Nothing Like Pissing Off The Few Friends We Have

Canada's Smiles for Camera Mask Chill in Ties With U.S.

By JOEL BRINKLEY

OTTAWA, Oct. 24 - Secretary of State Condoleezza Rice arrived here on Monday evening for meetings with Prime Minister Paul Martin, who has been inveighing against the United States in recent days, saying it is making a "mockery" of trade rules, angering and humiliating Canada.
Perceived slights and misunderstandings are normal features of the United States' relationship with Canada. But Canadians and outside experts say Ottawa's view of Washington now is as strained and combative as anyone can remember.

Partly as a result, Canada is working hard to build up its relationship with China, whose president, Hu Jintao, visited here last month. Some officials are saying Canada may shift a significant portion of its trade, particularly oil, from the United States to China.
Within a few years, China could well import one-quarter of the oil "that we currently send to the United States," John McCallum, Canada's minister of natural resources, said in a television interview last week, just after returning from Beijing. He added that the current trade fight with Washington, over steep import duties on lumber from Canada, gave the negotiations with China "an extra little push."

A senior State Department official, in an interview on Monday, noted that for the United States there was "a strategic advantage in getting oil from Canada," which is believed to have the world's second-largest reserves. "But petroleum is a fungible resource, and we are going to fill our energy needs from wherever we can get oil."

Ms. Rice, speaking to reporters on the plane, said she would emphasize the positive aspects of the relationship in her meetings with Mr. Martin and other officials. Specifically, she and aides said, she will thank Canada for aid it provided to the Gulf Coast after Hurricane Katrina, for the deployment of Canadian troops to Afghanistan and to Jordan to train the Iraqi military, and for its strong cooperation on security issues after the attacks of Sept. 11, 2001.

Ms. Rice said she was "absolutely prepared to discuss" the trade debate, "but it is important to keep it in perspective." Lumber, officials said, accounted for only 3 percent of the trade; over all, the senior official noted, Canada had a $77 billion annual trade surplus with the United States.
The most important source of Canada's anger is the import duties, totaling $4 billion in recent years, that the United States has imposed on Canadian softwood lumber. The United States says Canada subsidizes its lumber industry, forcing the Americans to impose the duties. But Canada has appealed under rules set up in the North American Free Trade Agreement, and has won every ruling, culminating in a final judgment in Canada's favor in August.

The United States has ignored those legal losses and taken the case instead to the World Trade Organization, which has ruled in Washington's favor. But Canada contends that the W.T.O. is not the proper legal forum and continues to demand a refund of the $4 billion, which under American law is to be paid directly to the lumber companies that are said to have been harmed.
"Instead of honoring" the final Nafta ruling in August, "the United States has decided to ignore it," Mr. Martin said in an unusually tough, uncompromising speech to the Economic Club of New York on Oct. 6. "The duties must be refunded." Washington's behavior, he added, is "nonsense, a breach of faith." The Canadians "are upset for good reason," said Phillip L. Swagel, who was chief of staff for the White House Council of Economic Advisers until earlier this year. "They signed a treaty with us, and we are not abiding by it. That $4 billion should never have been collected in the first place."

American officials note that Mr. Martin is nearing a re-election campaign - and that standing up to Washington is always a useful campaign tactic.

The United States responds to the Canadian arguments by urging negotiations, but Canada's view is that the time for negotiation is over. The case went to trial, and Washington lost.
"I don't think the time for negotiation has passed," Ms. Rice said.

Mr. Martin, in a Canadian television interview on Monday, said he would push Ms. Rice to resolve the issue. "When we have a disagreement with the Americans," he said, "it is not friendship that should get in the way of pointing out to them that friends live up to their agreements."

Ms. Rice said, "We would like to get this resolved."

Behind all of this, however, officials acknowledge that the American decision to ignore Canada's legal victories plays directly into the Canadian conviction that the United States simply does not care what Canada thinks. Canadians could not help but notice that Ms. Rice's first trip to Canada came more than eight months after she took office and after she had visited 42 other nations.

The lumber dispute is a topic of daily news coverage here, while "there are not a lot of people" in the United States "who know or care what the Canadians are saying about this," said Susan E. Rice, who was an assistant secretary of state in the Clinton administration.