American government shows contempt for the rule of law

I don't usually indulge myself in anti-American rants. First, I have good relations with several Americans on this blog. Second, I think Canadians and Americans share many common values; we're not as different as Canadians sometimes suppose. Third, I think Canada benefits in many ways from its close relations with the USA.

I disagree with the decision to invade Iraq, but so do lots of Americans. (Probably more than 50% now.) More generally, I don't have a very high opinion of "Dubya"; and again I'm in company with a lot of Americans on that point.

But the USA has really pissed Canadians off this week. The issue is free trade: the North American Free Trade Agreement (NAFTA).

It isn't even the sort of issue I usually care about. I am not a big business type. On the contrary, I'm all about social justice, and I tend to be pretty suspicious of multi-national conglomerates. So NAFTA is someone else's baby, not mine.

But as near as I can figure, the US government has literally stolen $5 billion from the Canadian economy over the past three years. The highest tribunal overseeing NAFTA has said as much.

I don't expect the US government to meekly apologize and return the money — I'm not such a hopeless idealist as that. But I would like the US government to obey the rule of law and stop imposing the tariffs. Instead, the US government intends to continue stealing our money.

Here are the facts, at least according to the Canadian media. From today's Globe and Mail:

U.S. Customs has collected roughly $5-billion in duties since May 2002, when American trade officials concluded Canadian softwood imports were unfairly subsidized.

NAFTA panels have three times concluded that the U.S. failed to prove that Canadian softwood poses a material threat of injury to U.S. producers.

Under trade rules, if Washington can't prove Canadian timber injures or threatens to injure U.S. producers, it is obliged to scrap the duties on Canadian lumber imports.

Canada's latest victory was on Aug. 10, when a NAFTA panel ruled that the U.S. had once again failed to adequately demonstrate injury to U.S. producers. The decision should have put an end to the dispute, but the United States said it had no intention of lifting the duties or returning the money.

In response, the federal government cancelled softwood negotiations scheduled for earlier this month with the U.S.

The men and women who negotiated the original free trade agreement are spitting mad over this. One of them described the conduct of the Americans as "an egregious, shocking, dishonourable breach of their obligations." Another said, "It's the tactic of the schoolyard bully." John Ibbitson, in Saturday's Globe and Mail, writes:

That the very architects of free trade between Canada and the United States should be speaking in such terms is, frankly, shocking.

Even more shocking is that, to a man and woman, they believe Canada should impose retaliatory tariffs, or other restrictive measures. …

There is a palpable sense of personal injury in their comments, which may come from the political irony that lies behind the American rebuke.

In 1987, the free-trade negotiations between Canada and the United States almost collapsed because the Americans refused to accept a binding dispute resolution mechanism, while Canada insisted on one. At almost literally the last possible moment, the Americans accepted the Canadian demand, on the condition that an Extraordinary Challenge Committee, as they called it, be able to review the decisions of all lower panels.

Although the Canadian negotiating team was very reluctant to accept yet another layer of appeal for trade disputes, they finally acquiesced.

It was to that Extraordinary Challenge Committee that the Americans appealed last year, when all other rulings on softwood imports went against them. It was that same committee that ruled last week in Canada's favour. That the Americans would repudiate the verdict of the very tribunal that they insisted must be part of the FTA infuriates those who negotiated the pact.

The USA's new ambassador to Canada has further infuriated Canadians by taking a completely patronizing tone with us. From another article in Saturday's Globe and Mail:

It is positively grating to hear the new U.S. ambassador to Canada, David Wilkins, patronizingly advise Canadian officials to tone down their rhetoric in response to that flouting of American treaty obligations. "The one thing that is for sure is that the more we escalate this and the more we have emotional press conferences about it, the less chance we've got to resolve it," he said in an interview this week, adding that negotiators from the two nations should simply get back to the bargaining table.

And what should they talk about? The fact that, for more than three years, the United States has slapped countervailing and anti-dumping duties on Canada's softwood exports, collecting almost $5-billion? The fact that Canada has won repeated skirmishes over softwood at both the World Trade Organization and at NAFTA dispute panels, all to no avail? …

That bad situation has been made even worse by the U.S. Byrd amendment, which effectively allows U.S. lumber firms to benefit doubly from their allegations of damage. Under that 2000 change to the U.S. Tariff Act of 1930, anti-dumping and countervailing duties are put in the kitty — and actually distributed to U.S. complainants, instead of the U.S. Treasury, when litigation is completed. So U.S. firms get to watch as their Canadian competitors are hit with duties — which makes them less competitive — with the added prospect of divvying up those huge duties among themselves.

It is a powerful incentive to keep complaining.

So I'm ranting, even though I usually don't bash Americans, and even though I usually don't give NAFTA a second thought. Am I wrong about this, or has the US government just demonstrated its contempt for the rule of law?

I am reminded of the Robert Frost line, "Good fences make good neighbors." The free trade agreement was the dismantling of a wall. And we've benefited from it in many ways, I have no doubt. But maybe I'd like this neighborhood better if the wall were still solidly in place.