NIAGARA-ON-THE-LAKE, ONTARIO — A looming trade war that could hammer the plastics industry was barely a topic of discussion at a recent summit meeting on cross-border trade.
Nevertheless, participants and attendees at Plastics Summit — Borders without Barriers agreed the dispute could be disastrous.
Canada's plastics industry is a potential target for retaliation if the Canadian government does not relax pending import rules on U.S. magazines.
Press reports based on leaks from government sources indicate that the U.S. Trade Representative would restrict imports of certain plastic raw materials from Canada if the northern government doesn't bend on Bill C-55.
Summit attendees talked off the record about how much harm the retaliation would cause in both countries. But the lack of solid information meant the issue was not on the agenda of the seminar, held April 8 in Niagara-on-the-Lake.
U.S. Trade Representative spokeswoman Amy Stillwell said press reports were speculative, and she would not comment on them. The trade office has not even drawn up a preliminary list, she said in a post-summit telephone interview from Washington.
Rumors abound, however. Lori Anderson, the Society of the Plastics Industry Inc.'s director of economic and international trade issues, said the major story making the rounds is that the trade office would target Canadian imports of two raw materials, three plate, sheet or film products, two types of finished goods and a type of process machinery. The trade office would impose tariffs of 100 percent.
``We expressed concern [retaliation] would hurt U.S. downstream industries,'' Anderson said in a telephone interview from SPI's headquarters in Washington.
Canada's industry would be seriously damaged by such a move, attendees said in conversations at the summit.
Faris Shammas, executive director for Ontario in the Canadian Plastics Industry Association, said in the summit's opening remarks that it would be futile for the two countries to engage in a plastics trade war.
Canada exports about C$9.5 billion (US$6.4 billion) of plastic products to the United States each year, CPIA President and Chief Executive Officer Pierre Dubois said in an interview after the summit.
``The plastics trade is totally out of proportion to the magazine issue,'' Dubois added.
Bill C-55 is aimed to limit ``split-run'' magazines exported to Canada. A few U.S. magazines include some Canadian content to qualify for Canadian advertisements and more want to do it. But Canadian politicians who back Bill C-55 argue that U.S. split-run magazines take advertising dollars away from Canada's magazine industry while providing minimal Canadian content.
The politicians also say the practice amounts to dumping, because U.S. subscribers and advertisers cover most of the magazines' cost. The U.S. magazine lobby opposes high Canadian content in issues exported to Canada, partly because it would increase costs.
Canada's House of Commons passed Bill C-55 March 15 and the bill is now being debated in the Canadian Senate. Meanwhile, U.S. and Canadian negotiators are trying to come to a compromise on Canadian content and advertising. There is no official deadline for the bill's passage.
The North American Free Trade Agreement contains provisions for protecting domestic culture and the bill's proponents argue they can use this loophole. Dubois said it is a commercial issue, not a cultural one, and so it should be handled like other cases of dumping.
SPI's Anderson said the U.S. Trade Representative has several criteria for how it can choose which industries it would target with high tariffs. Targeting an industry important to a country provides good political leverage during negotiations. If a country's exports of a product to the United States are rising, that product could be a target. If a country dominates U.S. imports of a product, it could be targeted.
Besides plastics, the U.S. trade office reportedly is looking at steel, textiles and wood products for potential retaliation.
