Canadian Chamber of Commerce CEO visits Richmond

Canadian Chamber of Commerce CEO Perrin Beatty was in Richmond this week promoting the country’s trade relationship with Virginia at the same time U.S. President Donald Trump launched his first attack in a potential trade war with America’s northern neighbor.

Trump on Monday announced tariffs of up to 24 percent on Canada’s softwood lumber, which is used heavily in the U.S. homebuilding industry. The announcement came a week after Trump decried unfair trade policies in Canada affecting U.S. dairy producers.

But Beatty said Wednesday that his reception in Virginia had been anything but acrimonious.

He met with Gov. Terry McAuliffe, Virginia Secretary of Commerce and Trade Todd Haymore and Barry DuVal, president and CEO of the Virginia Chamber of Commerce.

Canada is Virginia’s top trade partner, with annual bilateral trade worth $4.8 billion. 

“This relationship is important to Canada as well,” Beatty said. “Virginia is a destination for our investment, and our goods and services, and for about 800,000 tourists a year. It’s a win-win relationship.”

Virginia’s primary exports to Canada include tractors, paper and paperboard, plastics, paper and printing machinery, and motor vehicle parts. And Beatty sees growth opportunities in software, research and development at universities and tourism.

“It was great to see such a strong partnership between the government and business community,” says Beatty, a former Cabinet minister who also served in the Canadian Parliament.  “When you talk to the governor and the secretary of commerce, they have such a good understanding of the importance of the relationship.

“When I talk to members of the Canadian business community, I’m able to say Virginia’s open to business and that this is a good place for us to be looking for sales and to purchase.”

But Beatty’s visit comes against the backdrop of several attacks from Trump over trade.

Beatty plans to visit several U.S. states this year to highlight the importance of the U.S.-Canada relationship to both economies. Visits with local and state leaders are important to highlight trade between the countries, says Beatty.

“This is the most successful trading relationship anywhere in the world, and there’s potential for us to grow considerably more,” Beatty said.

“State government and municipal governments understand what’s happening on the ground, and when they speak to members of Congress or to senators or to the president, and say, ‘Look, it’s important that we recognize what this relationship does here in this state for trade prosperity and jobs,” Beatty said.

Canada and the U.S. have long had disputes over the trade of softwood lumber and dairy products.

Canadian Prime Minister Justin Trudeau and former President Barack Obama last year failed to reach an agreement to extend a truce on softwood lumber that effectively ended in 2016. The U.S. lumber industry says Canada unfairly subsidizes its lumber industry, which the Canadian government denies. About 30 percent of lumber used in the U.S. is imported from Canada.

Beatty points out that the U.S. National Association of Homebuilders released a statement decrying the tariffs. The association says that lumber prices in the U.S. have increased 22 percent in the first quarter of 2017 because of the expiration of the trade agreement governing lumber, adding almost $3,600 to the cost of building a new home.

As far as the dispute over dairy trade between the two countries, Canada has long had high tariffs on U.S. dairy products. The U.S. dairy industry, however, has imported ultrafiltered milk, which is used to create cheese and yogurt.  A new policy change last year, however, incentivized dairy farmers to create a lower-priced industry milk, and U.S. imports sharply fell.

On that note, Beatty points out that the U.S. has a surplus of $400 million in the dairy trade. “It’s hard to understand what the benefit is of a trade war [on dairy products] when you’re running a $400 million surplus today,” Beatty says.

But beyond the lumber and dairy issues, Beatty is concerned the actions could taint the relationship as well as future negotiations regarding the North American Free Trade Agreement.

“All trade is related,” Beatty said. “It contaminates the negotiations you have on NAFTA or other bilateral issues.

“This is very different form when I was in government, and we negotiated NAFTA with Ronald Reagan,” says Beatty. “The goals was: ‘How do we make all countries succeed? The approach today seems to be somebody has to lose for somebody to win and that makes is it very difficult.’”

Trump announced Wednesday he does not plan on withdrawing from NAFTA, but said Canada, the U.S. and Mexico had agreed to enable renogtiation of the deal.

Beatty says we should be encouraging more trade between the two countries, which are natural trading partners. “It’s in the in best interest in the U.S.,” says Beatty. “As a Canadian I would far sooner do business with the U.S. than with any other country. We have the same system of laws, we follow the rule of law; we speak the same language, and we’re tied together by security.”