What part of the World Trade Organization and NAFTA adjudicating panels’ determinations regarding the lumber dispute does Senator Max Baucus, the Democrat from Montana, not understand?
Since May 2002, U.S. Customs has held in escrow approximately $3.6 billion wrongfully taken as countervailing and anti-dumping duties. These funds were demanded from British Columbia and Alberta lumber producers as their products entered the United States. Monthly, this fund grows by approximately $150 million. This money continues to be taken, although it has now been determined by the international adjudicating panels to be contrary to the rule of law.
Two significant, but not surprising, determinations were announced last summer in favour of Canada’s lumber industries. These findings support the claim by many that the continuing litigation by the U.S. Coalition for Fair Lumber Imports was frivolous and vexatious.
The NAFTA panel, an adjudicating body, first rejected the U.S. position and found that there was no threat of potential injury to American softwood lumber producers. In clear language, it directed the U.S. International Trade Commission to recalculate its numbers using the appropriate formulas to support its position.
The second finding was provided by the U.S. Department of Commerce, which was required by law to undertake an annual review of its May 2002 determination. At that time, an 18.9-per-cent countervailing tariff and a further 8.4-per-cent dumping duty resulting in a total levy of 27.3 per cent was arbitrarily imposed. The annual review resulted in these duties and dumping fees being reduced tentatively to 13.2 per cent. It is expected this reduced level of duty will be confirmed in a few weeks. Our lumber exporters continue to pay the wrongful tariffs at the higher rate.
The evidence was clear, as was the ruling. The World Trade Organization and the NAFTA panels repeatedly found that the U.S. adjudicating bodies were biased and did not undertake an objective examination of the evidence when they imposed these protectionist countervailing duties and dumping fees on the forestry industries in B.C. and Alberta.
Since 1986, our national lumber industry has been under attack by our American cousins. It was hoped that these unequivocal determinations would end a very troubling period of U.S-Canada trade relations.
However, this is not to be. Attempting to beat the Dec. 7, 2004 deadline, Baucus has quietly proposed a bill to Congress called the Softwood Lumber and Duties Liquidation Act of 2004.
The sole purpose of the act is to disperse the escrow funds to American lumber producers, in spite of the court rulings determining that the U.S. has violated international trade rules. If the bill passes, it would require the U.S. Commerce Department to distribute the escrow funds to the eligible American softwood lumber firms within 15 days.
This would create the possibility of another lengthy round of litigation by the parties in order to prevent this money from being returned to its rightful Canadian owners.
The actions of Baucus are about propping up inefficient American lumber mills that are failing to compete in a global economy. They are about increasing housing costs for United States’ homeowners. They are about mercantilism. It is about a “we win – you lose” trade theory.
B.C.’s Forests Minister Mike de Jong called Baucus’s action “theft” during a recent radio interview. “You can’t have a country . . . steal what would be close to $4 billion and not have retaliatory action on our part,” de Jong said.
At the recent opening of the new Canadian consulate in Miami, federal Trade Minister Jim Peterson stated, “Canadian companies shouldn’t be paying duties when softwood lumber crosses the border . . . You would be paying less for your lumber if these duties were removed. When the United States takes action on a Canadian product such as softwood lumber, it has negative repercussions in both Canada and the United States.”
This at a time when Canadians have made it clear to our political leaders, and to our prime minister in particular, that the time has come for rebuilding the U.S-Canada relationship.
This form of unilateral hostility must stop. Tension is growing between good friends, because of the acts of Max Baucus and those like him on both sides of the border. Can we return to the days of the Iran hostage crisis, when then-U.S. president Jimmy Carter and then-prime minister Joe Clark demonstrated their friendship and solidarity as Canadian embassy officials protected American citizens in their time of danger?
We must rebuild the relationship, not just for national security or economic well-being, but because it is the right thing to do.
(Terrance Power is a professor of strategic and international studies with the school of business at Royal Roads University in Victoria. He can be reached at firstname.lastname@example.org)