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Bill Virgin: Forget TPP. Ready for a fight over lumber?

Contributing writer

Weyerhaeuser logs destined for China are loaded onto the visiting cargo ship Sun Ruby at the Port of Olympia's Marine Terminal in 2015.
Weyerhaeuser logs destined for China are loaded onto the visiting cargo ship Sun Ruby at the Port of Olympia's Marine Terminal in 2015. Staff file, 2015

Who says Donald Trump can’t bring people together and make unlikely alliances? Less than a week into his new administration, he managed to garner praise from both labor and some business groups for one of his major policy initiatives.

He did so by officially scuttling U.S. participation in the Trans-Pacific Partnership, a trade agreement involving a dozen nations that had been negotiated and promoted by the Obama administration.

TPP was likely doomed no matter who got elected president. Trump was outspoken against trade deals generally. Bernie Sanders was opposed to TPP, and his success in the primaries forced Hillary Clinton to denounce the trade pact as well, despite having served in the administration that agreed to it.

Still, it was striking to witness the range of expressions of approval, especially from labor groups that were certainly not counted in the Trump camp before the election.

Teamsters President James Hoffa Jr.: “With this decision, the president has taken the first step toward fixing 30 years of bad trade policies that have cost working Americans millions of good-paying jobs.”

AFL-CIO President Rich Trumka: “Today’s announcement that the U.S. is withdrawing from TPP and seeking a reopening of NAFTA is an important first step toward a trade policy that works for working people.”

The Alliance of American Manufacturing: “Withdrawing from the TPP is a first step in a long road toward reforming trade policy and we look forward to working with the administration on finding solutions to create trade deals that keep jobs here in America.”

Headline on industry website Plastics Today: “Goodbye, TPP, and good riddance.”

Labor and business found a fair amount to like in the first week of the Trump administration, not just on TPP but with the revival of two oil pipeline projects and an expressed interest in a major infrastructure-spending program (complete with buy-American, hire-American provisions).

But that’s just one week, and one trade deal most had already written off as political toast. Now things start getting interesting and the stakes get much higher as the administration moves on to the North American Free Trade Agreement.

They’re already interesting here in Washington state; as has been hammered into our brains until it’s a mantra, this is one of the nation’s most trade-dependent states.

That looks to be a verifiable assertion by reading the tail fins of airplanes lined up at Boeing Field or watching the ships moving into and out of container and grain terminals along Commencement Bay.

But the real action may be at places such as the truck customs border crossing at Sumas, or along the Burlington Northern Santa Fe line running south from British Columbia, what with Canada being one of the state’s two biggest international trading partners (depending on whether you’re looking at imports or exports involving China, and whether airplanes are included).

Reviving the NAFTA fight has a 1992 feel to it, when Ross Perot was the great political disrupter and he complaining about the “giant sucking sound” of American jobs going to Mexico.

The standard line of thinking about NAFTA is that Trump, who called it “the single worst trade deal ever approved in the United States,” is mainly focused on Mexico and the auto industry. That wouldn’t seem to have much to do with us, since Mexico is well down the list of the state’s trading partners and Washington isn’t much of a player in auto manufacturing. Nor is it evident what specific changes the administration might seek to NAFTA; Wilbur Ross, Trump’s pick for Commerce secretary, says only that “NAFTA issues of concern include rules for country of origin, dispute resolution mechanisms, and simultaneity of concessions.”

What is getting overlooked, however, is that the U.S. and Canada already have a significant trade dispute burbling, one that does matter to this state.

Earlier this month the U.S. International Trade Commission ruled “there is a reasonable indication that a U.S. industry is materially injured by reason of imports of softwood lumber products from Canada that are allegedly subsidized and sold in the United States at less than fair value.”

That’s an argument made by the U.S. Lumber Coalition, an industry group made up of such companies as Weyerhaeuser, Spokane-based Potlatch and Sierra Pacific Industries, which operates mills in Aberdeen, Burlington and Centralia, is building a new mill in Shelton and has discussed putting a new mill in Tacoma.

An existing softwood-lumber agreement between the two countries expired in 2015. In the absence of anything to replace it, Canadian lumber shipments into the U.S. have surged, at the cost of jobs in this country, the industry group says; lumber prices were driven down, it adds, at a time when they should have been going up because of increased demand due to stronger housing construction. It also contends that Canadian exporters are subsidized by provincial governments that own most timber acreage and set stumpage fees.

The significance, benefit and harm of trade deals can be overstated. Trade isn’t going to evaporate because there’s no TPP; renegotiated NAFTA or not, the U.S., Canada and Mexico are still going to do business with each other.

But trade deals do have enormous influence over local regional economies, and what businesses and sectors are rewarded or left behind. Trade deals and politics, as we’ve seen, also are intricately tied together. Those realities are going to pose some interesting choices in the months ahead for politicians, businesses and labor groups in this state.

And we haven’t even gotten to China yet.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

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