (Reuters) – President Donald Trump said on Thursday he pulled back from the brink of killing the 23-year-old trade pact with Canada and Mexico after requests from their leaders and expressed optimism about winning better U.S. terms in a renegotiated deal.



Trump, during a White House appearance with Argentine President Mauricio Macri, said terminating the North American Free Trade Agreement, a pact he has long condemned as unfair to the United States, “would be a pretty big shock to the system,” though he had been planning to do so within two or three days.



Hours after White House officials disclosed on Wednesday that Trump and his advisers had been considering an executive order to withdraw from NAFTA, he said he received telephone calls from Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau.



“They asked me to renegotiate. I will,” Trump said. “And I think we’ll be successful in the renegotiation, which frankly would be good because it would be simpler” than killing NAFTA.



Trudeau said he had warned Trump of the disruption that pulling out of NAFTA would cause. Mexico’s foreign minister said a good outcome for all three countries was possible under a new accord.



News of the possible U.S. pullout from NAFTA rattled financial markets on Wednesday. Relative calm returned on Thursday after Trump’s comments, and the Mexican peso strengthened 0.86 percent against the U.S. dollar while the Canadian dollar was flat versus the greenback.



Mexico, Canada and the United States form one of the world’s biggest trading blocs, and trade disruptions among them could adversely affect agricultural, automotive, energy and other sectors in all three countries. NAFTA erased most trade and tariff barriers between the neighbors, but Trump and other critics have blamed it for deep U.S. job cuts.



Trump campaigned for president last year on a pledge to pull out of NAFTA if he could not renegotiate better terms. The United States went from running a small goods trade surplus with Mexico in the early 1990s to a $63-billion deficit in 2016. On Thursday he said NAFTA had been “horrible” for the United States but very good for Canada and Mexico.
  Continued…


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‘America First’ strategy is raising hackles, and not just in Canada: Don Pittis

At first it was easy to discount U.S. President Donald Trump’s outrageous comments on trade. They came in the same breath as vows to build a wall along the entire U.S.-Mexico border and remarks about dating his own daughter.

But now with the planned imposition of duties of up to 24 per cent on Canadian lumber, Trump has demonstrated to the world that he is not merely raving.

There are growing signs that the world is taking Trump’s protectionism seriously.

Blame Canada

Canada’s government has responded diplomatically, politely disagreeing with the discredited old saw that Canada is dumping softwood on U.S. markets. But British Columbia, whose huge forest industry would be devastated by such a duty, has shot back, demanding a ban on U.S. thermal coal shipments through the province.

Heaping blame on foreign governments may play well among core Trump supporters. But Trump’s outspoken comments are beginning to alienate some of the country’s closest trade partners in a way that will only hurt the U.S. economy and damage the lives of the people who voted for him.

As in the past, companies that produce lumber in the U.S. will experience a windfall once the duty is imposed. But it is U.S. consumers who will pay the bill, says Queen’s University trade expert Warren Mabee.

Pushing up prices

“It’s going to push up prices for lumber. It’s going to push up prices for houses. It going to make things more expensive for the average American,” says Mabee. He says studies have shown the duty could increase the price of a new U.S. home by thousands of dollars.

USA-ECONOMY/HOUSING

While U.S. lumber producers will get a windfall from duties that devastate parts of the Canadian industry, U.S. consumers will pay the bill as house prices rise by thousands of dollars. (Mike Blake/Reuters)

As for dairy, Mabee says that from Trump’s tweets you would never guess Canada is a net importer of dairy products from the U.S.

But of course Canada isn’t alone in taking offence from the U.S. president’s protectionist tack on trade.

Back when the new president took office, one of his first official acts was to sign an order pulling the U.S. out of the Trans-Pacific Partnership, calling the move “great news for American workers.”

Everyone assumed that was the end of the deal, but Japan’s minister of finance Taro Aso has just announced his country will restart negotiations, leaving the U.S. out in the cold.

‘Minus the U.S.’   

