U.S. Seeks Arbitration In Softwood Lumber Dispute

"differing interpretations of the agreement" - was that not the case all along? What's new about this?

Jesus Christ already, we are long overdue in telling the USA to stick it! They won`t be happy until they control our entire Boreal Forest, and then some! To hell with these jerks! Why even bother playing nicey-nice? They don`t!

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Dave Ruston

The U.S. Department of Commerce understands that the laws and treaties that it imposes on Canada makes it impossible for Canada to win and compete in the real world, even if Canada wins every time in court. After years and in some cases decades of going through the courts by the time Canada does, the tariffs, duties and quotas the U.S. has imposed have completely wrecked Canadian controlled industries leaving wholly owned U.S. companies owning and controlling the remains receiving Government compensation for loses in Canada and the U.S. This leaves the average Canadian asking who cares what the courts or the rule of law has to say.

To appease U.S. wants and demands the Canadian Political leadership along with Canada's Business elites and U.S. Businesses demands have slowly given away control of Canada's resources and sovereignty. U.S. leaders are guilty of always having a clear interest in political interference and subordinating Canadian wealth, freedom and sovereignty to the needs and wants of U.S. political policy makers undermining Canada's democracy.



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Perception is two thirds of what we perceive reality to be.

Difficult decisions are a privilege of rank.

Tue August, 29 2006
Bush 'Slush Fund,' Courtesy of Canada

Turning trade deal into Republican ammo?
Softwood deal pours $450 million straight into White House, says U.S. lawyer.

By Elliot J. Feldman
Published: August 29, 2006


TheTyee.ca

[Editor's note: On August 21 in Ottawa, the Standing Committee on
International Trade heard a U.S. trade lawyer damn the proposed softwood
lumber agreement as a terrible deal for Canadians. Elliot J. Feldman of Baker
& Hostetler LLP argued that Canada caved at a moment of strength, given that
international rulings continued to land firmly on our side. Instead, Feldman
argued, this deal will kill the NAFTA process which has favoured Canada's
position, and forfeit at least a billion dollars plus hundreds of millions of
dollars more in interest that would have come our way had our negotiators
hung tough.

Feldman, who is based in Washington, D.C., offered one more bit of startling
analysis, excerpted below. The deal, he said, will funnel nearly half a billion
dollars directly to George Bush's White House, creating a political "slush fund"
available to the Republicans and the U.S. timber industry for waging future
campaigns.]

Honorable members, responsibility for this deal ultimately resides with the
government and with you, not the industry. It has been forced on the industry
for political reasons. No one in the industry likes it, but many believe they
have no choice and, therefore, many have already accepted it.

I want to talk for a few minutes about the genesis of this agreement and one
of its most important and least discussed elements. There is a bit of
Watergate in this story and, as in Watergate, it is essential to follow the
money. Back before Christmas, David Emerson, then minister in a Liberal
government, and his ambassador in Washington, Frank McKenna, were asking
what it would cost to buy peace in softwood lumber. They were adhering to
all of the usual Canadian negotiating positions on this subject: protecting
Chapter 19 in NAFTA, fending off onerous anti-circumvention clauses,
protecting Canadian prerogatives. But, unlike any previous dispute, this one
involved the accumulation of over 4 billion, now 5 billion, dollars. And there
was the Byrd Amendment, which led the U.S. industry to believe that if it
could just stall long enough to wear down the Canadians, while claiming title
to all of the money, they could settle for a lot of it. They knew the Canadians
had brought a case in U.S. courts that could prohibit them from claiming any
of the money pursuant to the Byrd Amendment. They demanded a 60/40 split
back at Christmas.

Messieurs Emerson and McKenna negotiated to 50/50 and then asked
industry. Industry calculated net present value against litigation prospects,
and said "no." But, in the process, Messieurs McKenna and Emerson asked
what would be enough. At that time, under those circumstances, they were
told 70 per cent. Think, then of how impressed Mr. Emerson was with himself
when in April, he could tell industry that he got 80 per cent. But, there were
at least four huge problems, and he had neglected all of them.

'Legally entitled to not a penny'

First, on April 7, the United States Court of International Trade ruled that the
U.S. industry was entitled legally to no money. None of it. It was not
surprising then, that 20 days later, the U.S. Coalition said that it would take
$500 million. It was hardly a negotiating triumph to persuade them to take
$500 million, when they had become legally entitled to not a penny.


Second, net present value at the end of April was not the same as it was at
Christmas, especially as the pot kept growing. Canadian industry had in mind
a fixed sum for the Coalition, maybe as much as $150 million, not half a
billion. Third, it was not quite as obvious in the two and a half page term
sheet of April 27, that Canada would give away everything that the previous
government had been defending in order to complete a deal, because
political priorities had changed so radically. And fourth, the term sheet
promised a major joint initiative to improve North American competitiveness.
The "remainder -- that was the word the terms said -- would go to so-called
"meritorious initiatives" in the United States.

