[Congressional Record Volume 149, Number 15 (Tuesday, January 28, 2003)]
[Senate]
[Pages S1669-S1673]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CRAIG (for himself, Mr. Baucus, Mr. Lott, Mr. Crapo, Mr. 
        Sessions, Ms. Snowe, Ms. Collins, Mr. Cochran, Mrs. Lincoln, 
        Mr. Burns, and Mr. Miller):
  S. 219. A bill to amend the Tariff Act of 1930 to clarify the 
adjustments to be made in determining export price and constructed 
export price; to the Committee on Finance.
  Mr. CRAIG. Mr. President, I come to the Chamber this morning, with a 
number of my colleagues, to discuss what is a critical issue in timber 
country across the United States, where men and women go to work every 
day in our sawmills only to find the mill has been shut down and the 
lights have been turned out.
  As a result, that has been a problem which has grown for some time 
because of the Canadians, their style of production at this moment, and 
the huge volume of timber they are pouring into this country. It is a 
market condition that will continue to shut down many of our mills, 
some that will never turn on their lights again, some that will never 
again employ men and women in the small towns where most of those mills 
are across the country.
  Today, some of my colleagues and I are introducing legislation to 
work cooperatively with the administration in trying to resolve this 
through negotiation. This legislation is being offered on behalf of 
myself, Senator Baucus, Senator Crapo, my colleague from Idaho, who is 
in the Chamber, Senator Sessions, Senator Snowe, Senator Collins, 
Senator Cochran, Senator Burns, and Senator Lincoln.
  In introducing this legislation today, we are amending the Tariff Act 
of 1930 to clarify what is an appropriate deduction from the price of 
merchandise. We believe the deduction of the countervailing duty should 
be included in the calculation in determining whether or not and to 
what extent there have been sales dumped at less than fair market value 
in the United States.
  Some time ago, we established a countervailing duty against Canadian 
products coming into this market. This is in response to that and the 
way it is calculated.
  While the Department of Commerce has worked diligently on the 
softwood lumber case, the Canadian industry and Government continue to 
effectively avoid the countervailing duty and antidumping orders. The 
most recent move by the Canadian Government to avoid the countervailing 
duty is to declare a significant region of interior British Columbia 
bug kill timber. This particular green lumber--or timber in this case--
is being sold at salvage prices and has flooded the amount of available 
timber already in the market.
  The price for this timber is now as low as a dollar per thousand 
board feet, while the competitive market value is over $100 per 
thousand board feet--in other words, on the stump at the time of the 
sale.
  I remind my colleagues a majority of this determined bug kill has not 
yet been affected by bugs. It is simply a decision made by the Canadian 
Government in this instance. Yet they are selling it at prices that are 
as if it had been affected by disease.
  Next, British Columbia has revised their forest practice code to 
reduce costs to the lumber manufacturers by decreasing forestry 
standards and placing logging corporations in charge of

[[Page S1670]]

enforcement actions. That is like the U.S. Forest Service turning to 
the logging companies and saying the logging companies can enforce all 
of the environmental laws, as well as the laws under which we govern 
and manage our forests. We will turn that authority over to the logging 
companies.
  What does this do to Canadian timber companies? It literally saves 
them millions of dollars in operating expenses.
  These recent and blatant moves by the Canadians reveal their true 
desires to continue to flood the U.S. markets and their unwillingness 
to find a resolution that provides both security for U.S. and Canadian 
jobs.

  Our proposal specifies that countervailing duties are to be treated 
as a cost of production, a clarification of the Trade Act that all 
duties should be considered a cost of production incurred on shipments 
to the United States. The deduction of countervailing duty would assist 
in determining whether or not and to what extent there have been sales 
dumped at less than fair market value in the United States.
  Dumping is when a company sells a product into the United States for 
less than its cost of production. The Department of Commerce currently 
does not consider countervailing duties, which offset subsidies, as a 
cost of production when calculating the amount of dumping and requisite 
antidumping duties. The Department's policy of ignoring countervailing 
duties when calculating antidumping duties undervalues the actual 
amount of the dumping.
