WHITEFISH — Canada’s relationship with the western states took top billing at the 33rd annual Western Governors’ Association meeting Monday in Whitefish.
The three-day long meeting brought together governors from seven western states, Hawaii and the North Mariana Islands to discuss a diverse slate of issues ranging from the challenges of cybersecurity on power grids to the economic force created by the explosive growth of microbreweries across the West.
But the first roundtable of the session focused on the longstanding, and sometimes contentious, relationship between the neighbors intertwined by a common history, trade, culture and national security.
“The importance of our relationship with Canada cannot be overstated,” said Montana Gov. Steve Bullock. “Trade with Canada totals $662 billion. We are each other’s largest export markets. There are many nations many consider friends, but I dare say that no bilateral relationship is more important than the relationship we share with Canada.”
The discussion was led by Saskatchewan Premier Brad Wall and Canadian Ambassador to the U.S. David MacNaughton.
The issues ranged from the need to tweak the North American Free Trade Agreement, the challenges of finding common ground on the softwood issue and the potential for the two countries to work together to develop clean coal applications that could open new economic doors in energy-starved countries like India.
Both of the Canadians said it’s important that those who understand the value of the relationship between the two countries spread the word to citizens and other stakeholders and not allow heated rhetoric to drive the discussion.
The challenge to NAFTA is a prime example. President Donald Trump has called NAFTA the “worst” trade deal in history and has threatened to back out of it.
Wall said that not everyone understands that Canada is the largest export market for six of the western states included in the association and is in the top three for all the others. Last year, Wall said the U.S. had a trade surplus with Canada, including exporting more steel than it imported from its northern neighbor.
“All of you folks understand the importance of this relationship with our two countries,'' Wall said. "Sometimes on both sides of the border we are too complacent about it. We take it for granted.
"So when the rhetoric happens on both sides of the border that heats things up on the protectionist side of things, maybe our stakeholders and citizens aren’t as equipped as they could be to defend what’s been a very dynamic and mutually beneficial trade relationship,” he said.
The relationship between the two countries is integrated in ways that many people don’t fully appreciate.
Wall said a Regina, Saskatchewan-based farm implement dealer recently opened up a plant in North Dakota that will sell the equipment it makes in Canada. The oats raised there will be sold to Quaker to make the oatmeal that will end up on store shelves on both sides of the border.
“That’s how integrated it is and that’s what's at stake if we’re not careful, if we don’t speak out about our relationship,” he said. “It’s not perfect. We have our irritants. We always have. But they are minor compared to the staggering benefits of free trade, including NAFTA with all of its imperfections.”
Wall said there’s agreement in Canada that it’s time to modernize NAFTA. The language about agriculture and crops is outdated. Health and safety issues need to be updated. There are changes that could be made.
“To improve it where we can, even if we don’t agree on everything that needs to be tweaked,'' he said. "But not lose it to the core of heated rhetoric on either side.''
The premier also said there’s an opportunity to cooperate on energy.
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“Right now we import oil into Canada,” Wall said. “We have the third largest oil reserves on planet Earth and we import oil.”
About half of what the United States exports goes to Canada. The remainder comes from places like Saudi Arabia and Venezuela.
“I think that this continent, with its huge oil reserves and huge energy reserves, should do more than talk about aspiring for energy independence,” Wall said. “We should take the steps to get there.
"We should be free of needing any oil from countries that are a few generations removed from public beheadings.”
Saskatchewan has the world’s first commercial-scale coal plant that captures carbon and sells it to the oil industry for oil recovery. It also has a plant that burns coal two times cleaner than natural gas.
But Wall said that first-generation technology is expensive.
The Canadians and governors talked about the potential of working together to further develop technologies that are showing promise toward the potential of adding clean coal to the energy mix.
“We are focused on research to make our considerable coal resources part of our sustainable future,” MacNaughton, the Canadian ambassador, said. “The challenges we’re facing environmentally from habitat perspective are very similar to what I’ve heard here in just the last little while. There’s much that brings us together.”
Idaho Gov. Butch Otter wanted to know what was holding up a new memorandum of understanding between the two countries on softwood lumber.
In April, U.S. Commerce Secretary Wilbur Ross announced a new, 20 percent tariff on imports of Canadian softwood lumber. The U.S. imports about $5.66 billion of softwood lumber from Canada annually. American lumber producers have complained that Canada’s system of charging for logs coming off Canadian government-owned lands amounts to an unfair subsidy.
Otter said the U.S. government attempted to renegotiate a new agreement when the last one expired in 2015, but was unsuccessful because Canada wouldn’t consider a proposal to put a limit on its market share in this country.
MacNaughton said Canada’s efforts to engage with the Obama Administration were met with frustration and said he hoped there will be more flexibility offered by the new Trump Administration.
The issue is challenging in Canada because of its potential to affect entire communities, MacNaughton said. The lumber mill is the only industry in some of those towns. "We're talking real people’s jobs and real community survival.”
At this point, MacNaughton said the new government in British Columbia is not offering any discussion on market share or quotas.
MacNaughton said he was impressed by the western governors' ability to work closely together on a variety of issues.
“It is a great testament to you that you all work so hard together and get along well together,” MacNaughton said. “I spend a lot of my time in Washington. I haven’t noticed an awful lot of that there.
"It is a great testament to your focus to doing what is necessary to help your people and make your states better and make your country better,'' he said.