The Softwood War:

NAFTA Ruling Upholds US Duties, Leave Talks Uncertain

Marco Procaccini

The provincial and federal governments may be celebrating, but last week’s ruling by a secret North American Free Trade Agreement tribunal upholding US countervailing duties on Canadian softwood lumber, but it’s no good news for the economy, say labour and community activists.

The panel agreed with the US government’s position that governments in Canada in fact subsidize the forest industry through low stumpage rates, and said the countervailing measures are an appropriate response. The panel’s decision also added support for a ruling by a similar tribunal of the World Trade Organization earlier this year.

However, it did say that current 30 per cent import duty is too high, claiming that the US government erred in its calculation of the rate by basing it on US lumber market prices without considering Canadian market conditions. It has ordered the US government to re-calculate the rate. This call has some Canadian politicians, at both the federal and provincial levels, calling the decision, at least in part, a victory.

But this is little consolation for BC’s forestry workers and communities already struggling under the rule of the duties and the mass layoffs caused by the BC Liberal government’s policies.

IWA-Canada President Dave Haggard expects this ruling will not bode well in the continuing softwood lumber negotiations between the Canadian and US governments and corporations. Those talks have been at a standstill.

“At this stage, the thinking in the industry is that any deal is a good deal,” said IWA president Dave Haggard. “But we all have to keep in mind the ramifications of any temporary agreement on employment and communities. In particular, we are concerned that a deal may benefit some provinces and some producers to the detriment of others.”

 

The IWA, along with other forest unions in both countries, has expressed its concerns that the “cure could be worse than the disease” for workers in both the US and Canada. The union has been studying joint strategies with forest workers organizations in the US as away to come up with a mutually acceptable agreement.

 

But other observers are hoping the ruling will encourage forces on both sides of the boarder to come up with a workable deal in a speedy fashion.

 

"Our sense is that you are looking at a pretty meaningful probability you're going to see a negotiated deal within 30 to 45 days," says CIBC World Markets analyst Don Roberts, claiming the panel’s decision, rightly or wrongly, more clearly sets the parameters for negotiator’s expectations.

 

The NAFTA panel’s ruling has again raised sharp criticism from public interest and citizen’s groups in Canada over the secretive and exclusive adjudication and decision-making process and structures of the agreement and the WTO regime.

Ellen Gould, veteran trade and investment researcher and consultant, active with the Council of Canadians, says the panels of the North American Free Trade Agreement and the WTO panels are made up of life-time appointed trade and fiscal bureaucrats and corporate executives who make rulings in secret and are not subject to public scrutiny or the judicial system.

She adds this proves that these trade and investment regimes are a failure in negotiating trade disputes in a mutually beneficial way.

“The signing of these agreements has not lessened the number of trade disputes between Canada and the US,” said. “They haven’t stopped the US government from taking unilateral action against Canada, like with the Softwood Lumber Tariff, which has really hurt our economy.”