Lumber Dispute Resolved?

The New York Times is reporting
U.S. to Accept Nafta Ruling to Cut Duties on Lumber.

The Commerce Department said Tuesday that it would accept a Nafta dispute panel ruling in a long-running dispute with Canada and would substantially reduce hefty duties on Canadian softwood lumber.

But while the United States government accepted the settlement's finding that countervailing duties should fall from about 16 percent to less than 1 percent, it did not endorse it. And John Sullivan, general counsel for the Commerce Department, said that the acceptance of the ruling did not prevent the United States from starting an extraordinary appeal later.

"We start off with the premise that Canada subsidizes lumber," Mr. Sullivan told reporters during a conference call. "We're complying with the panel's decision, but we don't agree with it."

The United States will continue to collect its 20.96 percent tariff on Canadian softwood - which includes a separate antidumping duty of about four percentage points - until the Nafta panel completes the case, which may take more than six weeks. Any extraordinary challenge would further extend that period.

Mr. Sullivan also said that the ruling had no impact on duties that have been collected to date but set aside because of the trade dispute. Canada estimates that those funds total about 5 billion Canadian dollars, and it is demanding their return.

At the heart of the case are differences in the sources of lumber. In Canada, the vast majority of lumber comes from logs harvested from government land, while private land is the primary source in the United States. American producers contend that Canadian provinces subsidize their industries by charging artificially low cutting fees.

While Tuesday's move is far from the final word in the dispute, it may provide some political relief for the Canadian prime minister, Paul Martin, and his Liberal Party. His minority government could be facing an election shortly, and early Tuesday, before the Commerce Department announcement, he was attacked by the opposition Conservative Party for failing to advance the softwood case.

The Coalition for Fair Lumber Imports, a group representing American producers involved in the dispute, condemned the move to reduce the duty.

"I could go on for hours about how outrageous this subsidy decision is," said Harry Clark, a Washington-based lawyer for the group. "What we have here is a Nafta panel that simply decided to flout its obligation to enforce U.S. trade laws."

I am not sure if the word "accept" is exactly correct.
In spite of 5 separate NAFTA rulings the US is still saying "We start off with the premise that Canada subsidizes lumber".
Furthermore the US is going to continue to collect 20% tariffs for 6 weeks or so until the case is "final", then issue an "extraordinary challenge" to further extend the case.
Does this come close to "accepting" the decision?
I think not.

In one of the silliest statements on free trade yet, Harry Clark, lawyer for "The Coalition for Fair Lumber Imports", said Nafta is "flouting" its obligation to enforce U.S. trade laws. Flouting? Mr. Clark, why shouldn't NAFTA want the US to enforce its treaties? If ever there was "flouting" it was blatant flouting by President Bush on behalf of US lumber companies to collect mammoth tariffs in spite of 5 arbitration rulings in favor of Canada. That is the essence of "flouting" and that is why there has been little or no progress in reaching new trade accords earlier this year in South America. Point blank: The US is not afraid to play the bully in one-sided agreements, and that is why the US and EU are becoming increasingly isolated on free trade issues while China, Australia, and others forge ahead.

One more thing: Anytime one sees there is a Coalition for "Fair" Anything, rest assured it is in reality a Coalition for Increased Protectionism, Unfair Subsidies, and/or other Government Handouts, all at taxpayer expense. That Mr. Clark, is exactly what you and your coalition are all about.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/