  Fair value typically is the sales price of the merchandise in the 
country-of-origin market. The antidumping analysis compares fair value 
of a good from another country to the fair value of a good from the 
United States to determine if the good from another country was dumped 
at an unfair price in the U.S. market.
  For example, in the U.S.-Canadian softwood lumber dispute, the 
Department of Commerce determined that the Canadian provinces subsidize 
their industry by providing lumber mills timber at prices that are 33 
to 50 percent below market value. It also found that Canadian companies 
were selling lumber in the United States at below their subsidized cost 
of production, requiring an antidumping duty of 8.79 percent.
  The antidumping duty currently undervalues the Canadian dumping 
practices by comparing a subsidized cost of production to the price of 
lumber rather than comparing the cost of production plus the 
countervailing duty to the price of lumber. It is all in the math, and 
in this kind of math it is quite obvious that Canadians are taking 
tremendous advantage of the marketplace. As I said earlier, the lights 
in the sawmills across America are going out.
  Such a change in the Department's policy, we believe--those of us who 
have authored this legislation--is consistent with the practices of the 
European community and of Canada. It is time the Department of Commerce 
correct this accounting error, and it is time for the Canadian 
Government and their industry leaders to come to the table to negotiate 
a free and fair market price for both U.S. and Canadian lumber 
products.
  I believe this Congress will not tolerate the kind of dumping 
activity that is going on in the market today, which appears to be at 
this moment not only blatant but an attempt to grab even a larger 
market share in this country.
  For years, I have worked on this issue, and I clearly recognize the 
importance in the overall market of Canadian lumber in our market to 
meet our housing demands, but to do so and to expand that market base 
at a cost to U.S. jobs and U.S. producers is not fair, nor is it 
balanced. That is why we have introduced this legislation today.
  Several other colleagues who are cosponsors in the legislation plan 
to come to the floor during this period of morning business to speak to 
this issue. I am extremely pleased to be joined by Senator Baucus, 
Senator Lott, and Senator Snowe. I mention those three specifically 
because they are on the Finance Committee. This is legislation that 
will be referred to the Finance Committee.
  As my colleague from Idaho so clearly said, this is a simple 
correction in the law. It is a practice followed by other countries in 
Europe and Canada itself. Clearly, it would change the dynamics of how 
we deal with Canada, but it would also show the Canadians that we are 
not going to stand idly by and allow what is so blatant and so 
intentional in both the pricing of their stumpage and, therefore, the 
cost of entry into our market. Blatant dumping in the market for the 
purpose of gaining market share and putting some of our businesses out 
of business should not be tolerated.
  We have all heard over the years the phrase ``mill town.'' It is so 
true today, still, in those areas of our country that are adjacent to 
private and public forests, that it is the sawmill that often is the 
larger employer in the community, providing excellent jobs at high pay 
to the men and women who live within that community. When that mill 
goes down and those citizens are out of work, there is no alternative, 
there are no other jobs, or there are limited jobs in the community. 
That community oftentimes is anywhere from 20 to 100 to 150 miles from 
the next community.
  So that wage earner oftentimes is faced with a very tough choice he 
or she may have to make. That is not just to go search for another job 
but oftentimes to pick up their family and move from that small 
community they had chosen to live in and to raise their families. Why? 
Because a singular employee in this instance was either shut down or 
put out of business. Why? Because of predatory practices on the part of 
our friends to the north. And I say ``friends'' because I believe that. 
But certainly in this segment of their economy, they are choosing to 
enter the most lucrative timber market in the world--ours--with a 
thriving, aggressive homebuilding industry and an economy in the 
homebuilding industry that is very strong today, to supply that 
product.

  I recognize the sheer demand for dimensional lumber in this market is 
much greater than both United States producers from private and public 
lands can supply, and Canadians can and have had and will have a 
substantial portion of our market. But now, to do so intentionally so 
the big boys can get bigger in Canada, putting oftentimes out of 
business the smaller producer here in the United States, is something 
we should not stand idly by and tolerate.
