U.S. President George W. Bush should stop playing games with the North American Free Trade Agreement (NAFTA), and the U.S. government should start paying back the estimated $4-5 billion in excess and illegal duties it has collected — one might even say stolen — from Canadian softwood lumber exporters since 2002.
The U.S. government’s position is intended to protect U.S. lumber companies from legal imports of cheaper Canadian softwood lumber. But the position is a sad example of misguided domestic politics and should be abandoned. While it may indeed protect lumber interests, it also hurts U.S. home builders and buyers, sends the wrong signal on trade agreements to other countries and has become a true hot-button among Canadians. In Canada, the details of the lumber dispute are common knowledge and front-page news. (A background report prepared by Canada’s CBC News summarizes the history of the dispute from the Canadian point of view.)
The dispute has been going on for several years, during which the U.S. government has shopped its faulty claim — that Canadian lumber is unfairly subsidized by the government and therefore subject to excess duties — from one international venue to the next. For the most part, this venue-shopping has not produced the hoped-for results for the United States, according to news reports.
The final venue, NAFTA’s extraordinary challenge committee, ruled against the United States in August. Observers since then have suggested that the U.S. government’s refusal to comply with that ruling violates the nation’s own laws.
The National Association of Home Builders has warned that the Bush administration’s domestic protectionist stance against Canadian lumber adds approximately $1,000 to the price of a new-built house. The builders group has applauded Congressional interest in the dispute and NAFTA rulings in favor of Canada.
“We urge the (Bush) administration to allow this final verdict to be implemented without further delay and to immediately rescind the tariffs and return to Canada more than $4 billion in deposits that have been collected,” NAHB President David Wilson, an Idaho home builder, said in August after the NAFTA committee ruled against the United States.
The Bush administration has no legitimate grounds to protect U.S. lumber interests at the expense of U.S. home builders and buyers and in blatant disregard for NAFTA, which is by any measure one of the nation’s most important trade agreements.
A spokesperson for the Free Trade Lumber Council in Canada suggested earlier this month that Canada has more at stake in the dispute than the U.S. has and consequently shouldn’t act on its recent unveiled threats to retaliate against the United States by selling more oil and gas to China and India, according to a news report.
But such a sensitive issue shouldn’t be resolved on the basis of which country has more to lose. Rather, Canada should stand its high moral ground, insist on its proper rights according to NAFTA and even consider whether retaliation is appropriate if that’s what it takes to pound its rightful message into the U.S. government’s deaf ears. Indeed, given the importance of NAFTA and the employment and financial harm caused to Canada, Canadian Prime Minister Paul Martin has no choice but to pressure the United States on the issue, as former U.S. President Bill Clinton recently told an audience in Ontario, according to a Canadian news report.
Canada’s economy is so tightly bound to that of the United States that Canadians often observe that when the U.S. economy catches a cold, Canada sneezes or at least runs up with a Kleenex tissue. Canadians tend to view the United States with a mixture of admiration, envy and loathing much like a younger sibling’s feelings toward an older brother who doles out punches one day and candies the next.
No one likes a bully, and the Bush administration’s behavior can only continue to damage the nation’s very valuable friendship with its Great White Northern neighbor. Compliance with NAFTA is the best and only solution to this harmful dispute.
Marcie Geffner is a real estate reporter in Los Angeles.
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