"BACKING DOWN FOR CANADA" Softwood Lumber Deal an Economic and Political Disaster
Campbell, Bruce, CCPA Monitor
Claiming that "a clear majority" of lumber producers now support the Canada-U.S. softwood lumber agreement, Prime Minister Harper says this is sufficient for his government to bring forward implementing legislation in Parliament, though it almost certainly falls far short of the original 95% support target.
Given the significance of this settlement-far beyond the commercial effects on a single industry-who won and who lost, and what the implications are for Canada, are questions that bear close scrutiny.
The U.S. government now holds over $5 billion in duties extracted over the last five years from Canadian exporters. Despite Canada having won virtually all the legal actions against the U.S. under NAFTA and the WTO, the U.S. government has continued to stonewall or simply disregard rulings, and has refused to hand back this money.
The U.S. domestic trade court had ruled that the U.S. law (the Byrd amendment) that would remit this money to U.S. plaintiffs was unconstitutional and therefore that the U.S. companies were not entitled to a penny of this money.
As part of the settlement, however, the Canadian government handed over $1 billion of the duties collected from Canadian companies-$500 million to the U.S. lumber industry, and $450 million to the Bush administration. This was the American price for giving Canada at least two years of lumber peace. In addition, the Americans secured tough restrictions on Canadian access to their market and got greater control over Canadian forest policies.
The US. companies' cut of this money covers their legal fees and replenishes their war chest for the next round of the lumber dispute. The Bush White House cut was nothing less than a huge slush fund for the upcoming Congressional elections-an unprecedented campaign gift from the Harper government to the Republican re-election bid, paid for by the Canadian lumber industry.
On the Canadian side, apart from a small group of large continentally integrated companies, the vast majority think it is a bad deal. They feel let down, coerced, and sacrificed by their own government for narrow political ends.
Having spent hundreds of millions of dollars on litigation, they could see light at the end of the legal tunnel. Canadian WTO and NAFTA victories were tightening the noose on the Americans, and, more importantly, U.S. trade courts were ruling in Canada's favour. They are bitter that their own government pulled the plug just as they were on the verge of winning the legal war. They are bitter that the government kneecapped them into submission: offering cash advances only for those who signed on, and ominous threats to the holdouts: no cash advances, no cooperation, no support.
The Canadian firms feel they have been fleeced to the tune of a billion dollars. They have bought a pitifully short period of peace and have bolstered their enemy's capacity and incentive to resume the fight. …