Adding fuel to the fire (en francais)

Looks like the Liberals still like to leak like a sieve.

James Travers blows the lid on a story that should keep everyone talking for a while. The question I have after reading this article is what would have happened to the deal if Emerson didn't defect?

With Frank McKenna resigning from Washington and the Liberals busy shredding files it looks like they were ready to let the deal die in the name of partisan politics. They were willing to do it for the election, so why not altogether. Better than the Conservatives benefiting from their work, or so the thinking must have went.

Certainly explains the degree of rage coming from the Liberals. Considering this story is being fed by Liberal sources, it should be interesting to hear the whole story, once it emerges. Having screwed up by not finalizing the deal and with the whole story about to blow, the Liberals have been left with only one option - smear the messenger. Hence the leaks.

And to think I said it would take Emerson 6 months to a year to resolve this.

H/T to MK Braaten

Emerson blocked deal on softwood: Liberals
Feb. 9, 2006. 01:00 AM
JAMES TRAVERS
NATIONAL AFFAIRS COLUMNIST

OTTAWA—Here's the plot of a real-life political thriller: David Emerson defected to the Conservatives this week carrying a multi-billion dollar softwood lumber deal that Liberals, for political reasons, didn't finalize before the federal election.

Former colleagues as well as officials and diplomats privy to the secret, backchannel talks insist Emerson was instrumental in delaying a breakthrough in the decades-old dispute that cost thousands of Canadian jobs. They say the former Liberal industry minister worried that a pre-election announcement would damage Liberal prospects in key British Columbia ridings.

In a telephone interview last night, Emerson confirmed he raised concerns about the proposal after discussions with the B.C. government and softwood industry. But he said it's a "false story" to suggest his resistance was politically motivated and insisted the deal on the table before the election wasn't good enough for Canada then and isn't now.

Liberals and non-partisan sources tell a different story. They say the B.C. government and its powerful forestry industry only lost interest in the plan after meetings with Emerson. His objections, along with concerns in Paul Martin's office that a pre-election deal would stop the then-prime minister from using George W. Bush as a campaign punching bag, convinced Liberals to delay formal negotiations at least until after the January election.

Informally discussed on parallel tracks here and in the U.S., the plan calls for Washington to reimburse about 75 per of the disputed $5 billion in tariffs imposed on Canadian lumber in return for Ontario and Quebec export quotas. In B.C., there would be higher stumpage fees to keep mills in the province's interior from flooding the U.S. market with cheap wood culled from forests hard-hit by mountain pine beetle infestations.

Those behind-the-scenes talks, led in Washington by Ambassador Frank McKenna and nursed in Ottawa by then-international trade minister Jim Peterson, were rapidly moving the two countries toward brief formal negotiations and a quick deal until they tripped over political realties. At the time, Martin's government was publicly resisting Bush administration pressure to return to the negotiating table, arguing that Canada had won serial tribunal decisions and would settle for nothing less than complete victory and full compensation.

Emerson was among the most outspoken Liberal ministers. In August, he called on Canadians to unite around fair trade. "Are we going to be stronger than the sum of our parts, or are we going to be endlessly bickering amongst ourselves and allow the bully to basically mop the floor with us."

But while making noisy demands that the U.S. abide by the letter and spirit of cross-border treaties and by threatening a trade war if it did not, Martin's government was quietly building a Canadian consensus. First, the three biggest softwood provinces tentatively agreed to the hybrid formula, and then key parts of the industry were brought into the talks on condition of strict confidentiality.

In Washington, McKenna discreetly tested how the U.S. would respond to the hybrid Canadian proposal and Washington's willingness to reimburse tariffs. Conscious of the powerful lumber lobby, U.S. officials were encouraging as well as equally discreet.

By early November, the critical components were in place. "A deal was there to be had," a well-informed source says. "It was easily within reach."

Other sources, including diplomats, confirm the template was complete before Martin's minority government fell. But for reasons Liberals now blame on Emerson, it stepped back from a deal that now falls into Stephen Harper's lap.

That would be a dramatic early success for a new government and for a new trade minister. And that has some of Emerson's former colleagues steaming.

They and others who spoke on condition of anonymity say they accept that Tories will claim a softwood victory as the spoils of war. But they can't stomach that Emerson is now positioned to take credit for an agreement Liberals say he blocked.

They say Emerson didn't want a less-than-perfect agreement to become a Conservative and NDP target. According to the sources, Emerson, a former top lumber executive, also warned that some companies could object to the higher stumpage fees.

Rather than take an unnecessary political risk, Liberals parked the deal, assuming it could be restarted when they were, as they wrongly expected, returned to office.

It's not clear if or when Conservatives learned about the advanced softwood talks. What is known is that the small circle of those aware of the backroom discussions expanded during the final campaign weeks.

In any case, Conservatives had many reasons to encourage Emerson's defection. Highly respected at home as well as by mandarins here, Emerson, who jokingly calls himself a small-c Liberal, gives the party downtown Vancouver representation and an experienced minister to handle the financially troubled Olympics and Pacific rim issues.

So less than 24 hours after the election, Emerson and Conservative campaign co-chairman John Reynolds were discussing the defection that on Monday caught the national capital by surprise. In retrospect, it wasn't so surprising.

Independently wealthy and more interested in policy than politics, Emerson would find little in opposition to justify the grinding travel between the capital and West Coast. Equally important, Harper was willing to give Emerson the international trade job former Liberal cabinet colleagues say he coveted.

Now that he has it, Emerson gets a second chance to complete the deal that diplomats say requires little more than signatures.

That would be an unpleasant surprise ending Liberals didn't anticipate when they put the softwood talks on hold.