  Mr. President, I see I am being joined in the Chamber by my colleague 
from Mississippi. Senator Lott is a cosponsor of the legislation we 
have just introduced dealing with the Tariff Act of 1930. Mississippi 
has a thriving timber industry that is a major contributor to their 
State's economy, and especially to rural Mississippi's workforce. So I 
will be happy to yield to Senator Lott for him to discuss this issue, 
of course, or any other issue he might wish to discuss.
  Mr. BAUCUS. Mr. President, I rise today to discuss a much-needed 
clarification of current trade law. Misinterpretation of the current 
law hurts hundreds of American companies and thousands of American 
workers.
  It is a misinterpretation that results in the understatement both of 
the degree of foreign unfair trade and the amount of duties necessary 
to offset it.
  The legislation Senator Craig and I are proposing would clarify that, 
in an antidumping proceeding, countervailing duties paid by a foreign 
seller should be deducted from the U.S. price.
  This legislation would rectify the current understatement of unfair 
trade and ensure that the true expenses of selling in the United States 
are recognized in the calculation of duties.
  Now, I am here today because this issue is of particular importance 
to Montana's softwood lumber industry. For more than 20 years, I have 
stood beside our lumber industry as they have fought massive illegal 
subsidies by the Canadian government.
  All they are asking for is a level playing field.
  Unfortunately for everyone, this process has been stuck in an endless 
cycle of litigation. I hope we can end that, and get to a place where 
there is real market-based competition. But until we do, we must ensure 
that our fair trade laws are as strong as possible.
  We have countervailing duty laws that offset unfair foreign 
subsidies. We also have antidumping laws that help ensure that foreign 
products are sold for a ``fair price'' in the United States,

[[Page S1671]]

a price that is comparable to the foreign price, and that reasonably 
reflects the cost of production.
  But we can't make a fair comparison unless we factor in the cost of 
countervailing duties. It's that simple. We are letting unfair traders 
off the hook.
  And we're doing so simply because of a misinterpretation of current 
law by the Department of Commerce. There is no sensible policy or legal 
rationale for this practice.
  And I would note here that adopting this legislation would make our 
practice consistent with the practices of Canada and the European 
Union. For the life of me, I can't understand we wouldn't give our 
companies and workers trade laws that are as strong as those in the 
countries we compete against. That is just common sense.
  I would also emphasize that Commerce itself could fix this problem if 
it were so inclined. Commerce could, for example, announce in an 
ongoing administrative review its intention to reconsider treatment of 
countervailing duties as a cost. The Department has often used such 
cases as a means to review policy.
  The current policy makes no sense. It violates the statute. It fails 
to redress continued dumping. And it effectively discourages 
negotiations to end unfair trade.
  Most importantly, correcting the current policy would force Canadian 
mills to make a clear choice, negotiate a long-term resolution or face 
higher duties.
  In the absence of a voluntary change in policy by Commerce, I offer 
this legislation to clarify the statute.
  This will ensure a fair comparison of prices and a more accurate 
measurement of the amount of dumping. It is just the right thing to do.
  The PRESIDING OFFICER. The Senator from Mississippi.
  Mr. LOTT. Mr. President, I thank Senator Craig for his leadership on 
this issue, and also Senator Baucus and Senator Crapo, and a number of 
others whose States are being severely impacted by very unfair Canadian 
softwood lumber practices.
  Forestry is the second largest crop in my State of Mississippi and 
represents $1.25 billion annually. But what we are dealing with is the 
dumping of this Canadian softwood into our region of the country.
  ``Dumping'' is when a company sells a product for less than the cost 
of production. But the Department of Commerce currently does not 
consider countervailing duties, which offset subsidies, as a cost of 
production when evaluating and calculating the amount of dumping and 
the requisite antidumping duties. The Department's policy of ignoring 
these countervailing duties when calculating antidumping duties 
undervalues the amount of the dumping of the products.
