EDITORIAL All’s well that ends well

A bitter Canada-U.S trade dispute over potash appears to have been amicably settled, at least for the time being, with both parties apparently satisfied. But it came just in the nick of time, for if an agreement had not been reached, the United States Commerce Department was ready to issue a final ruling on that country’s imposition of crippling import duties against Saskatchewan’s big producers.

Canada is the world’s leading exporter of potash, an all- important ingredient of fertilizer, most of which is produced in Saskatchewan — that province’s third largest industry. But we consume only about 5% of its output, the bulk of which goes into the U.S. market.

The fuss started when two relatively small but vociferous producers at Carlsbad, New Mexico, charged that the big, bad Canadian mines were dumping potash into their market at less than production cost. Whose production? Unquestionably, Saskatchewan’s producers do hold a competitive advantage. But that’s because they are newer, larger and more efficient mines, with a higher grade of ore with much lower production costs. Indeed these Canadian mines are the best in the world, with almost unlimited ore reserves good for hundreds of years.

On the other hand those U.S. producers are old and tired, with a limited remaining life expectancy. They couldn’t possibly meet all of Uncle Sam’s needs.

Much the same situation threatens Saskatchewan’s uranium producers, likewise the world’s best.

What is especially galling about these U.S. protectionist moves against its biggest and friendliest trading partner contradicts the very free enterprise system that Uncle Sam espouses, and at the very time they are talking up free trade. However as it turned out, that selfish move by the U.S. potash producers also hit hard at U.S. farmers by sharply boosting fertilizer prices in that country. With an election coming up there, Washington listened and backed off. It’s all politics — economics be damned.

The new agreement does not set any specific prices that must be charged by Canadian producers. Rather it simply calls for us not to sell potash into the U.S. market at prices deemed by U.S. authorities to be unfairly low. Doesn’t this look like another mouse and elephant marriage? We carry the dowry, they the economic clout.