“We will start talks on an 11-member TPP, minus the U.S.,” said Aso in New York last week.

Japan isn’t the only one looking to start a club without inviting the U.S. China is already threatening to fill the role of Pacific trade leader with RCEP, the Regional Comprehensive Economic Partnership, a free-trade deal with 16 Asian countries.

MEXICO PROTEST

Mexican dairy farmers have complained about cheap imports that hurt their industry, but now the world’s biggest importer of U.S. milk is looking for new sources. (Daniel Aguilar/Reuters)

According to a report yesterday from the Bloomberg business news service titled “America’s $1.2 Billion Mexico Milk Trade Is Now at Risk,” the world’s biggest buyer of U.S. milk is looking for new sources, working on a deal with giant milk producer New Zealand and increasing imports from Europe. 

“Mexico is looking to make sure they have market alternatives because of the rhetoric from the U.S. on renegotiating NAFTA,” a U.S. agriculture and trade expert told Bloomberg.

Seeking markets outside the U.S.

Here in Canada trade hostility from the U.S. has led to a push to find new markets for lumber and other Canadian products. Canada’s CETA agreement with Europe is one success, as Canada expands trade links with the world’s second largest trade bloc. A similar deal between Europe and the U.S. seems far away.

Justin Trudeau, Li Keqiang in China

Chinese Premier Li Keqiang shakes hands with Prime Minister Justin Trudeau in Beijing on Aug. 31, 2016. In the face of U.S. protectionism, Canada is looking for new markets for its lumber. (Adrian Wyld/Associated Press)

Canadian international trade analyst Patrick Leblond says off-the-cuff comments by Trump have an effect, not just on government negotiators but consumers. For example, Trump’s grouping energy with milk and timber as areas where Canada is trying to “take advantage” added new enemies. 

“It has negative consequences,” says Leblond, senior fellow with the Centre for International Governance and Innovation and a professor at the University of Ottawa. “It puts a damper on how people see the U.S. and how they see U.S. products.”

He says the impact has already become apparent in the U.S. tourism industry as international travellers look for alternatives to Trump’s United States, where minorities feel unwelcome and border guards demand cellphone passwords.

‘America Last’

As Trump talks about “America First,” consumers might be increasingly tempted to pursue a strategy of “America Last.”

Patricia Cormack, an expert in a subject called consumer nationalism and co-author of the book Desiring Canada, says consumers have enormous power.

“The idea of boycotting Trump precedes these trade discussions at a more personal level, as all of us are consumers,” says Cormack. “We don’t need California wine. We’ve got tons of choices.”

Of course in a globalized world market, products that seem to be from one country, such as California wine, may have inputs from many other countries, including the country doing such boycotting.

Trump’s inflammatory and misinformed comments might be useful in softening up the other side in a real estate deal. But if they inspire old friends to develop plans for retaliation against the United States, they could be setting the stage for a trade war that will benefit no one. 

Follow Don on Twitter @don_pittis

​More analysis from Don Pittis

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How Trump’s Tariff Against Canada Could Lead To A Trade War

Earlier this week, the Trump administration announced a preliminary decision to impose a 20% tariff on Canadian softwood lumber imports. The move stems from an ongoing trade issue that dates back at least to the Reagan administration, which is poised to hurt both the US and Canadian economies if the countries can’t resolve it.

Lumber mills in Canada and the U.S. essentially have different ways of buying timber. In Canada, timber comes mostly from trees grown on government-owned lands, while U.S. lumber mills mostly buy their timber from private landowners through competitive bidding. At issue is that the US views Canada’s practice as a subsidy to its lumber industry giving it a competitive advantage over U.S. producers. And since Canada also restricts its log exports, this depresses Canadian timber prices even lower, increasing the advantage Canadian lumber has in the U.S. market.

The US has dealt with this issue for almost four decades. In the past three cases where Commerce found subsidies, Canada agreed to restrict lumber exports to settle the matter. This could happen again. Needless to say, there are no guarantees, and it will likely take a while before the latest case is resolved.

