NAFTA panel gives Washington one week to cut softwood lumber duties
news.yahoo.com
BETH GORHAM
Wed Nov 16, 5:48 PM ET
WASHINGTON (CP) - A NAFTA panel has given the United States until next Wednesday to drastically cut duties on Canadian softwood lumber, rejecting a request from American officials for another delay.
The order Wednesday was the latest in a string of decisions favouring Canada under the North American Free Trade Agreement in a bitter battle that's been going on for years.
It was unclear whether the U.S. Commerce Department will continue to stall on an issue that has recently raised hackles at the highest levels and soured the Canada-U.S. relationship.
Franklin Lavin, a department undersecretary, said U.S. officials are closely reviewing the panel's order and would provide a response by the Nov. 23 deadline.
Canadian officials said the Americans will either comply, refuse to go along with the NAFTA decision or appeal to what's called an extraordinary challenge committee.
In Ottawa, International Trade Minister Jim Peterson said Canada has "strongly opposed any motion to delay the inevitable."
"We must keep our eye on the ball; the NAFTA must be respected. Here is a prime opportunity for the U.S. to recommit to the treaty it signed, plain and simple."
The panel has told Washington five times that it must all but eliminate punishing penalties of more than 16 per cent on Canadian lumber.
But the United States hasn't complied. In August, Ottawa broke off negotiations toward a new softwood deal after Washington said it wouldn't abide by what experts call the definitive ruling under NAFTA.
Late last month, the Commerce Department asked for clarification of the panel's order but the request was rejected Wednesday.
John Allan, president of the B.C. Lumber Trade Council, said Americans now have no choice now but to acknowledge that Canadian softwood isn't unfairly subsidized and dumped on the U.S. market.
But Carl Grenier, president of the Free Trade Lumber Council based in Quebec, predicted they'd do so only grudgingly and would probably appeal the free trade panel's August decision.
"They'll say we're doing this under duress, we believe the NAFTA panel was wrong, it exceeded its authority and so on," said Grenier.
"Then they'll request an extraordinary challenge panel, which would of course suspend the implementation of the lower rate."
Prime Minister Paul Martin is insisting that the United States return at least $3.5 billion Cdn of some $5 billion in duties collected from Canadian companies.
He's been cranking up the volume on Canada's dismay over the issue, suggesting the hard-fought battle could lead to retaliation on other trade fronts like energy.
On Wednesday, Martin said he planned to tell President George W. Bush at an Asia-Pacific summit in South Korea that Canada is "in the right" on softwood.
Americans want to negotiate a settlement and U.S. officials like Secretary of State Condoleezza Rice and U.S. ambassador David Wilkins have been telling Canada to tone down the rhetoric.
"We are not going to negotiate a win," said Martin. "The fact is that Canadian companies are in the right and I'm not going to back off of that."
Meanwhile, U.S. lumber producers insisted Wednesday the Commerce Department shouldn't comply with the NAFTA panel's order.
"The fundamental fact that Canada's lumber industry receives billions of dollars in annual subsidies derived from Canadian taxpayer-owned forest resources has not changed and is at the core of this trade dispute," said Steve Swanson, head of the U.S. Coalition for Fair Lumber Imports.
"NAFTA panels must not be allowed to trump U.S. law."
The American coalition has launched a constitutional challenge of NAFTA's dispute resolution mechanism, a lawsuit that could take years.
American companies discount NAFTA decisions and point to rulings from the World Trade Organization that affirm the U.S. position.
On Tuesday, the world body found the U.S. Commerce Department had modified its import duties and was complying with international trade rules.
Canada is appealing that ruling. |
