Posted on 01/27/2005 1:31:46 PM PST by Willie Green
For education and discussion only. Not for commercial use.
WASHINGTON - Frustrated by legal challenges and stalled talks, the U.S. lumber industry is threatening an unprecedented constitutional challenge of NAFTA that could risk unravelling the decade-old free trade deal completely.
The U.S. Coalition for Fair Lumber Imports yesterday confirmed statements by Sen. Michael Crapo of Idaho that it may file a lawsuit challenging the wide-ranging trade deal's authority over U.S. law.
"The grounds would be that it is inconsistent with the U.S. Constitution and it violates our rights," said Harry Clark, a lawyer for the coalition.
Trade experts said last night the constitutional challenge, if successful, could seriously undermine the free trade pact between Canada, Mexico and the United States.
The pact has been held up as a global model and spurred similar deals in Europe.
"If they win, it would cause a lot of heartburn, especially for Canada," said William Merkin, a Washington trade expert who was a U.S. negotiator during the original Canada-U.S. trade talks.
Sen. Crapo told the Senate during a rare debate on the Canadian softwood lumber dispute this week that the U.S. lumber industry intends to launch the constitutional challenge to a series of NAFTA panel rulings that appear to have gone in Canada's favour.
"The future of U.S. sawmills and millworkers cannot be allowed to be ruined by outlandish decision-making by NAFTA dispute panels and a panelist's service with an obvious undisclosed conflict of interest," he told the Senate.
The senator was referring to the U.S. industry's extraordinary challenge of a NAFTA panel ruling that essentially found that Canadian lumber exports did not hurt the U.S. industry. The coalition is complaining one of the five panelists has a conflict of interest. A ruling is expected as early as next month.
The U.S. lumber industry intends to argue that NAFTA's Chapter 19 is inconsistent with U.S. law. That chapter deals specifically with dumping and countervail laws.
Mr. Merkin said a successful challenge of Chapter 19 -- something that would take at least a year -- would open a "Pandora's box" for the three governments since they would likely end up trying to renegotiate much of the entire trade pact and fight old battles over again.
"All three sides would be looking to change parts of the deal that they don't see being in their interest," he said.
The three senators close to the dispute -- Mr. Crapo, Max Baucus from Montana and Larry Craig from Idaho -- warned the United States will not easily give up the US$3-billion in duties it has collected unless there is a settlement.
"The United States will be flexible about the form a lumber settlement may take," Mr. Baucus said, but he added that no matter what the final decision of next month's challenge, the case is far from over.
"The question of reform of NAFTA's Chapter 19 dispute settlement mechanism is an issue Congress will have to address," Mr. Baucus said. "It will be regrettable if these well-intended statement of fact and resolve is taken in Canada as hostile."
The comments come after the U.S. Commerce Department slightly revised lower its import duties on Canadian lumber, the second such move in past months. The duty now hovers about 21%, instead of the original 27%.
Ottawa welcomed the decision by the Commerce Department as more proof that the four major timber producing provinces -- British Columbia, Quebec, Ontario and Alberta -- do not illegally subsidize timber rights to gain market share in the United States.
"While this will not end the softwood lumber dispute overnight, it is proof that our message is being heard loud and clear south of border," said Jacqueline LaRocque, a spokeswoman for Jim Peterson, the Trade Minister.
"Canadian softwood lumber is not subsidized, and even the Department of Commerce has recognized this," said Ms. LaRocque.
She said the federal government continues to demand that all the duties collected during the past three years be returned.
This would be a collosal blow for numerous reasons.
First, all NAFTA participants have benefitted greatly. NAFTA has helped Mexico start to build a middle class. (Yes, I know they still have problems.) Canadian exporters have also benefitted. And the enite US-Mexico border is a hot zone of economic development.
We need free trade.
If this challenge wins, we will have serious problems with the rest of our trading partners.
As for the Thomas Jefferson quote...
I like the man. But, his economy was just a bit simpler than ours.
'Bout freakin time!!
All this extra-UN-Constitutional BULLCRAP needs to be STOPPED and indeed STRICKEN from our nation...
You aren't hip to joining the WWUofW Party? (World Wide Union of Workers) /s
Lumber industry challenges NAFTA
By Jeffrey Sparshott
THE WASHINGTON TIMES
September 14, 2005
The U.S. lumber industry yesterday challenged the North American Free Trade Agreement's dispute-settlement system in court, saying it violates the U.S. Constitution.
The system, known as Chapter 19, empowers panels of judges to determine whether any of the three NAFTA countries is violating the trade pact by breaking its own trade laws.
"As NAFTA panels threaten to subvert application of the trade laws to unfair lumber imports, we must enforce our constitutional right to due process and accountable decision making," said Steve Swanson, chairman of the Coalition for Fair Lumber Imports, an industry group that includes Sierra Pacific Industries and International Paper.
A NAFTA panel last month said U.S. duties on Canadian softwood lumber, the kind used to build homes, ran afoul of the law, angering the U.S. companies and their political supporters.
The Bush administration and Canada's government both said they would defend the trade agreement and its dispute settlement rules.
"We remain strongly committed to the NAFTA, including the dispute settlement procedure, and the administration will vigorously defend its constitutionality," said Neena Moorjani, spokeswoman for the U.S. Trade Representative's Office.
"This is nothing more than a veiled attempt by the Coalition for Fair Lumber Imports to undo the softwood victories that Canada has achieved through NAFTA," said Jim Peterson, Canada's international trade minister.
NAFTA, which was signed by the U.S., Mexico and Canada in 1993 and became law in 1994, has three chapters dealing with dispute resolution. One procedure handles government disagreements with companies over investment rules, another deals with interpretation of NAFTA rules, and Chapter 19 deals specifically with dumping rules.
Dumping occurs when products from one country are sold below cost in another.
NAFTA panels, made up of judges appointed by U.S. and Canadian governments, recently found that the U.S. violated its trade rules when it found Canada was dumping lumber in the U.S. and applied tariffs to keep it out of the U.S. market. The panel said the tariffs should be scrapped or revised.
The lumber coalition said the panels are not accountable to the American public, and challenged their constitutionality in the D.C. Circuit Court of Appeals.
"The challenge is against the Chapter 19 dispute mechanism, not the NAFTA as a whole," Mr. Swanson said. The industry filed a similar complaint in 1994 but dropped it after the governments negotiated a solution to the dispute.
The U.S. lumber industry for decades complained that the Canadian government unfairly subsidizes its lumber industry and U.S. companies sought protection from cheaper imports.
The Bush administration consistently has sided with the U.S. companies, and refused to heed the NAFTA panel decision.
"Nothing can force [the U.S.] to change its behavior. So I don't see where there would be a constitutional issue if the government is not forced to do anything," said Todd Weiler, an adjunct professor at American University's Washington College of Law who specializes in NAFTA but not U.S. constitutional law.
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