Every industry in the US has a right to file a case with the U.S. government to determine whether imports are being subsidized. Once that’s determined, domestic industries have a right to file a case and get an answer from the U.S. government as to whether a subsidy exists. The Department then continues its investigation to assess a final duty rate. Then an independent agency, the U.S. International Trade Commission, still has to find that the subsidized imports injured the domestic industry before duties are applied. While career civil servants conducted this investigation and the law is supposed to operate without political influence, whoever is in the White House can reasonably claim credit for what his government does.

Trump’s announcement this week comes after the lumber industry filed a case with the US Department of Commerce. Since 1980, it’s the fifth case filed by the industry. In the most recent case, a preliminary finding determined that Canada offered a lumber subsidy of 19.3%.

Each of the last three cases resulted in a U.S. Canada lumber agreement, under which Canada decided that it was better to restrict its lumber exports than having the U.S. impose tariffs. And that is an outcome that would not be surprising this time around as well.

Does that mean that all will be well in U.S.-Canada trade relations insofar as lumber is concerned? There are still risks. Canada can appeal U.S. agency decisions to a World Trade Organization (WTO) panel and under the North American Free Trade Agreement (NAFTA) to a bi-national panel. Challenges to U.S. trade remedies are often successful. President Trump’s 2017 Trade Policy Agenda criticizes international dispute settlement as an interference with U.S. sovereignty. Moreover, during the last lumber case in 2001, the domestic industry also challenged the constitutionality of NAFTA dispute settlement which end rights to appeal to U.S. courts.

If the U.S. government fails to implement an international panel’s decision, that could trigger trade hostilities. If it is a WTO decision, ultimately Canada would have a right to retaliate against U.S. trade. Lumber is a big trade item for Canada, and the retaliation authorized could cost Canada billions of dollars. If a NAFTA panel were disregarded, this could undercut the basis for continuing to have NAFTA, and hundreds of billions of dollars worth of trade between the two countries could be at risk. If Canada and the US cannot come to an agreed or at least tolerable result on lumber trade, the costs to our two economies would be very high. There would be no winners.

Alan Wm. Wolff was a senior trade negotiator with in both Republican and Democratic administrations. He is a Senior Counsel with Dentons LLP. He was counsel to the domestic U.S. industry for several rounds of lumber litigation and negotiated settlements. This article is written on behalf of no client or organization.

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In Canadian lumber town, real fears over a trade war with Trump

Brett Gosselin, a lumberjack like his father before him, lives his life in solitary 12-hour shifts in the vast pine forests that stretch across the Canadian north, master of a gigantic whirling buzz saw that can fell several 100-foot trees in a single crashing roar.

The isolation, or risk of injury, holds no terror for him. But on an afternoon when the future of North America’s globalized economic order appeared to hang in the balance, Gosselin — a tall, heavyset man in a black hooded sweatshirt — retreated to the bar of a local hotel and admitted something: He was very worried.

In Washington, some 2,300 miles away, the Trump administration was venting its frustration with the tangled trade agreement among the United States, Canada and Mexico, forged a ­quarter-century ago, that it was now threatening to unravel.

Gosselin was letting off some anger of his own — fretting about the possibility of layoffs, cursing President Trump and stewing about the iniquity of being just one small figure in a great supply chain to the world’s most powerful economy.

(Daron Taylor/The Washington Post)

“You don’t know what’s going to happen. That’s what I’m scared of,” Gosselin said, huddled over a white porcelain pot of tea in the bar of the Cariboo Hotel. “I’m just a low-class little guy that runs a machine, until the mill says that’s enough.”

Quesnel (pronounced Kwe-nel), a town of just 10,000 in the rolling hills of British Columbia, may be spectacularly remote in ordinary times, but it is ground zero in the escalating trade war between the United States and Canada.

