Softwood lumber dispute and soft heads

I like my American colleagues by and large and am far from being a nationalist of any sort, so the following comments are practically impartial observation. Some people may know that there has been an international dispute between Canada and the US over softwood lumber tariffs for a decade or more. It has been raised to various tribunals among which I'm sure is GATT, likely the World Court (although that might be pushing it), and of course, the NAFTA tribunal. (For any who don't know, NAFTA is the "negotiated" free trade agreement between Canada, the US, and Mexico that replaced the previously "negotiated" agreement between Canada and the US, called the FTA. I've put the word negotiated in scare-quotes for a reason that will become apparent below.) Canada has persistently won in these settlement mechanism rulings: the tariffs levied by the US are breaches of international trade contracts.

Today, the Globe and Mail, among other outlets is carrying a Canadian-perspective story on the most recent state of the situation (U.S. 'slap' infuriates Canada). Won't ask anybody to read the whole thing, but lets pull apart some of the information presented.

First, this:

On Wednesday, a last-ditch NAFTA appeals panel rejected Washington's assertions that an earlier string of softwood rulings in favour of Canada broke trade rules. NAFTA panels have three times concluded that the United States failed to prove that Canadian softwood poses a material threat of injury to U.S. producers.

Under trade rules, if Washington can't prove Canadian softwood lumber poses at least a threat of injury to U.S. producers, it is obliged to scrap the duties on imports of Canadian lumber.

Wednesday's ruling should have forced an immediate end to the dispute.

But the United States says that the NAFTA ruling is inconsequential and that it has no intention of scrapping duties on Canadian softwood that exceed 20 per cent for some companies today, or refunding the $5-billion in levies collected since 2002. [Emphasis mine]

OK, so much for the rule of law: didn't like any of the many consistent rulings made by the body that was agreed to be the final arbiter on international trade contract, so we're just going to ignore it.

How about this?

Ottawa took pains to emphasize that legal battles such as the NAFTA challenge will not provide final resolution to the softwood dispute. Mr. [International Trade Minister Jim] Peterson said the only way to permanently settle the trade battle is through negotiations.

"I believe the only way to find something that is durable and provides predictability for the industry and the workers is through a negotiated solution," he said.

This was similar to Mr. [U.S. ambassador to Canada David] Wilkins's message yesterday. "We want a negotiated settlement," the ambassador said. "That is the only way to get finality on this issue."[Emphasis mine, again]

WHAT? The only way to settle is through a "negotiated settlement?" I'm sorry, wasn't the trade deal a negotiated contract which provided the dispute resolution mechanism? Wasn't that mechanism employed repeatedly with the same result? How unbelievably retarded is this? Is Bernie Ebbers now in a position to "negotiate" a settlement to his situation? Typically the negotiated settlement comes before the arbitration of an adjudicator. Afterward, you take your lumps. I'm quite stunned by the naivity of the Canadians ("D'oh! Oh well, let's negotiate. What would you really like and let's do it. After all, THERE'S NOT A GOD DAMNED THING WE CAN DO ABOUT IT if you're not going to respect the situation and show some integrity.") and the Americans ("It seems that the judge didn't see it our way. Well, we tried to play nice for a while and make sure everyone did it our way. They didn't, so screw em. What can they do about it?)

That is the way the world works. Call it the Golden Rule: Those with the gold make the rules. Call it a more sophisticated and subtle form of gunboat diplomacy. Whatever. The whole thing is stupid. And if this is how friends or brothers of the same mother deal with each other, it's no wonder the other hemispheres are "unfriendly" shall we say.

Posted by Grayson at August 12, 2005 07:55 AM