U.S. Gets Lift In Lumber Fight With Canada

Posted on Thursday, September 01 at 10:54 by jensonj
"Canada has to take a stand," Industry Minister David Emerson said in a television interview. "When it comes to negotiating with the United States, power seems to win out every day, every time." Canada responded to Washington's snub by walking out of negotiations on the issue, while officials have hinted that Parliament could return early from summer vacation and impose tariffs on California wine and Florida orange juice. The ratcheting up of language recently by several members of the cabinet as well as senior members of the opposition has brought the roughest patch in American-Canadian relations since Canada's refusal to join in the invasion of Iraq two years ago. In the United States, the softwood lumber industry hailed this week's W.T.O. finding, the details of which remained confidential. "It is a profoundly important decision," said Harry L. Clark, a lawyer who represents the Coalition for Fair Lumber Imports, an American softwood lumber group in Washington. "What's really going on here is a Nafta panel system that's out of hand." At the United States trade representative's office, Neena Moorjani, a spokeswoman, said in a statement that the preliminary finding confirmed that Canada had dumped and subsidized its softwood exports. "Despite this win, the United States believes that back-and-forth litigation won't solve this 20-year-old issue," Ms. Moorjani said. "The best course of action is to come to a negotiated solution, and we look forward to the resumption of talks as soon as possible." In Canada, however, trade officials and politicians rejected the idea that the W.T.O. finding was a setback, and continued to regard the Nafta panel as the final word on the matter. The Canadian trade minister, Jim Peterson, said Tuesday that the Nafta agreement trumped the W.T.O. in disputes involving the United States. "We're going to examine this decision very carefully," Mr. Peterson told reporters in a conference calls. "My message is very simple: We want the U.S. to live up to and respect the Nafta." At the heart of the dispute is the fact that most wood in Canada is harvested from land owned by provincial governments. The United States industry, which largely takes its trees from private land, has long argued that Canadian provinces subsidize their lumber producers through artificially low cutting fees. The current round of the battle dates to 2002, when the United States International Trade Commission imposed tariffs as high as 28 percent. That has prompted about two dozen challenges by the Canadian government through Nafta, the W.T.O. and courts in the United States. After the rejection of its subsidy arguments, the International Trade Commission gathered additional evidence, expanded its reasons for an order against Canada and then went back to the W.T.O. It is that revised order, issued in December 2004, that was upheld by the W.T.O. in its preliminary ruling. The unanimous ruling from the challenge committee of Nafta this month, which Canada is promoting as the pivotal decision, only reviewed the 2002 trade order, not the most recent one. It will now probably be up to the United States Court of International Trade, where Canada refiled a suit last week, to determine if the Canadian lumber industry gets refunds of the duties. But if the W.T.O.'s finding against Canada is ultimately upheld, as expected, it could greatly diminish Canada's ability to retaliate against the United States. In a recent meeting with The Ottawa Citizen editorial board, the United States ambassador to Canada, David H. Wilkins, called on Canadian politicians to stop their "emotional tirades." "Emotional press conferences are not going to settle the issue," Mr. Wilkins said, adding that "we could start talking about import barriers by Canada on certain goods, like dairy and egg products." Prime Minister Paul Martin later responded, "It's not emotional to state the facts, and the facts are that when you sign an agreement you should live up to its terms." Ian Austen reported from Ottawa for this article and Clifford Krauss from Toronto. http://www.nytimes.com/2005/08/31/business/worldbusiness/31trade.html?pagewanted=print

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