The dispute burst into the open this week with Trump accusing the Canadians of trying to keep U.S. dairy products out of their markets while dumping cheap lumber on the United States, and with the Commerce Department slapping tariffs of up to 24 percent on the country’s lumber industry.

The Canadians punched back. Prime Minister Justin Trudeau said he would “vigorously” defend the country’s economic interests. British Columbia’s premier, Christy Clark, who is facing a tough fight for reelection on May 9, called for a ban on U.S. coal shipments from provincial ports. And industry leaders urged Canada to ship its lumber west to growing markets in Asia instead of its giant neighbor to the south.

On Wednesday, the White House went so far as to signal that it might scrap the North American Free Trade Agreement altogether, before eventually concluding the United States would not exit the treaty “at this time.”

But while that ominous outcome, for now, has been avoided, Quesnel is still an early casualty.

(Patrick Martin/The Washington Post)

The logging hub — whose rugged beginnings in the gold rush are symbolized by a giant mining pan on the road out of town — is home to three of the five Canadian lumber companies named in the Commerce Department’s complaint.

This is a town that runs on lumber hewed from the surrounding lodgepole pine forests. At the West Fraser sawmill, one of the biggest in the world, the logs are piled so high they rival the tallest buildings downtown.

The mill’s vast machinery comes to life late Sunday night and runs without stopping through the Friday graveyard shift. The entire building shakes with the motion of the massive conveyors required to move the logs across the seven-acre production line.

Trade with the United States is so crucial that Quesnel flies a U.S. flag at its visitors center, alongside the maple leaf. On Tuesday, the mayor said that an angry constituent asked him to take it down.

The two countries have had several eruptions over softwood lumber over the past 30 years. Disputes have typically played out with the United States imposing tariffs and Canada challenging those measures in long, expensive court battles. Such periodic spats were even immortalized in a “West Wing” episode.

This week brought the latest installment of the saga.

“We affectionately call it ‘Lumber 5,’ ” joked Bob Matters, the chair of the United Steelworkers Wood Council, which represents local lumber workers. “It’s like a bad action movie that keeps coming back again and again.”

But as Gosselin spent the afternoon commiserating with the bartender and other customers, there was a sense that this time around things are different. Behind the bar, Sid Cyca, who sold lumber for West Fraser before retiring to take over the family restaurant, said Trump had gone too far.

“It’s not a proper way of doing business between countries,” Cyca said. “We don’t have that problem with any other country, like China or Japan. The price is the price, and they pay it. It sort of rubs everybody the wrong way.”

Gosselin told him Trump did not fully realize the impact a trade war would have on towns such as Quesnel.

“It’s not good,” Gosselin said. “It’s going to hurt a lot of people. Jobs, families, people going bankrupt. People will be living on the street. He doesn’t seem to realize that. He doesn’t give a s—.”

Cyca argued that the whole rationale for NAFTA was to avoid disputes such as this — although softwood lumber is one of the many products exempt from the treaty.

“That’s why we put NAFTA in there, so there wouldn’t be no dogfighting,” he said.

Trump on trade

The Trump administration came into office promising harsh treatment for countries that cheat the United States on trade, including renegotiating or withdrawing from NAFTA and slapping tariffs on China, Mexico and U.S. companies that relocate abroad.

Instead, the president withdrew the United States from the Trans-Pacific Partnership — a largely symbolic move, given that Congress was unlikely to ratify it — and announced executive orders directing his Cabinet to study trade-related matters.

But as he nears the close of his first 100 days in office, Trump has moved more forcefully on trade. The Commerce Department announced last week that it was undertaking an investigation into whether steel imports compromise U.S. national security — an accusation that, if supported by Congress’s findings, could lead to tariffs or other punitive trade measures.

Then on Monday came the new tariffs on softwood lumber.

U.S. lumber companies argue that Canada unfairly subsidizes its exports, since almost all the trees Canadian companies cut are on government land. The Canadians say that their operations are just more efficient and that American claims are a naked effort at protectionism.

