U.S. lumber producers like a Trump administration move to drop part of the North American Free Trade Agreement’s dispute resolution system they say handcuffs their ability to fight unfair Canadian timber sales. But Canadian timber analysts warn the move could further muddy a wood market already clouded by political maneuvers.
“We applaud U.S. Trade Representative Robert Lighthizer for pushing the removal of the Chapter 19 dispute panel system from NAFTA,” U.S. Lumber Coalition spokesperson Zoltan van Heyningen wrote in an email Tuesday. “The Chapter 19 system is unconstitutional, unworkable in practice, and for decades has seriously undermined the enforcement of U.S. law against unfair trade practices by Canada and Mexico, to the detriment of U.S. industries and workers.”
NAFTA’s Chapter 19 provides a case-by-case negotiating court where governments can argue legal claims about unfair trade practices. The U.S. Department of Commerce believes Canada’s federal government unfairly subsidizes wood harvested from its national forests, giving Canadian sawmills an advantage when they export the finished lumber to the United States. Commerce Department attorneys also claim Canadian exporters sell their lumber below fair market value to U.S. buyers. But their case also must pass the Chapter 19 panel to be internationally binding.
“The NAFTA dispute mechanism is unlike any other mechanism or trade agreement we’re party to,” van Heyningen said Tuesday. “It’s unique because it allows foreign citizens, in this case Canadians, to sit on a panel that makes a binding decision interpreting U.S. law. They get to tell the U.S. government how to apply U.S. law to Canadian imports.”
The now-expired U.S.-Canada Softwood Lumber Agreement specifically excluded that Chapter 19 panel in favor of a weaker international trade court. Since it collapsed last year, U.S.-Canada lumber disputes may now get settled under the NAFTA rules. The Chapter 19 dispute panels appoint two U.S. and two Canadian members, with a tie-breaking fifth member chosen by coin-toss.
From The Missoulian: https://missoulian.com/news/local/nafta-fight-could-rock-timber-industry/article_b8cd0380-d6aa-5439-98fd-82af452d59ef.html