By Peter A. Buxbaum, AJOT
The recent NAFTA panel decision finding the countervailing duty placed by the United States on Canadian softwood lumber to be unlawful has elicited mixed reactions from US industry groups. The Coalition for Fair Lumber Imports, a group of US lumber producers and sawmill operators, criticized the binational panel's decision. Other groups, including homebuilders and affordable housing advocates, lauded the ruling.
The US placed a countervailing duty on Canadian softwood lumber following a 2002 petition by US industry interests that claimed the Canadian industry was subsidized by the provincial government. The petitioners, which included timberland owners and forestry companies such as International Paper, Potlatch, Plum Creek, Sierra Pacific, and Temple Inland, charged that Canadian lumber is unfairly subsidized, and is being dumped at lower prices in the US.
At the core of the dispute before the NAFTA panel was not whether, but to what extent, the Canadian industry is subsidized. The issue boiled down to how to calculate the subsidy. The panel found that the subsidy amounted to less than one percent of industry revenues. At that level, US law does not permit a countervailing duty.
The US imports approximately one-third of its lumber requirements from Canada. The US government imposed countervailing and anti-dumping duties totaling 27% on softwood lumber in May 2002, charging that Canadian imports represented a threat to the domestic industry. The countervailing duty percentage has been reduced twice, and currently stands at 8.7%. Canadian lumber imports are also subject to anti-dumping duties averaging about 2.1%. The recent NAFTA ruling has no effect on the anti-dumping duties.
"The NAFTA panel decision is gravely flawed," said Steve Swanson, chairman of the Coalition for Fair Lumber Imports. 'The US government must respond aggressively to this decision to prevent further injury to a US industry already grievously wronged by Canadian practices.' According to Swanson, the NAFTA panel erred in calculating the amount of subsidies provided to the Canadian industry by using economic data from a period of time different than that under investigation.
"This decision is just the latest example of a NAFTA dispute settlement system that is out of control and wrongfully and unconstitutionally trumping US law,' Swanson added. 'Every US Administration since President Reagan has consistently found that the Canadian lumber industry has benefited from enormous subsidies.'
The coalition argues that Canadian provinces provide billions of dollars in subsidies to Canadian lumber companies through below-market sales of timber used to make softwood lumber. 'Canadian practices severely jeopardize American sawmills, the livelihoods of thousands of workers and millions of forest landowners throughout the United States,' Swanson concluded. 'We will not stand for this absurd and unjust result from panelists acting outside our constitutional system of accountability."
'Time for the US to honor its legal obligations"
But another US group, American Consumers for Affordable Homes, an alliance of seventeen organizations that claims to represent more than 95% of lumber consumption in the US, ridiculed Swanson's characterization of the NAFTA dispute resolution system. 'The Coalition for Fair Lumber Imports continues to call NAFTA actions illegal and unconstitutional, yet NAFTA was approved by Congress and signed into law by then President George Bush,' said Susan Petniunas, an alliance spokesperson. "When the US wins, the coalition cheers, but when it loses, they whine and attack the dispute settlement process imposed by NAFTA. It is clearly time for the US to honor its treaty agreement with Canada, and to end these illegal duties that continue to harm American consumers."
Petniunas claims that US Census Bureau data indicate that the lumber duties add at least $1,000 to the cost of a new home, pricing as many as 300,000 famili