Industry was troubled by this last development. It wondered why it was
providing foreign aid to the United States, but it was also reassured that the
sum would be small. More impressively, Minister Emerson told CEOs that, as
long as they were getting back 80 per cent of their money, it was none of
their business what would happen to the rest. He was, by all accounts, very
blunt on this subject. And, meanwhile, we were advised by negotiators that
the White House had taken a direct and active interest in this money, but that
Canadian industry ought to focus on other things. As the minister had said, it
was not really their concern. The "remainder," then, became $450 out of $500
million dollars.

'Gift of $450 million to the president'

That, honorable members, is a colossal sum of money. It certainly got the
U.S. government, as well as the coalition getting the other $500 million,
committed to the deal. It is astonishing how little, nothing really, the
Canadian Government got in exchange for it. And let's understand this money
-- the $500 million -- not the coalition's money, about which you heard
some on July 31, but the rest.

Some perspective. At the height of the Watergate scandal, focus was on an
illegal slush fund available to the Committee to Re-Elect the President, that
was thought to be tipping the balance of American politics. The fund never
exceeded $20 million. One of the Articles of Impeachment against Richard
Nixon, was that he received foreign campaign donations, perhaps as much as
$50,000. Both by statute and by the United States Constitution, gifts of
money to the United States must go to the treasury and be appropriated by
Congress. The lone, aberrant, and still controversial exception has been
money donated in the immediate aftermath of the emergency created by
Hurricane Katrina, and the sums involved were very small.

So, here we have the government of Canada requiring that Canadian private
parties sign over $450 million to an escrow fund slated to be conveyed to the
White House. The agreement does not mention Congress, and the Bush
administration says that Congress will not be involved in any way with this
agreement. The government of Canada thus is making a gift of $450 million
to be spent by the president. That was more than a belt buckle, even more
than a Stetson, on July 6th. There is only one date certain in the deal: that the
planned expenditure of the $450 million must be determined by September
1.

Political blowback?

Curious, that date, which traditionally is the kick-off for campaigns in the
United States in election years. Yes, it's an election year, and the Republican
control of Congress is considered in trouble. The entire Republican campaign
war chest is less than $300 million. Canada will add to it by 150 per cent in
funds to be expended for "meritorious initiatives." It does not require much
imagination to foresee the strategic places where this money will be spent.

This peace on softwood lumber will probably not improve Canada's relations
with the United States, because this colossal sum of money is going to the
White House, not the U.S. treasury. When the Democratic Party learns of it and
understands it, it's not likely to be pleased, and it's possible that, despite the
infusion of such money, the Democrats nevertheless will win in November.
Canada may then have much improved relations with the Republican Party but
not with the United States.

During questions following Feldman's presentation, NDP MP Peter Julian (New
Westminster/Burnaby) noted the "quite a staggering revelation that the
funding of $450 million would be, if I understand it, under the control of the
White House; Congress would have no say and Canada would have no say as
to the use of that money. And, hence, in a mid-term election year we would
be giving $450 million to a massive political fund." Feldman responded:

This is in my view an historic, unprecedented, astounding intrusion into
American politics. We searched all the way back to the Revolution and found
nothing like it in American history. And the question that I came this morning
to put is, "Will the Parliament of Canada accept responsibility for possibly
tipping the balance in American politics in preserving the control of Congress
by the president's party?" This softwood lumber agreement is an historic
moment in part because of that proposition, and it's up to this Parliament to
decide whether it will accept the responsibility. That responsibility cannot be
shifted and, indeed, that money inevitably will go to shore up the electoral
aspirations of the Republican Party through the president -- it's not going to
be touched by Congress -- it's going through an escrow fund. And these are
questions that could impact American politics for generations and impact
relations between Canada and the United States for generations to come. And
that is entirely in the hands of this Parliament.

Mr. Julian: So what you're saying is that we are not only providing money to
the Coalition to fight further legal victories, for further legal battles -- giving
half a billion dollars to them -- but we're also providing money that may go
to political purposes for the re-election of Republicans, many of whom have
been the most adamant against allowing free trade in lumber. It is ridiculous.

Mr. Feldman: The provision in Article 13.A.2 of the agreement, which recites
the meritorious initiatives, is language which could be defined only as a slush
fund for the president.

Elliot J. Feldman is a partner of the law firm Baker Hostetler and represents
clients in Europe, Asia, Latin America and Australia. He is the former director
of the University Consortium for Research on North American at Harvard
University and is a Director of the Canadian-American Business Council.