Those claims are backed up by a major U.S. construction industry group that argues that the biggest loser in the trade tiff will be the American consumer. Much of Canada’s high-grade lumber goes to build new U.S. homes.

“Clearly, protectionist measures to prop up domestic lumber producers at the expense of millions of U.S. home buyers and lumber users is not the way to resolve the U.S.-Canada trade dispute or boost the U.S. economy,” Granger MacDonald, the chairman of the National Association of Home Builders, argued in a statement Tuesday.

Timber tensions

The two countries had managed to keep those tensions in check for roughly a decade under an agreement in which Canada voluntarily limits exports and the countries promise not to sue each other. But the pact expired in October, and the complaints and lawsuits from the U.S. timber industry resumed.

“Everybody expected there would be duties — the question was just how much,” said Kris Hayman, the president and chief executive of C&C Resources, a family-owned company that makes wood paneling and other products.

D’Arcy Henderson, a regional manager for West Fraser, said the company is diversified enough to ride out the new tariffs. The company is pushing into growing consumer markets in Japan, China and India, and it is acquiring mills throughout the American Southwest, where the growing season is longer.

But Hayman said the tariffs would be a challenge for small companies such as his. C&C supplies its products to U.S. stores such as Lowe’s and Home Depot, which are in a position to find cheaper sources.

The town is still scarred by the shutdown of the logging and milling operation that came as a result of the 2008 global financial crisis — when Gosselin was forced to move back in with his parents.

Residents fear another shuttered mill could send more away from the town and sap its vitality.

Then there is the additional threat posed by climate change. While the forests that surround Quesnel appear almost endless, they are actually running out.

Years ago, mountain pine beetles moved into the surrounding forests, nesting in the trees and cutting off their flow of nutrients. The epidemic killed roughly 80 percent of the area’s lodgepole pines, the species the town’s lumber industry depends on.

For people such as Gosselin, the tariffs — and the further threat of a trade war — are just too much, a reminder that workers are operating in an environment where there are powerful outside forces.

“What can we do? We’re just a tiny little speck of dust on a map. We just go with the flow,” he said. “Yeah, Trump, he’s the man. . . . What can you do? Hold on for the ride. I just hope it turns out better for us.”

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Trump says U.S. will renegotiate trade pact with Canada, Mexico

By Ayesha Rascoe and David Lawder
| WASHINGTON

President Donald Trump said on Thursday he pulled back from the brink of killing the 23-year-old trade pact with Canada and Mexico after requests from their leaders and expressed optimism about winning better U.S. terms in a renegotiated deal.

Trump, during a White House appearance with Argentine President Mauricio Macri, said terminating the North American Free Trade Agreement, a pact he has long condemned as unfair to the United States, “would be a pretty big shock to the system,” though he had been planning to do so within two or three days.

Hours after White House officials disclosed on Wednesday that Trump and his advisers had been considering an executive order to withdraw from NAFTA, he said he received telephone calls from Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau.

“They asked me to renegotiate. I will,” Trump said. “And I think we’ll be successful in the renegotiation, which frankly would be good because it would be simpler” than killing NAFTA.

Trudeau said he had warned Trump of the disruption that pulling out of NAFTA would cause. Mexico’s foreign minister said a good outcome for all three countries was possible under a new accord.

News of the possible U.S. pullout from NAFTA rattled financial markets on Wednesday. Relative calm returned on Thursday after Trump’s comments, and the Mexican peso strengthened 0.86 percent against the U.S. dollar while the Canadian dollar was flat versus the greenback.

Mexico, Canada and the United States form one of the world’s biggest trading blocs, and trade disruptions among them could adversely affect agricultural, automotive, energy and other sectors in all three countries. NAFTA erased most trade and tariff barriers between the neighbors, but Trump and other critics have blamed it for deep U.S. job cuts.

Trump campaigned for president last year on a pledge to pull out of NAFTA if he could not renegotiate better terms. The United States went from running a small goods trade surplus with Mexico in the early 1990s to a $63-billion deficit in 2016. On Thursday he said NAFTA had been “horrible” for the United States but very good for Canada and Mexico.

