[Congressional Record (Bound Edition), Volume 151 (2005), Part 1]
[Senate]
[Pages 334-335]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    CANADIAN SOFTWOOD LUMBER DISPUTE

  Mr. CRAIG. Mr. President, I rise today to discuss the latest 
developments regarding the Canadian softwood lumber dispute. With yet 
another curious and ultimately inconsequential lumber unfair trade 
determination due today at the behest of a NAFTA dispute panel, it is 
important to place this matter in proper perspective.
  Would the distinguished Senator from Montana and my colleague from 
Idaho engage in a colloquy with me concerning the Canadian softwood 
lumber dispute?
  Mr. BAUCUS. I would be pleased to engage in such a colloquy.
  Mr. CRAPO. I would also like to join my colleagues in a colloquy on 
this matter.
  Mr. CRAIG. The Commerce Department has found repeatedly that Canadian 
lumber is subsidized and dumped. World Trade Organization and NAFTA 
dispute settlement panels have definitively rejected Canada's long-time 
arguments that its underpricing of timber cannot be deemed a subsidy. 
The panels have also upheld findings that Canadian lumber is unfairly 
dumped in the U.S. market. The International Trade Commission has found 
repeatedly that the unfair imports threaten our industry with harm.
  President Bush was well prepared to answer the Canadian Prime 
Minister when they last met. The President told the Prime Minister that 
the problem of subsidies and dumping is caused by Canada, and the 
solution lies with Canada, unless Canada wants the solution to be 
permanent duties to offset the subsidies and the dumping. In over two 
decades, Canadian officials have not gotten the message, at least not 
in a way that takes, that this problem will not be resolved by Canada's 
investing hundreds of millions of dollars in legal fees on more than 30 
Washington law firms to circumvent U.S. laws in countless appeals to 
the WTO, to NAFTA panels and to the U.S. courts--several more were 
filed just this month. And it will not be solved by the cottage 
industry that has grown up in Canada to mount PR campaigns in the 
United States.
  The U.S. timber industry vigorously supports the administration's 
view that the unfair Canadian lumber problem could most appropriately 
and productively be resolved through negotiations--although perhaps 
there just ought to be permanent duties in place. But the U.S. timber 
industry is taking the statesmanlike high road, and I support it. Some 
vested interests in Canada do not see this, and prefer endless 
litigation, probably based on misguided advice that this will be 
productive from those who have made a living defending Canadian 
subsidies.
  Mr. CRAPO. Specifically, the problem remains that the market is 
grossly distorted by Canadian unfair trade practices. Absent 
termination of or an offset to the unfair practices, the U.S. timber 
industry will be severely impacted by subsidized and dumped Canadian 
imports. We in the Congress have been assured that those responsible in 
the administration will not allow this further injury to our industry 
occur.
  A solution can be either border measures imposed by the United States 
or Canadian border measures agreed to with the United States pending 
adequate Canadian timber policy reforms.
  The Bush administration has concluded that the November 2004 
determination of the International Trade Commission that Canadian 
imports threaten the U.S. industry with injury--the ``Section 129'' 
determination--represents an independent basis authorizing and 
necessitating retention of the countervailing and antidumping duty 
orders. The United States has faith in winning the NAFTA Extraordinary 
Challenge Committee proceeding on the injury issue, but even a negative 
outcome before the committee would not be the end of the matter.
  The Bush administration has concluded that duty deposits, amounting 
to approximately $3 billion and growing daily, cannot and will not be 
returned absent a negotiated settlement between the Canadian and U.S. 
Governments. The panels can provide prospective but not retroactive 
relief. In any event, these funds are rightly due under U.S. law to the 
injured domestic timber industry. If there is a negotiated solution, 
the funds can be apportioned fairly as part of the settlement.
  There is zero likelihood that the countervailing duty, antisubsidy, 
order will disappear absent settlement of the lumber subsidy and 
dumping issues, no matter how often a NAFTA panel tries to achieve this 
outcome.
  The U.S. right to challenge Canadian log export restrictions at the 
WTO is clear under the WTO, and Canada is clearly in violation of its 
WTO obligations. I understand that the Bush administration is 
evaluating this issue.
  I also understand that the U.S. timber industry intends to bring a 
constitutional challenge to NAFTA dispute settlement if the lumber 
dumping issue is not resolved. The future of U.S. sawmills and 
millworkers cannot be allowed to be ruined by outlandish decisionmaking 
by NAFTA dispute panels and a panelist's service with an obvious, 
undisclosed conflict of interest.
  Mr. BAUCUS. I agree completely with my colleagues. As suggested, a 
NAFTA dispute panel is requiring that the Commerce Department issue 
today yet another revised version of the

[[Page 335]]

original 2002 lumber-subsidy determination. Given the panel's pattern 
of overreaching, it may be a relatively low subsidy estimate. If so, 
this will be trumpeted in headlines across Canada as a victory for 
Canada's lumber policies. Before all those editorial writers seize on 
this supposed ``victory,'' they should understand that this 
determination will have absolutely no legal effect. It is the Commerce 
Department's December 2004 findings of a subsidy of over 17 percent and 
dumping of 4 percent that controls. Hyping the January 24 decision as 
having any meaning performs a disservice to Canadian interests, which 
lie in a mutually beneficial negotiated settlement.
  Nothing can change the facts. The Canadian provinces provide timber 
to their lumber companies for a fraction of its value. This harms not 
only U.S. sawmills, millworkers and family forest landowners, but also 
the Canadian forest. Environmental groups have long decried the 
overharvesting of timber caused by undervaluing the resource.

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