Travels in Canada - Part Four: Nova Scotia — A C.O.O.L. Summer?

Dateline: Halifax, NS, June 10, 2015

As is often the case at these types of forums, I was asked for my thoughts on the state of the relationship between Canada and the United States, or more specifically, between the Prime Minister’s Office and the Oval Office. Very few people really know the answer to that question but the fact that so many are asking leads me to think that Canadians have grown nervous about our cross-border ties.
 
The speeches all remain the same of course — “world’s largest trading relationship” or “we are neighbours and friends” — but many in the business community wonder if the relationship has possibly gone off track. From the delay of State Department permits for the XL pipeline to new Buy American constraints in US spending bills, Canadians wonder whether there is in fact a commitment to a North American cross-border marketplace.
 
In the weeks to come, we may see yet another indicator of the health of the relationship when Washington is faced with responding to the World Trade Organization’s (WTO) ruling on US country of origin labeling (COOL) laws. Since nearly the day they were implemented, those rules have almost destroyed a vibrant cross border meat industry.
 
For years Ottawa argued that COOL violated international trade rules. The WTO agreed. And four times Washington has appealed and four times they lost. What’s ahead is now the question everyone is asking – in Ottawa, in Washington and surely in every major capitol of the trading world. 
 
Ironically, as negotiators in Ottawa and Washington set their sights on the next round of the multilateral Trans-Pacific Partnership Agreement, they must first deal with this festering bilateral trade irritant right here in their own backyard.
 
The ball is in Washington’s court. More specifically, it is in Congress’ court. And everyone is waiting and watching. A key committee of law makers on the US House Agriculture Committee voted in May by a 38-6 vote to repeal the offending COOL law. The full House is set to vote on the matter later this month. That may be the easy part. If it passes that chamber, it will face a far more uncertain future in the Senate where consensus will be hard to find.
 
Washington insiders will tell you that COOL was and remains all about domestic farm politics. That may be so, but the ramifications go far beyond the ranches of America’s heartland. Official Ottawa is making it very clear that Canada will react swiftly. No ambiguity there. Unfortunately for Canadian businesses executives, the unpredictability of the US political machine is certain to mar summer time plans.
 
Meanwhile, the “feel good” needle in the relationship barometer will continue to lurch and possibly even stall. 
 
If you would like to be part of the conversation and would like to know more about COOL and what this might mean for your business interests, join Matt Nolan of Arent Fox LLP on June 23^rd for an online conversation organized by IE Canada. For full details about this event, please click here.

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These short briefs are designed to share with our Canadian readers what she is hearing from businesses “on the ground” and their issues in regard to the US marketplace.

For our clients, the US marketplace remains an important destination — some industry sectors have particular challenges while various regions in Canada have differing border infrastructure needs. Following each trip, Birgit hopes to report on the regional issues of the day and how the US Administration and the new Congress might address those needs and challenges. We hope these alerts are of interest to clients across Canada and across industry sectors.