“If I’m unable to make a fair deal … for the United States, meaning a fair deal for our workers and our companies, I will terminate NAFTA. But we’re going to give renegotiation a good strong show,” Trump said.

‘GET TO WORK’

Trudeau, speaking at a news conference in Saskatchewan, said he had urged Trump not to withdraw from the trade pact and warned that doing so “would cause a lot of short- and medium-term pain.”

“That’s not something that either one of us would want, so we agreed that we could sit down and get to work on looking at ways to improve NAFTA,” Trudeau said.

Canada sends 75 percent of all its exports to the United States. On Tuesday, Trump said he did not fear a trade war with Canada, a day after his administration moved to impose tariffs on Canadian lumber.

In Mexico City, Mexican Foreign Minister Luis Videgaray said Pena Nieto had called Trump on Wednesday and spoke with him for about 20 minutes in a conversation focused exclusively on the looming talks over NAFTA’s “renegotiation and modernization.”

Trump has accused Mexico of luring away American factories and jobs with cheap labor and other advantages enabled by NAFTA. During the presidential campaign he accused Mexico of sending rapists and criminals into the United States, and as president plans a U.S.-Mexico border wall.

“I believe that all the conditions to reach a good negotiation exist, that will suit Mexico … and that is also good for the region, for both Canada and the United States,” Videgaray told local broadcaster Televisa.

Trump’s scorn toward multinational trade deals, part of his nationalist political message, appeals to Americans who feel such pacts have cost Americans jobs. He has said businesses that choose to move plants outside the country would pay a price.

Trump made pulling out of the 12-nation Trans-Pacific Partnership, negotiated by his Democratic predecessor Barack Obama, one of his first major acts after becoming president in January.

Several agriculture lobby groups in Washington were told U.S Agriculture Secretary Sonny Perdue, confirmed by the Senate on Monday, met with Trump on Wednesday evening to dissuade him from withdrawing from NAFTA.

American Soybean Association President Ron Moore said, “When you’re talking about $3 billion in soybean exports a year, any threats to withdraw from agreements and walk away from markets makes farmers extremely nervous.”

Formal NAFTA talks likely will not get started until August. The U.S. Trade Representative’s office must first send Congress a notice that starts a 90-day consultation period preceding any negotiations. A USTR spokeswoman said the notice would not be sent until the Senate confirms Trump’s nominee for trade representative, Robert Lighthizer.

(This story corrects paragraph 2 to show Trump had been planning, making clear he was no longer planning to terminate the pact within two or three days)

(Additional reporting by Susan Heavey and Mohammad Zargham in Washington, Veronica Gomez and David Alire Garcia in Mexico City, David Ljunggren in Ottawa, and P.J. Huffstutter and Mark Weinraub; Writing by Will Dunham; Editing by Nick Zieminski and Tom Brown)


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Front-runner unexpectedly withdraws from Canada Conservative Party race

By Andrea Hopkins



OTTAWA (Reuters) – The front-runner in the race to become the next leader of Canada’s Conservatives dropped out on Wednesday mere hours before the final televised debate, stunning party insiders and throwing the contest open to two remaining favorites.



Reality TV star and venture capitalist Kevin O’Leary said he was withdrawing from the 14-way contest to replace former Prime Minister Stephen Harper because he had not gained enough support in the French-speaking province of Quebec, where elections are often decided.



“I worked really hard and I couldn’t move the needle” in Quebec, O’Leary told reporters, standing next to Maxime Bernier, a former foreign minister whose candidacy O’Leary said he would support.



The Conservative Party of Canada will decide its new leader by May 27 to face Liberal Prime Minister Justin Trudeau in the 2019 national election.



“We are going to bring our forces together now so that we can win this race and then beat Justin Trudeau in 2019,” said Bernier, a Quebec libertarian who was neck-and-neck with O’Leary for much of the race.



