U.S. - Canada Sparring Match Continues
October 4, 2004For many years now, U.S. agricultural producers have harassed their Canadian competitors with antidumping and countervailing suits only to be told by international trade
panels,
and sometimes even the U.S. government, that Canada is not competing unfairly.
Why won't U.S. producers listen to the ref? Here are two current U.S.-Canadian
trade disputes that harm American consumers:
Softwood Lumber
Canadian softwood lumber is used by homebuilders to frame houses. There is
not a sufficient quantity of softwood lumber in the United States to meet
domestic demand, so we import it from other countries, most notably Canada.
Several years ago, our domestic lumber industry filed a trade case alleging
that Canada subsidizes softwood lumber production, and also that Canadian
producers are selling softwood lumber at an unfairly low price--a practice
that is called "dumping." The Government promptly investigated,
and determined that the allegations were "true" and that these "unfair"
practices were "threatening" to injure U.S. lumber producers. To
correct this unfair trade situation, the U.S. imposed border taxes or duties
totaling 27 percent on imports of softwood lumber.
The trade dispute process seems to work, right?
Wrong. First of all you, the consumer, pay the price for this "leveling
of the playing field." Secondly, producers in Canada get hurt, too, so
it makes sense for the Canadian government to insist that the U.S. process
is fair and unbiased. And they have the right to ask for a review of the case
by a dispute settlement panel under the North American Free Trade Agreement
(NAFTA).
In pretty short order, a NAFTA dispute settlement panel (composed of three
Americans and two Canadians) found that the United States had failed to prove
that there was a threat of injury to our domestic lumber producers due to
Canadian imports. The International Trade Commission (ITC) reluctantly agreed
to reverse its original finding. On October 13, the Bush Administration decided
to appeal the NAFTA decision. If the appeal panel upholds the original ruling,
the U.S. Government will be obligated to repeal the 27 percent duties on the
lumber imports and return the monies collected, plus interest, to the importers
who paid them. The current amount of duties sitting in escrow pending the
outcome of the dispute: about $2.5 billion!!
American consumers should be both pleased and outraged. Why? First, if the
original NAFTA decision is upheld by the appeal panel, the price of new homes
and lumber should be reduced. But, only importers--who initially pay the duties--will
get their money back. Consumers who paid higher prices for lumber and new
homes over the last few years because of these bogus taxes will never get
their money back.
Second, our government will have to pay interest on the improperly collected
taxes. That's your tax dollars being flushed down the toilet all because American
lumber producers didn't like competition from Canada, and the U.S. government
either botched its investigation or caved in to the politically well-connected
lumber lobby.
Third, our government is appealing a legal decision that would benefit American
consumers. It claims that the original NAFTA dispute settlement panel went
too far in requiring the ITC to change its injury finding and repeal the tariffs.
Our government seems to accept the authority of dispute settlement panelists
only when they rule in favor of American industry.
Any way you look at it the softwood lumber case doesn't paint a very consumer-friendly
picture of the U.S. Government.
Live Swine
Another more recent case involves imports of live pigs from Canada. On
March 5, 2004, a group of U.S. pork producers filed antidumping and countervailing
petitions with the U.S. Department of Commerce, claiming that Canadian pork
producers are selling live swine at prices below the cost of production and
benefiting from government subsidies. These petitions claim that low-priced
Canadian swine is hurting their sales and causing the loss of U.S. jobs.
These claims are ridiculous for two reasons:
First, Canadian hog producers play a vital role in the North American swine
industry. The U.S. pork industry has become highly concentrated. To compete
against mega-producers, hundreds of American family farmers import Canadian
piglets and raise them for slaughter in the U.S. Tariffs will threaten these
farmers and concentrate more market control in the hands of a few huge companies.
This is bad news for consumers.
Second, farm support payments are a way of life in both Canada and the United
States. On August 17, the U.S. Department of Commerce issued a preliminary
ruling stating that Canada is not subsidizing its pork industry illegally.
The U.S. government found that Canadian swine industry farm support payments
are fully in compliance with U.S. law and international trade rules. For once,
the Commerce Department may have gotten it right.
Consumers for World Trade hopes that no new tariffs on swine imports are levied.
Tariffs are nothing but border taxes designed to increase prices and limit
competition. They "protect" domestic industries by penalizing American
consumers, many of whom cannot afford to bear the cost of protectionism. Competitively
priced imports of Canadian hogs benefit U.S. consumers greatly. Imposing punitive
duties to increase price and limit availability of a product is simply not
in the interest of American consumers.