Good neighbors help each other in times of need
I wonder if this would be a good time to settle the softwood lumber trade war between the US and Canada. I am sure the rebuiding effort could use some lumber. The US is currently holding some 4 billion dollars in tarrifs collected since 2002. Canada could agree to donate that money to the rebuilding fund to purchase building materials from Canada in exchange for removal of the anti-NAFTA tarrifs.
To get an insight on the problem read the following....
Canada's continuing inability to resolve its softwood lumber problems with the United States recently prompted former free-trade negotiator Gordon Ritchie to warn that President George W. Bush's protectionist pit bulls are threatening to destroy the entire binational dispute-settlement system.
Despite Mr. Bush's conciliatory rhetoric at last week's meeting of North American leaders, it was naive to think that he would commit any of his political capital to settling the softwood lumber dispute. Still, Canadian exasperation is understandable. For two decades, this country has fought U.S. trade actions. It has fought them under NAFTA, at the World Trade Organization and at its predecessor, the GATT. It opted for a negotiated settlement in 1986 to avoid aborting the free-trade negotiations and, in 1996, to avoid changes to U.S. trade law that neutralized Canada's earlier victory.
In the current lumber round, now in its fourth year, the U.S. trade agencies have gone to extraordinary lengths to avoid complying with rulings in Canada's favour. The Americans have refused to return the $4.25-billion (Canadian) in tariff revenue collected from Canadian exporters since 2002 - an amount that's growing by $150-million a month. Senior U.S. officials are saying they will distribute it, instead, to their U.S. competitors as directed by the 2000 Byrd Amendment (which said the United States could redistribute tariffs collected on allegedly unfair imports as payouts to the very U.S. companies that brought the complaints - rather like a bounty). The Byrd Amendment, an irritant for all of America's trading partners, has been declared illegal by the WTO. Canada says it also runs afoul of the North American free-trade agreement. But the Americans say that, because of an arcane legislative provision, U.S. law now trumps NAFTA panel decisions.
The lumber dispute has dramatically exposed the NAFTA dispute system's flaws. The U.S. has invoked a mechanism known as the Extraordinary Challenge procedure (which was only supposed to be used in the most exceptional of circumstances) six times - twice in the lumber case. Despite NAFTA, Congress has changed U.S. law several times to reverse dispute losses. NAFTA panel disputes now take 700 days on average to resolve - more than twice as long as they were supposed to, and longer than disputes settled at the U.S. domestic trade court.
Canadian companies have taken their fight against the lumber tariffs back to the U.S. court, where they at least have a chance of having the duties returned to them if they win; under the NAFTA process, according to U.S. officials, they now have no chance of getting their money back. This leads to the perverse outcome that companies from Mexico and Canada going through the NAFTA dispute process are treated worse than, say, a French company going through the U.S. court process.
The final irony is that the Canadian government is also preparing to head to the U.S. domestic trade court to challenge the Byrd Amendment - which is the very process it sought to replace with the binational dispute panels.
The stakes in the softwood lumber dispute are high - for companies, workers and resource-based communities across the country. But this dispute is about more than lumber. It is about the very integrity of the commitments that Washington made under NAFTA and the wisdom of the concessions Ottawa made to secure them.
Canadian governments and industry should continue to fight the legal battle through to its conclusion. They should not cave in to U.S. pressure for an early (and unfavourable) settlement. A legal win will not solve the problem, but it will help improve Canada's bargaining position in the inevitable negotiation that will result in some form of managed trade agreement. Government should provide adequate support to affected workers and communities, and assistance to the industry to help offset its enormous legal costs.
The U.S. is dragging this out, trying to cripple the Canadian companies financially and force them to settle on American terms. Any indication that we are anxious to settle will be interpreted as a sign of weakness and an incentive to continue bully tactics.
If, as expected, Canada wins the legal battle and the U.S. still refuses to remove the duty and return the duties collected from Canadian producers, if it persists in asserting that U.S. law trumps NAFTA, then Canada should invoke a little-known, but powerful and as yet unused NAFTA provision: Article 1905.
Article 1905 would allow Canada to trigger a bilateral consultation process on the grounds that the U.S is violating the agreement. A win, which is likely, would give Canada the right, as trade lawyers have told a House of Commons committee, to withdraw benefits it has extended to the United States under NAFTA. The most obvious candidates for the withdrawal of benefits are the investment provisions - for example, national treatment for U.S. investors, and the energy-sharing provisions.
Mr. Ritchie, in his memoir Wrestling With The Elephant: The Inside Story of the Canada-U.S. Trade Wars, made it clear that Canada would never have signed the free-trade deal without the dispute-settlement system, certainly not if our negotiators thought that the Americans would show such contemptuous disregard for their commitments.
U.S. trade officials believe they can act with impunity because dependent Canada will not walk away from the agreement no matter what. If Canada continues to cave in, the Americans will continue to trample over us whenever they have an important interest to protect.
Canada must draw a line in the sand. We do have alternatives. Despite the continuing efforts of our continentalist elites, we still have the capacity to assert ourselves and flourish as an independent nation.