[Congressional Record Volume 140, Number 20 (Tuesday, March 1, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 1, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
CANADIAN REJECTION OF UNITED STATES CHARGES OF CONFLICT OF INTEREST ON 
                        DISPUTE RESOLUTION PANEL

 Mr. COHEN. Mr. President, I am outraged by the announcement 
last week from the Canadian Government that it will not dismiss two 
members of a dispute resolution panel and rehear a case concerning 
Canadian lumber subsidies. It was recently discovered that two 
Canadians on the panel failed to properly disclose their apparent 
conflicts of interest and, therefore, their unsuitability to serve on 
the panel.
  During the consideration of the lumber case, one of the panelists 
joined a law firm that often represents the Canadian Government. The 
second panelist failed to disclose that he had worked for a law firm 
that represented Canadian lumber interests. These are serious conflicts 
of interest that should have prevented the Canadians from sitting on 
the panel.
  The decision of the Canadian Government to simply reject these very 
serious allegations is disturbing for many reasons. Not only does this 
undisclosed conflict of interest put the lumber case in question, but 
also raises serious doubts about the entire dispute resolution process, 
a process vital to the integrity of our free-trade agreement with 
Canada.
  Under a 1986 agreement between Canada and the United States, the 
Canadian Government agreed to assess a 15-percent tax on its exports of 
finished lumber product in exchange for the United States decision to 
drop an unfair trade case against Canada. This tax was designed to 
offset proven subsidies the Canadian Government continued to provide 
its lumber industry. In the fall of 1991, Canada unilaterally withdrew 
from this agreement and stopped imposing the 15-percent tax, claiming 
that subsidies no longer existed for Canadian producers. At the request 
of the United States forest products industry, the Department of 
Commerce initiated an unfair trade case against Canadian lumber 
exports.
  In 1992, a Department of Commerce investigation concluded that these 
subsidies continued to effectively lower the price of exported Canadian 
lumber. Consequently, the Department ordered a 6.51-percent penalty 
duty be imposed on Canadian lumber imports in an effort to level the 
playing field for United States producers.
  The Canadian Government objected to this duty, and requested a 
dispute resolution panel. Last year a five-member dispute panel 
overturned the 6.51-percent duty. Unfortunately, it was later 
discovered that two of the Canadian panelists had not disclosed 
potential conflicts of interest. Such conflicts raise serious doubts 
about the impartiality of this panel.
  I am deeply disappointed by the Canadian Government's decision to 
ignore these conflicts of interest. This decision raises serious 
questions about the commitment of the Canadian Government to free trade 
and its responsibilities under the free-trade agreement.
  I am pleased that the Clinton administration has decided to 
vigorously pursue this matter by filing an extraordinary challenge to 
the panel's original decision. This is the only way to effectively 
address the conflicts of interest that Canada unfortunately fails to 
recognize.

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