O’Leary, who gained fame as a brusque dealmaker on the reality show “Shark Tank,” had no political experience and tenuous ties to the party but stole the spotlight because of an outsized media profile and the support of Canadians who saw the businessman as a breath of fresh air.



Bernier, by contrast, is a second-generation politician and free-market champion whose previous brush with fame came when he was dumped from Harper’s cabinet after leaving confidential documents at the house of a girlfriend with links to organized crime.



The endorsement by O’Leary will boost Bernier’s chances, with populist immigrant-skeptic Kellie Leitch and current members of Parliament Andrew Scheer and Erin O’Toole representing Bernier’s biggest threat.
  Continued…


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Canada reports progress with U.S. on lumber as Trudeau, Trump talk again

By David Ljunggren
| OTTAWA

Canadian Prime Minister Justin Trudeau and U.S President Donald Trump spoke again about bilateral trade on Wednesday, the second conversation in as many days between the two leaders amid strains over softwood lumber and dairy.

Trudeau’s office declined to say who initiated the phone call and revealed no details about the tone or content of the conversation, saying only that Trudeau continued to emphasize the importance of the trade to U.S. jobs.

It is extremely rare for the two to speak two days in a row, highlighting tension between their countries.

“The two leaders continued their dialogue on Canada-US trade relations, with the Prime Minister reinforcing the importance of stability and job growth in our trade relations,” Trudeau’s office said in a statement.

Trump is considering issuing an executive order to pull the United States from the North American Free Trade Agreement with Canada and Mexico, a senior administration official said on Wednesday, a move that could unravel one of the world’s biggest trading blocs.

News of the possible executive order, first reported by Politico shortly before midday, came two days after U.S. Commerce Secretary Wilbur Ross announced tariffs on Canadian lumber exports, which U.S. producers complain are unfairly subsidized. The move triggered the fifth bilateral dispute over Canadian lumber in less than 40 years.

Canadian Foreign Minister Chrystia Freeland said the two nations have made progress in recent days on the softwood lumber dispute, “but we are not there yet,” adding that the United States should treat Canada with respect, given that Canada is a major supplier of softwood.

Freeland said she had long conversations with Ross on Sunday and Monday about lumber.

“We do believe a negotiated deal is achievable. There is a deal to be had … but we are also absolutely prepared to fight this out in the courts,” she said.

Freeland, who described the tariffs as “punitive, unfair and just plain wrong,” said Canada would strongly defend its domestic industry.

Stocks in Canadian lumber firms, which rose on Tuesday on relief the duties had not been higher, posted mixed results. Resolute Forest Products Inc shares closed up 15.0 percent on Wednesday while West Fraser Timber Co Ltd fell 2.6 percent.

In Washington, the National Association of Homebuilders said the duties would hurt American wages and raise house prices.

The premier of the Pacific province of British Columbia, a major lumber-producer, urged Ottawa to retaliate by banning exports of U.S. thermal coal to Asia via Vancouver. A shortage of port capacity means some U.S. coal firms rely on Canada.

In an open letter to Trudeau, premier Christy Clark cited the “unfair and unwarranted” lumber duties.

In Quebec, another lumber province, softwood negotiator Raymond Chretien said the two sides should try to settle the dispute ahead of the NAFTA talks.

“If lumber is not resolved (before NAFTA) the atmosphere will be so polluted,” he said in an interview.

(Additional reporting by Allison Lampert in Montreal and Andrea Hopkins in Ottawa; Editing by Chris Reese and Tom Brown)


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CANADA STOCKS-TSX slips on U.S. trade worries; Home Capital slumps

(New throughout, updates prices and market activity, adds
portfolio manager comment, details on White House draft order on
NAFTA and BCE)

* TSX closes down 95.65 points, or 0.61 percent, at
15,649.54

* Five of the TSX’s 10 main groups end higher

* Home Capital falls nearly 65 percent to C$5.99

By Fergal Smith

TORONTO, April 26 Canada’s main stock index
pulled back on Wednesday from a 2-month high the day before,
pressured by a plunge in the shares of Home Capital Group Inc
and investor worries about Canada’s trade relationship
with the United States.

