Trade briefing for Trump's team flagged Canadian softwood, dairy

A confidential briefing for President Donald Trump's transition team flagged Canada's dairy policies and the "deeply rooted" softwood lumber dispute as trade issues to watch.

Briefing notes from the U.S. Trade Representative's Office (USTR), obtained by CBC News under the United States Freedom of Information Act, outline 17 trade issues or disputes – four of which directly involve Canada. Others involve China, the European Union, Mexico, Ecuador and Colombia.

The document includes a warning in red type at the top of each page that the information is "for the use of authorized representatives of the president-elect's transition team only. Subsequent disclosure of this information to an unauthorized individual, including unauthorized members of the president-elect's transition team, is strictly prohibited."

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While the document is undated, references in the text indicate it was prepared in December 2016.

CBC obtained the document as Prime Minister Justin Trudeau is preparing to meet Trump in coming weeks. On Friday, Trump spokesman Sean Spicer told reporters that a date is expected soon for Trudeau to come to the U.S. to meet Trump.

As the Trump administration settles in and begins to implement its agenda, countries around the world have been watching closely, anxious to see what effect the administration will have on trade.

Seeking clues on what's coming around trade

Canadian Press reported Friday that some are looking for clues in documents such as the U.S. National Trade Estimate's annual report on foreign barriers. The report was cited in a September 2016 policy paper written for Trump's campaign by Wilbur Ross and Peter Navarro – who have both been appointed to senior roles.

According to Statistics Canada, trade between Canada and the United States totaled $769 billion in 2015. The USTR estimates that cross border trade supported 1.7 million jobs in 2014.

On Thursday, former Conservative prime minister Brian Mulroney – a veteran of free trade talks who began negotiations on the North American Free Trade Agreement (NAFTA) – warned Canada will have to work hard to ensure it doesn't become the target of U.S. protectionism.

Issues on administration's radar

There is no guarantee the briefing notes foreshadow what the Trump administration will do when it comes to trade policy. However, they do give some indication of the issues U.S. trade officials put on the radar of Trump's transition team and how disputes were portrayed.

The silences are also telling. For example, while Trump has announced plans to renegotiate NAFTA, NAFTA does not appear on the list of trade issues flagged by USTR officials.

While it outlines problems with Canada's supply management for dairy products, the briefing notes are silent on other supply-managed products such as eggs or poultry.

A key dispute outlined in the briefing note is the fight over softwood lumber. It refers to Canadian lumber being "unfairly subsidized or dumped" and holds out little hope of a speedy resolution.

"The most recent such agreement expired in 2015 and, to date, Canada and the United States remain far apart on a new agreement," officials wrote.

Softwood lumber dispute ongoing

On Jan. 6, the U.S. International Trade Commission (ITC) determined Canadian softwood lumber products had injured American producers.

"If the ITC determines there is a reasonable indication of injury, the investigations will continue and DOC (Department of Commerce) will make its preliminary CVD (countervailing duties) determination in February 2017 and the preliminary determination in May 2017," USTR officials wrote.

Foreign Affairs Minister Chrystia Freeland was unavailable for comment. However, when the ITC ruled, Freeland said the government would defend the interests of Canadian softwood lumber producers.

"Our softwood lumber producers and workers have never been found in the wrong. International bodies have always sided with our industry in the past," she said in a statement.

On dairy policy, the briefing note says Canada is planning changes.

"Canada restricts imports of dairy through supply management," officials wrote. "With CETA and TPP providing additional access for imports, Canada is looking to implement new policies in response to Canadian dairy farmer demands that undermine current U.S. access for dairy products valued at $200 million."

Meat-labelling rules may be raised

The briefing note also warns the U.S. country-of-origin labelling (COOL) legislation imposed on beef and pork may not be completely resolved – even though "Congress amended the law to eliminate mandatory labelling requirements."

"Canada and Mexico acknowledge the repeal but have not formally terminated the dispute."

The World Trade Organization ruled two years ago against COOL, which demanded meat products bear labels describing where the animal was born, where raised and where slaughtered, an expensive system that would drive up the cost of imports.

Canada is also mentioned in the briefing on the Trade in Services Agreement talks, with the comment "As of December 2016, TiSA negotiations were at an advanced stage with the most significant outstanding issues involving the EU's approach to key e-commerce provisions."

However, Canada isn't the only country on the USTR's radar. There are several references to issues involving the European Union and China.

One is Chinese steel and aluminum – a concern Trump echoed on Jan. 24 when he signed an executive order to revive the Keystone XL pipeline project and told observers the pipe should be made in the U.S.

"Chinese steel and aluminum overcapacity has led to excess global supply, harming U.S. producers," officials wrote. "With our industry and economics experts, as well (as) other interested agencies, OGC (Office of General Counsel) is analyzing these issues to determine legal and policy options."

Other trade issues are China's market economy status, access to the Chinese market for U.S. agricultural products and talks on a possible U.S.-China Bilateral Investment Treaty (BIT), which officials said provides a "major opportunity to push for liberalization of China's numerous investment restrictions" and level the playing field with China's state-owned enterprises (SOEs) and favoured private companies.

Issues with China, EU

"As of December 2016, BIT talks were at an advanced stage with the most significant issues relating to SOEs and U.S. investors' market access rights in key services sectors."

Trade issues with the European Union are often rooted in agricultural biotechnology.

"The United States has lost significant market share in the EU over the last 20 years, in part due to the steady growth in regulatory restrictions to U.S. food and agriculture products, including related to agricultural biotechnology, animal drugs, pesticides and pathogen reduction treatments. The United States has been and will continue to work to combat and resolve these barriers."

Elizabeth Thompson can be reached at elizabeth.thompson@cbc.ca