Posted on 11/14/2004 5:29:08 PM PST by -=[_Super_Secret_Agent_]=-
VANCOUVER - - A powerful U.S. senator is set to introduce legislation next week to pay American lumber companies the more than $3 billion in softwood lumber duties the Americans have collected, The Canadian Press has learned.
The bill - to be introduced as early as Monday - comes despite the fact the softwood lumber dispute remains mired in trade litigation and the World Trade Organization has found such a move violates international rules.
Sources say Sen. Max Baucus, Democrat of Montana, plans to introduce the bill to "liquidate" the duties.
The money has been held until the outcome of the various trade litigations. If Canada wins on all fronts, the money is supposed be returned to the Canadian companies that paid it.
Under Baucus' bill, the collected tariffs would remain in U.S. Customs' escrow accounts and the cash to pay American lumber producers presumably would come out of the U.S. government's own funds.
A spokeswoman for International Trade Minister Jim Peterson said the government is keeping an eye on developments.
"We would monitor the course of any legislation that affects Canadian trade and economic interests," Jacqueline LaRoque said Friday from Ottawa, reiterating Peterson's previous view that Americans historically support free trade.
B.C. Forests Minister Mike de Jong warned the bill could trigger a "full-scale crisis in the bilateral relationship between Canada and the U.S."
"If they move ahead with this, it will require retaliation from Canada," he said.
Canadian lumber exporters have known for several weeks something was brewing, a spokesman said.
"My sense is the U.S. side has been trying to regain leverage they've lost in litigation," said John Allan, president of the B.C. Lumber Trade Council.
"It's a pretty blatant attempt to get us back to the table and I don't think that kind of attempt's going to work."
Allan said the bill's aim is to "confiscate" the duties held in trust by U.S. Customs.
"It kind of blows away any rights we have, even under American process," he said.
But John Ragosta, a lawyer for the U.S. Coalition for Fair Lumber Imports, said the bill is simply an attempt to reinforce American rights under their own trade laws undermined by international trade processes.
The Canadian Press obtained a copy Friday of the proposed bill, entitled the Softwood Lumber Duties Liquidation Act of 2004.
Citing aspects of the U.S. Tariff Act, it calls on the U.S. Commerce Department to distribute the money to eligible companies within 15 days of the bill's passage.
The U.S. Customs and Border Protection bureau is holding an estimated $3.6 billion in countervailing and anti-dumping duties collected since May 2002 after American producers claimed Canadian softwood lumber sold into the U.S. market was being subsidized. The WTO ruled in January 2003 that the so-called Byrd Amendment to the Tariff Act, which distributed punitive tariffs to companies deemed to have been injured by subsidized imports, violated international trade rules.
Last September, the trade body gave Canada and other countries the right to impose retaliatory sanctions against American products after the U.S. government refused to repeal the Byrd Amendment.
Allan said it's conceivable the Baucus bill, if it passes, could order U.S. Customs to turn over the duties held in trust. Otherwise, the money would come from U.S. government revenues.
Then if Canada ultimately wins the duty case, "that leaves the U.S. taxpayer on the hook," said Allan.
But he said the bill appears to be an attempt to pre-empt the whole process by arguing that legal remedies available to Canada under NAFTA and WTO appeals are "prospective," - that is, forward-looking and don't apply to duties already collected.
"It's just outrageous, beyond the pale," said Allan.
No one was available from Baucus' office to comment.
Baucus is a longtime nemesis of Canadian lumber producers. In 2003 he introduced a bill that would have doubled duties levied on softwood.
That piece of legislation went nowhere but angered Canadians just as the two countries sat down to negotiations on the issue.
The latest move comes amid conciliatory words between the newly re-elected administration of President George W. Bush and Prime Minister Paul Martin after years of chill between the two capitals. Bush is expected to visit Canada soon.
Canadian lumber-exporting companies also held discussions this week and agreed in principle to restart talks with the Americans towards a long-term solution to the decades-old lumber war.
Sources termed Baucus's bill an act of "aggressive unilateralism" that flies in the face of recent bilateral fence-mending attempts.
Baucus's bill tries to do an end-run around the WTO's Byrd Amendment ruling, the sources said.
It's the latest attempt to entangle the tariff kitty - growing at a rate of about $150 million a month - in legal and legislative red tape.
Canada ultimately expects to win its challenge of the 27.2 per cent combined countervailing and anti-dumping levies.
It won a key victory in September when a binational panel of the North American Free Trade Agreement ruled Canadian softwood imports presented no threat of injury to American producers.
U.S. trade officials served notice they would file an extraordinary challenge against the ruling, a process that would drag the dispute into next spring.
The last time Canada successfully fought softwood duties in the early 1990s, it took more than a year to get back several hundred million dollars in collected tariffs.
The Commerce Department also has refused to refund anti-dumping duties collected from West Fraser Timber Ltd. despite the fact its own review showed the B.C. exporter should not have had to pay.
Ragosta said Congress has a full agenda and is expected to sit only for another two weeks before adjourning until the new year. The bill will likely die but could be reintroduced, perhaps as a rider to another piece of legislation.
"That's how the Byrd Amendment was enacted, after all," he said.
By the title....the first thing I thought was Viagra and doctors.
"Soft-wood?" Isn't that a blue-state problem?
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