Step Right Up for the Best Show in Town!
December 27, 2004
Sen. Max Baucus (D-MT) and Sen. Larry Craig (R-ID) recently introduced a bill
that would require the $3 billion in duties collected over the last three
years on Canadian softwood lumber imports to be distributed to domestic timber
companies--many of which are located 
in--you
guessed it--in Montana and Idaho. These duties, which are border taxes collected
by importers and ultimately paid for by consumers, have been sitting in escrow
pending the outcome of a trade dispute on softwood lumber that almost everyone
expects Canada to win. If Canada does win, these duties will be returned to
the importers who paid them. (Unfortunately the consumers will never see a
refund for the billions they have shelled out in higher lumber costs.)
Senators Craig and Baucus probably know that these billions of dollars are
unlikely ever to be actually distributed to their special interest constituents.
Indeed, their actions in introducing S. 2992 seem to be compelled by a wish
to bully Canada into agreeing to a bad bilateral agreement that will continue
to keep lumber prices high.
More important, though, is the fact that two senators are so willing to take
money from hundreds of thousands of Americans just to benefit a few special
interests back home. And who are the mere few that will stand to gain from
this piece of legislation? Well, it isn't us taxpayers or consumers; that's
for sure. The current duties on softwood lumber were imposed at the request
of a group of protectionist southern land owners and five large timber companies.
Each member of this group would stand to gain hundreds of millions of dollars
if these funds are distributed. However, not every domestic timber producer
would gain from the distributions. Only those few who signed the petition
requesting the duties would stand to benefit. Their domestic competitors would
be left out in the cold.
This latest legislative bid harkens back to the Byrd Amendment, more formally
known as the Continued Dumping and Subsidy Offset Act (CDSOA). The CDSOA permits
the distribution of legally collected "dumping" or "countervailing"
duties that are imposed when one of our trading partners engages in "unfair"
trade practices.
But in this instance, it is very unclear whether Canada ever engaged in "unfair"
trade with the United States. Indeed, a dispute panel set up under the terms
of the North American Free Trade Agreement (NAFTA) has ruled that the U.S.
government failed to prove any injury to its domestic injury in which case,
the duties should never have been collected. As long as there is a dispute
over whether these duties were legally collected by the United States, it
is improper to distribute this money to U.S. special interests.
Senators Baucus and Craig don't appear to be that concerned that their bill
is in blatant disregard of international trade law, and would make other American
exporters vulnerable to an additional $3 billion in trade sanctions. It is,
after all, for the constituents back home. Oh, and by the way, once the money
has been distributed to domestic timber companies it would be impossible to
retrieve it and give it back to the folks -- American Taxpayers -- from whom
the money was illegally collected.
At $3.3 billion the lumber pot is so big that it is now driving this trade
case, and provides yet another prime example of why the Byrd Amendment--which
allows these tax revenues to be given away to corporate America with no strings
attached--needs to be repealed. It does nothing but serve as an incentive
to industries to engage in market-distorting behavior that in the end costs
consumers and taxpayers plenty. You can do something about this by contacting
your senator and urging repeal of the Byrd Amendment!