The White House is considering a draft executive order to
withdraw the United States from the North American Free Trade
Agreement, a trade pact with Canada and Mexico, a senior Trump
administration official said.

“I think they’re (investors) being a little cautious about
Mr Trump and maybe what he is going to do to Canada,” said John
Kinsey, portfolio manager at Caldwell Securities.

U.S. President Donald Trump has recently ramped up criticism
of Canada, saying last week that Ottawa’s protection of its
dairy industry was “unfair.” This week he ordered 20 percent
tariffs on imports of Canadian softwood lumber.

Home Capital plunged nearly 65.0 percent to C$5.99 after the
alternative lender said it would secure a C$2 billion (credit
line to shore up its shrinking balance sheet.

The overall financials group declined 1.3 percent even as
the Trump administration proposed slashing business taxes, which
could provide a boost to some Canadian banks that have
operations in the United States.

Toronto-Dominion Bank fell 1.5 percent to C$65.77.

Other influential decliners included Burger King and Tim
Horton parent Restaurant Brands International, which
fell 2.9 percent to C$77.02 despite reporting profit and revenue
that beat expectations.

The energy group retreated 1.1 percent even as oil prices
rebounded from early losses after U.S. government data showed a
larger-than-expected falloff in crude inventories.

U.S. crude oil prices settled 6 cents higher at $49.62 a
barrel.

The Toronto Stock Exchange’s S&P/TSX composite index
closed down 95.65 points, or 0.61 percent, at
15,649.54. Five of its 10 main groups ended lower.

Shares of BCE Inc advanced 1.7 percent to C$62.70
after Canada’s largest telecommunications company reported a
better-than-expected quarterly profit, driven by an increase in
net postpaid subscribers.

Teck Resources Ltd advanced 0.5 percent to
C$28.97 after it said it will double its dividend payout.

Canadian retail sales fell more than expected in February,
dragged down by lower vehicle purchases and cheaper prices for
gasoline at the pump, but the decline did not alter expectations
for strong economic growth in the first quarter.
(Additional reporting by Alastair Sharp; Editing by Nick
Zieminski and David Gregorio)


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Canada falls in press freedom ranking

Canada’s press freedoms are under threat, according to the latest World Press Freedom Index released by Reporters Without Borders.

Canada dropped four spots to number 22 on the list that ranks 180 countries based on how they treat journalists.

A number of high-profile incidents of police action against journalists in Canada have raised concerns.

Press organisations have called on the government to shore up laws protecting free speech and media sources.

The UK was ranked 40, down five spots, and the United States 43, down two spots, on the same list.

Last fall, Canadian Journalists for Free Expression slammed the “massive culture problem in our policing and surveillance agencies” after it was revealed that Quebec police spied on 10 journalists. Their criticism came shortly after journalist Justin Brake was arrested for covering a protest in Newfoundland.

  • Journalists call on Canada to shore up press freedom
  • Montreal police hacked journalist’s phone

In March, the federal Court of Appeal ruled that Vice News journalist Ben Makuch had to turn over all his communication with accused terrorist Farah Shirdon, including texts, to Canadian police.

His lawyer argued the ruling will have a “chilling effect” on the media, by turning journalists into police sources.

“This has all happened in the last year, so it doesn’t surprise me that we went down” on the list, Mr Makuch told the BBC.

“We really need to start taking this more seriously.”

He believes that law enforcement has been “pressing their powers” in an age where the secret to solving many cases is getting access to digital information. At the same time, the RCMP has complained about current roadblocks to obtaining digital information, such as the widespread use of encryption.

Mr Makuch and other journalists have pushed for the government to pass a “shield law”, which would protect journalists from being forced to reveal their sources. A similar law exists in most states in the US.

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