Canada political pressures force PM's hand on U.S. trade disputes

Mon May 8, 2017 6:13pm EDT
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By David Ljunggren

OTTAWA (Reuters) - Canada escalated a trade dispute with United States by making threats Washington called inappropriate in part because Prime Minister Justin Trudeau is under pressure to secure support in a key region ahead of the country's 2019 elections.

Washington last month slapped tariffs on timber imports, prompting Trudeau to say he was considering a ban on exports of U.S. coal through Pacific ports.

As well as lumber, the administration of President Donald Trump has targeted Canadian dairy farmers, while Boeing Corp (BA.N: Quote) launched a trade challenge against Montreal-based planemaker Bombardier Inc (BBDb.TO: Quote).

All three are vital to the economy of Quebec, Canada's second most-populous province. And Quebec is seen as vital to Trudeau's hopes of maintaining a strong grip on power in a national election set for October 2019.

As contentious talks on renegotiating NAFTA draw closer, Trudeau has little choice but to defend dairy farmers and offer help to the lumber industry, even though that is likely to prompt fresh U.S. challenges.

"Quebec is the key," said one senior Liberal organizer.

The predominantly French-speaking province holds 78 of the 338 seats in the House of Commons and Liberals acknowledge they need to win extra seats there to offset expected losses elsewhere in 2019.

The challenge is that they captured 40 seats in Quebec in 2015, which was far more than expected.   Continued...

FILE PHOTO: A worker checks a truck with a load of logs at Sqomish Forestry LP in Squamish, British Columbia, Canada on April 25, 2017.  REUTERS/Ben Nelms/File Photo