  Let me just say, I have been working on this issue actually for years 
now. I have worked with the previous administration and have been 
working with this administration. Our Customs officials have tried to 
be helpful. And certainly the current Secretary of Commerce has been 
paying close attention to this issue, and I really appreciate it. But 
there are limits to what they can do without additional legislation 
that will make it clear how we will deal with these countervailing 
duties. So that is why this legislation has been introduced.
  I think we must have had 8 or 10 Senators who met with the Secretary 
of Commerce and other officials of Commerce and discussed this problem 
and its continuing impact on this major industry in my State and in our 
country, and talked about the need to take some further actions to make 
sure we are properly evaluating the product that is being dumped in the 
United States.
  The United States-Canada softwood lumber dispute is one that has been 
going on a long time. And it is clear from information we have that the 
Canadian provinces are subsidizing their industry by providing lumber 
mills timber at prices that are 33 to 50 percent below market value. 
Our Commerce Department has found that Canadian companies have been 
selling lumber in the United States but below their subsidized cost of 
production, requiring an antidumping duty of 8.79 percent. The fair 
market value calculation currently undervalues the Canadian dumping 
practices by comparing a subsidized cost of production to the cost of 
United States lumber rather than comparing the subsidized cost of 
production plus the countervailing duty to the cost of United States 
lumber.
  That is what this legislation would do. It would correct this by 
specifying that the CVD duties are to be treated as a cost of 
production, a clarification of U.S. statute section 19, U.S.C. 1677, 
which states that all duties should be considered a cost of production 
incurred on shipments to the United States. Such a change of Department 
policy is consistent with practices in the European Union and, as a 
matter of fact, of Canada.
  The legislation, in my opinion, will have an immediate impact because 
with the correction of this problem, then, the Canadian mills will face 
the prospect of paying considerably higher antidumping rates if the 
lumber market remains at the current low level. So I think this is 
something we need to do.
  I have met with Canadian officials, including the Prime Minister, the 
Ambassador, and Members of their Parliament. I had the impression that 
while they recognized this is an economic problem in the United States 
and unfair, they do not believe we are going to take the necessary 
action to really get a result. And they have been dragging it out now 
for years.

  I am going to meet with some Canadian Government officials even 
tomorrow. I am sure this issue will come up. But once they realize we 
are serious--I believe this administration, this Commerce Department is 
serious--we are not going to allow them to sell this product at below 
production of cost, and that we are also going to include in that 
figure the cost figure, the countervailing duty orders, I think maybe 
they will understand that we have to deal with this problem.
  Even today, bug kill timber is being sold at salvage prices in the 
interior of British Columbia, which has increased the amount of 
available timber already on the market. The price for this timber is as 
low as $1 per 1,000 board feet, when the competitive market value is 
over $100 per thousand board feet. That gives you some concept of the 
disadvantage with which our American softwood lumber producers are 
dealing. Our lumber industry is in a crisis. Make no mistake about it. 
We have been losing mills. The product value is down. Production is 
down. If the current market conditions continue, many of our remaining 
lumber manufacturers will not survive the next 6 months. This is a 
critical situation, and it is one that is going to get much worse if we 
don't get some action quickly.
  The U.S. lumber industry supports the Department's changed 
circumstances process. Therefore, I think this is a solution we can all 
work on. As a member of the Finance Committee, along with Senator 
Baucus, who also serves on the Finance Committee, we will make sure 
this legislation receives the consideration it deserves.
  We urge our colleagues in the country that is one of our two or three 
best friends in the world, Canada, to work with us on this. This is an 
unfair situation, one that has been going on too long, one that is 
destroying an important part of our economy. I hope our Government will 
vigorously pursue the litigation that is now being considered. The WTO 
has already found that Canada has an actionable subsidy, meaning these 
duties will be imposed until provinces allow the market to determine 
the price of timber. Our Government should continue to pursue it.
  Our Canadian friends and allies should work with us because this is a 
very unfair situation, one we are trying to remedy by making sure all 
of the costs of production, including the countervailing duties, are 
included in their calculations.
  I congratulate Senator Craig for his leadership in this area, and I 
look forward to working with him in the future as we come forward with 
a proper solution to this critical issue.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Idaho.
