MNI POLICY: Trudeau: Rail Blockade Must End Now As Talks Fail

--Canada GDP Likely Hurt by Halted Cargo Shipments

By Greg Quinn

     OTTAWA (MNI) - Canadian Prime Minister Justin Trudeau said Friday that

protesters blocking the main railway line between Toronto and Montreal must

immediately take down their barricades, saying days of high-level talks have

failed and the economy is being put at risk.

     Trudeau didn't say how the barricades blocking hundreds of millions of

dollars of shipments per day would come down, adding governments can't order

police to enforce legal injunctions against the protest. He said the "onus" to

act is now on the protesters. 

     "It has been two weeks and the barricades need to come down now," Trudeau

said at a press conference in Ottawa. "We cannot continue to watch Canadians

continue to suffer shortages and layoffs."

     Economists have started cutting first-quarter economic growth forecasts as

the protest threatens to extend through most of February. Seaports in Halifax

and Vancouver are now jammed with containers that will take time to unclog

whenever the protests end, and some shippers are now diverting traffic to the

U.S., another sign of lost orders for Canada.

     The Bank of Canada said before the protests broke open that the economy

nearly stalled at the end of last year and a rate cut is on the table if

weakness becomes persistent. Canada's economy was hurt last year by global

tensions like trade disputes and consumer confidence may also be slipping. The

outlook is also at risk from the coronavirus outbreak.

     Trudeau's Liberal Party government now faces its biggest test since being

reduced to a minority of seats in the House of Commons late last year.

Opposition members from Quebec and western Canada have pounded the Liberals in

daily Question Period about calling in the police to end the lost income to

farmers and factories.

     "We have exhausted our capacity to engage in a positive, substantive,

active way," Trudeau said. 

     Trudeau has often stressed he can't order the police to remove the

protesters, and said a negotiated settlement is better than risking a wave of

future protests. The main dispute is a small number of protesters who have put

objects near the main track a a few hours' drive southwest of Ottawa. The

opposition Conservatives called Trudeau's engagement one of the weakest

responses to a crisis in modern Canada.

     Still, with the main Conservative Party seeking a new permanent leader and

two other smaller parties seen as being reluctant to force another election so

soon, Trudeau is unlikely to face a direct non-confidence vote. The political

damage may be longer lasting since Trudeau stakes much of his reputation on good

relations with the indigenous people leading the protests.

     The main railway protest goals early on were to force federal police to

leave the site of a disputed natural gas pipeline in British Columbia. Police

have signaled they are doing that soon.

     While a large group of tribal leaders along the route of the natural gas

pipeline support the project, a small minority of hereditary chiefs are opposed.

Canada has many unresolved claims with indigenous leaders in the west that have

led to delays in other resource projects.

     Most of Canada's grain crops can only be moved by rail, and many mines,

lumber mills and factories in rural Canada rely on trains as well for raw

materials and to ship finished goods. While there have been recent short labor

strikes there is little modern precedent for this kind of shutdown.

     "Even if the rail blockades end in the coming days, we estimate that they

will subtract 0.25% from GDP in February," Stephen Brown of Capital Economics

wrote in a report on Friday. He also reduced his first quarter growth forecast

to 1.5% from 2%, citing the rail protest and other recent weak data.

     Canada's VIA passenger rail service laid off 1,000 workers this week citing

the blockade that has also severed its network.

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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