By David Lawder

WASHINGTON (Reuters) -U.S. Trade Representative Katherine Tai discussed a range of trade issues with Canadian Trade Minister Mary Ng on Monday and emphasized the need for Canada to implement new North American trade deal commitments on dairy and e-commerce shipments, her office said in a statement.

In a virtual meeting on the eve of the first meeting of the U.S.-Mexico Canada Agreement Free Trade Commission, Tai also raised concerns about Canada’s recently proposed digital services tax, USTR said. The trade agency is readying potential tariffs on six countries while international negotiations on the issue proceed.

A statement from Canada’s trade ministry said Ng also raised concerns about U.S. trade policies but the two agreed on the need to strengthen North American supply chains, collaborate on COVID-19 recovery and implement the USMCA’s labor rights provisions.

These included concerns about U.S. “Buy America” government procurement restrictions and an ongoing dispute over U.S. tariffs on Canadian softwood lumber. American home builders and U.S. lawmakers have asked Tai to lift the 9% duties to ease a supply crunch that has sent lumber prices soaring.

“Minister Ng reiterated that it was in the best interest of both countries to reach an agreement on softwood lumber and raised the impacts of solar safeguards,” the trade ministry said.

Ng also brought up a dispute over Michigan Governor Gretchen Whitmer’s order that Canadian pipeline company Enbridge shut down a crude pipeline over safety concerns, a move Canada says would violate a 1977 treaty.

The trade ministry said Ng “noted the importance of the continued safe operation of Line 5” which runs under the Straits of Mackinac in the Great Lakes.

The USMCA trade deal allowed for improved access for U.S. dairy farmers to Canada’s highly protected dairy market. The Trump administration in December said it was challenging Canada’s allocation of tariff-rate quotas for dairy.

The trade deal also raised the “de-minimis” duty-free threshold for small duty-free shipments of goods to C$150 from C$20 previously, a move expected to benefit U.S. e-commerce companies such as Amazon.com and eBay

The meeting of the USMCA Free Trade Council, which includes Tai, Ng and Mexican Economy Minister Tatiana Clouthier, will also discuss several irritants in Mexico’s implementation of the accord, notably on labor rights. Tai has pledged to bring up allegations that labor rights were denied in a union contract vote at a General Motors truck plant in the central Mexican city of Silao and a union membership drive at an auto parts plant in the Texas border city of Matamoros.

(Reporting by David Lawder; additional reporting by Steve Scherer in OttawaEditing by Chris Reese and David Gregorio)

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