  Mr. CRAIG. Mr. President, I appreciate Senator Lott coming to the 
Chamber this morning to speak on the role the timber industry plays in 
the

[[Page S1672]]

economy of Mississippi and how important it is. It is important to 
rural Mississippi, to rural Idaho, to rural America, where we struggle 
mightily to keep a viable productive job base.
  Clearly over the last decade, the economy of this country flourished. 
And while all of that was going on, it was rural Idaho that felt much 
of the pain and shared not in that new growth economy, in part because 
of the very problem both Senator Lott and I and Senator Baucus and 
others are addressing. My colleague Senator Crapo spoke to the matter 
as well.
  This is a relatively simple adjustment in trade law, but it could 
have a substantial impact on the Canadians and the current practices in 
which they are involved, practices we believe are not in the best 
interest of both governments and both countries.
  To have a nearly ``cut at will'' policy, both in provincial and crown 
timber in Canada, is at best frustrating to some of us who believe not 
only is that bad policy but, from an environmental point of view, it is 
not an effectively balanced policy. Are the practices being adhered to 
that should be adhered to for the purposes of sustaining yields and 
ongoing production of timber? Or is it simply an effort to keep people 
at work, in this instance, and, more importantly now, because of the 
declaration of green timber unaffected by disease or bug, now being 
called bug kill timber, is it simply a policy to grab an increasingly 
larger portion of the market? When many of these medium- and small-size 
mills go down, oftentimes they don't come back. If they are down for a 
longer period of time, the workforce disperses in search of another job 
and, as a result of that, many of these mills that go down will stay 
down permanently.
  That is exactly what larger producers in Canada are hoping for, as it 
will allow them an ever-increasing larger portion of the market here in 
the lower 48 States.
  I hope the Finance Committee will hold hearings and move quickly on 
this issue. It is important for our economy and, more importantly, it 
is a small town, mill town issue that in many States, such as Idaho, 
Mississippi, Montana, and throughout the South where there are large 
timber reserves, becomes a critical way of sustaining the rural 
economy.
  The PRESIDING OFFICER. The Senator from Idaho.
  Mr. CRAPO. Mr. President, I appreciate the opportunity to join with 
my colleague from Idaho, Senator Craig, and with the other Senators he 
has listed who are cosponsoring this critical legislation.
  Senator Craig has already laid out this circumstance. Some time ago, 
when we could not reach an agreement with Canada on this critical issue 
through trade negotiations, WTO and other trade sanctions were sought 
by American companies seeking to correct the problem that has been 
faced by subsidized timber flooding into the United States from Canada. 
As a result of that effort, the U.S. Department of Commerce found the 
Canadian provinces subsidize their industry by providing lumber mills 
timber at prices that are 33 to 50 percent below market value.
  As Senator Craig has indicated, as a result of that, a countervailing 
duty was applied and the Canadian timber producers, who are trying to 
bring their timber into the United States, are now required to pay this 
countervailing duty as a cost for their subsidized timber.
  The response of the Canadian Government to that has not been simply 
to comply and try to negotiate a new, workable softwood lumber 
agreement. Instead, the Canadian Government has continued to increase 
the available subsidies and to try to flood the United States markets 
with this timber. The outcome has been that from August 2000 to March 
2001, the United States lumber manufacturers closed 27 mills 
permanently while only two Canadian mills were closed during that time. 
The reason, of course, was this continued support provided from the 
Canadian Government.
  How was it provided? As has already been indicated, allegedly bug 
kill timber. But timber wood that has not faced the impact yet was 
provided for prices which were as low as $1 per 1,000 board feet when 
the market price for that timber would have been somewhere in the 
neighborhood of $100 per 1,000 board feet. This significantly 
subsidized timber has been brought into the United States, exacerbating 
the problem.
  Second, as Senator Craig already indicated, the British Columbian 
government has already revised their forest practice code to reduce the 
cost of lumber manufacturers under their code, saving them millions of 
dollars annually. What we see is, in response to this anticompetitive 
situation of unfair trade practices that have been identified and which 
are now being dealt with in litigation, the Canadians have increased 
their subsidies and are continuing to flood timber into the United 
States markets.
