Negotiation leverage or just plain arrogance?
The temperature on the Canada-US softwood lumber dispute has just been dialed up again by an old adversary of the Canadian lumber industry: Senator Max Baucus (D-Mon) who introduced the original legislation to double the tariffs. Currently, Canadian lumber companies exporting to the US have paid C$3.6 billion of tariffs into an escrow account -- the status of the funds awaiting final ruling on both the legality and amount collected. However, the new Baucus bill could seek to distribute the escrow funds to US lumber companies that have applied for compensation. Optionally, the lumber companies could be paid by the Treasury in anticipation of a favourable ruling -- which is highly unlikely given the past history of the dispute (WTO Link, NAFTA Link).
The distribution of disputed tariffs to local companies arises from the Byrd Amendment ("Continued Dumping and Subsidy Offset Act") to the Tariff Act which was originally introduced by the Bush Administration to assist US steel companies against foreign competition. The disputing countries have successfully applied for countermeasures from the WTO (Link) but have so far withheld any action pending a promise by the Bush Administration to have the legislation withdrawn. It has been over a year since the promise was made.
There are two opinions as to the timing and content of the proposed Baucus bill:
1) With the recent (and expected) defeats of the US side at the bilateral dispute panels, this is just a way to regain leverage over upcoming discussions, or
2) Sadly, protectionist voices in the US government are as strong as ever.
Either way, hopefully a resolution is on its way (as President Bush has promised Canada) as the Canadian lumber industry has lost thousands of jobs and the regions affected have been economically devastated. Likewise, US lumber prices have skyrocketed, putting the brakes to the US housing boom.