  A number of changes need to occur. But one of them needs to occur in 
U.S. law because as a part of the entire process, it is important to 
determine the amount of subsidy. The subsidy is determined by 
evaluating whether the price that is being charged to the Canadian 
producers is above or below their cost of production. One of the 
critical elements is determining that value.
  Currently, we have found Canadian companies are selling their lumber 
into the United States at below their subsidized cost of production, 
requiring antidumping duty of 8.79 percent. The point I make is that 
their current subsidies are even below and make it so that they are 
able to provide their timber to U.S. markets below subsidized cost of 
production.
  The legislation we are introducing today will require them to include 
the countervailing duty which they pay as a part of their cost of 
production in determining what their true subsidy is. As long as the 
United States does not require the Canadians to include their 
countervailing duties as a cost of their production, then the amount of 
the subsidy which we determine will be even less than it truly is. It 
will not be accurately reflected.
  This is a simple change to clarify what is already on the books in 
the United States. This practice is pursued in Europe and in Canada 
already under their approach to these issues. It is only proper that 
the U.S. Government stand firmly behind this principle. Again, the 
principle is, when a nation is subsidizing its products and shipping 
them into U.S. markets to the detriment of our producers, that subsidy 
must be included as a cost of doing business when we calculate in our 
litigation with them the amount of subsidy and the resultant 
countervailing duties we can apply.

  I don't believe there is a legitimate argument against this 
legislation. I realize nations across the world are trying to figure 
out how to continue to do the best they can for their producers to help 
them get their products into our markets. However, we have now very 
aggressive negotiations underway in bilateral trade arrangements as 
well as in multilateral trade arrangements such as the world trade 
negotiations seeking to bring down the level of subsidies across the 
world to a level of zero. That is our objective in our international 
trade negotiations. We cannot tolerate the continued defiance of these 
types of laws in our negotiations. That is the simple purpose behind 
this legislation.
  The United States and the Department of Commerce and our United 
States trade negotiators in particular have been doing a tremendous job 
in helping deal with a very difficult situation resulting from the 
Canadian unfair trade practices in softwood lumber. They are to be 
commended for this. One of the things we need to provide to them as a 
tool in this ongoing process is a congressional and, indeed, American 
statutory declaration that countervailing duties must be included in 
the cost of production as we negotiate on these critical issues with 
our neighbors to the north.
  I thank the Senate for this time. I thank my colleague Senator Craig 
for his leadership on this issue and the other Senators supporting this 
effort.
  Ms. SNOWE. Mr. President, I am here today to cosponsor legislation 
that should help resolve the current crisis being faced by the U.S. 
softwood lumber industry, which continues to be devastated by the 
continuation of a ``wall of subsidized wood'' coming from four Canadian 
provinces that are effectively avoiding countervailing duty and 
antidumping orders of the U.S. Department of Commerce. This is causing

[[Page S1673]]

a crisis in current market conditions not only in Maine but across the 
Nation.
  The purpose of the U.S. countervailing duty, or CVD, law, is to 
offset unfair foreign subsidies which cause injury to our U.S. 
producers. In the Canadian softwood lumber case, Commerce has 
determined that some Canadian provinces subsidize their lumber mills at 
prices that are 33 to 55 percent below market value. Currently, 
Canadian prices for salvage timber, for instance, are as low as $1 per 
thousand board feet at the same time the competitive market value is 
over $100 thousand board feet.
  Our antidumping law is supposed to ensure that foreign products are 
not sold for less than its cost of production. Currently, the 
Department of Commerce does not consider countervailing duties as a 
cost of production, thereby undervaluing the Canadian dumping practices 
by comparing a subsidized cost of production to the price of lumber 
rather than comparing the cost of production plus the countervailing 
duty to the price of lumber. Ignoring countervailing duties when then 
calculating antidumping duties undervalues the actual amount of 
dumping, and is devastating to our U.S. softwood lumber industry.
  The Craig/Baucus legislation that I am supporting today amends the 
Tariff Act of 1930 to clarify that countervailing duties should be 
added into the cost of production as it reflects the true cost of 
production by offsetting subsidies. This provision will rectify the 
problem of undervalued dumping duties and make U.S. trade policies 
consistent with those of our trading partners, such as Canada and the 
European Union.
  Adopting this clarification should have an immediate market impact. 
With the correction of the current problem, Canadian mills would face 
the prospect of paying considerably higher antidumping rates if the 
lumber market remains at the current low level. This legislation should 
demonstrate the resolve of the U.S. government to reach a fair and 
permanent solution to the softwood lumber trade case by increasing the 
risk to Canadian companies if a negotiated settlement is not reached. 
The Canadian lumber industry and its governments must realize that the 
U.S. will continue to impose the required duty offsets until the 
subsidies and dumping stop.
  I commend the Department of Commerce for their diligent work on the 
softwood lumber case with Canada and cannot urge our U.S. trade 
negotiators strongly enough to reach a settlement with Canada just as 
soon as possible before we have yet another U.S. mill close its doors 
for good. The subsidized and dumped lumber from Canada has been 
devastating to my State of Maine, where sawmills continue to close 
their doors for good, affecting entire rural communities where these 
businesses are located, and where the mills are often the major source 
of good paying jobs in these areas.
  Moreover, if a negotiated settlement is not reached, I believe that 
the U.S. should vigorously pursue the litigation with the World Trade 
Organization, WTO, especially since the WTO has already found that 
Canada has an actionable subsidy, meaning duties will be imposed until 
provinces allow the market to determine the price of timber rather than 
provincial governments.
  Again, this legislation being offered today by Senators from all 
regions of the country provides a much needed clarification of U.S. 
trade law, in keeping with those of Canada and the European Union, that 
will greatly help the U.S. softwood lumber industry out of its current 
economic crisis that has been caused by subsidized, underpriced 
imports, and I urge the support of my colleagues.
  Mr. COCHRAN. Mr. President, I support the efforts of the Department 
of Commerce and United States Trade Representative to negotiate a fair 
trade agreement with Canada. We have a very important trading 
relationship with Canada. They are America's strongest trading partner, 
and I hope we can continue strengthening that relationship. However, 
Canada subsidizes its lumber mills, and those mills are dumping lumber 
in our domestic market. This has a devastating effect on the lumber 
industry in America, particularly in Mississippi where mills are 
closing each month.
  Currently, the Department of Commerce has imposed a countervailing 
duty to offset the injury to our market. Canadian mills must pay a 29 
percent duty on top of the cost of producing their lumber. To arrive at 
that duty rate, the Department of Commerce calculates what it costs 
Canadian lumber producers to process their lumber. In fact, a U.S. 
statute, Sec. 19 U.S.C. 1677, states that duties should be considered a 
cost of production incurred on shipments to the United States.
  Today, Senators Craig, Baucus, Burns, Miller, Crapo, Lott, Sessions, 
Snowe, Collins, Lincoln, and I introduced a bill to clarify the law so 
that there is no misunderstanding of the rules under which the 
Department of Commerce calculates the duties imposed on illegally 
subsidized Canadian lumber. This recalculation would raise the price it 
costs Canadians to produce their lumber and would allow the Department 
of Commerce to raise the current 29 percent duty. The practice of 
subsidizing and dumping must be taken seriously.
  I am hopeful that the recent trips by the U.S. Government to Canada 
can result in honest and fruitful negotiations leading to a fair lumber 
trading agreement. It is in the best interest of both of our countries 
that we reach an agreement. In my State, lumber is one of our most 
valuable agricultural products.
  For years the mills in my state have endured unfair trading 
practices. Now that the U.S. is finally imposing duties to offset the 
injury to these mills, the Canadians are simply incorporating the 
duties into their cost of doing business. On behalf of the few 
remaining lumber mills in Mississippi I urge the Department of Commerce 
to uphold existing trade laws by counting duties as a cost.
                                 ______