NAFTA Injury Panel Decision

CONGRESSIONAL RECORD
SENATE
Oct. 5, 2004

NAFTA INJURY PANEL DECISION

Mr. SMITH. Mr. President, I would like to join my colleagues in expressing concern about the Canadian lumber NAFTA panel decision. The experience in the lumber case suggests that greater safeguards may be needed to prevent abuse by rogue panels. Without such reform, I fear Canada will continue its strategy of litigation over negotiation. Indeed, the softwood lumber dispute has reached a critical phase. Since backing away from a tentative agreement reached in December 2003, the Canadian Government has pursued an even more aggressive litigation strategy in an effort to insulate its unfair practices. Most recently, the Canadian Government has urged the Commerce Department to act contrary to U.S. law and return on a retroactive basis antidumping and countervailing duties collected prior to recent Chapter 19 rulings.

In my view, it is imperative that the Commerce Department clearly and emphatically reject requests that deposits already collected be repaid as a consequent result of Chapter 19 panel decisions. U.S. law clearly follows the generally-accepted convention that international dispute settlement decisions are to be implemented prospectively only. The Commerce Department cannot repay deposits already made without express statutory authorization. And the law as passed by the Congress is clear that entries prior to any panel decisions would be "liquidated" in the circumstances of the lumber case at the duty rates that Commerce Department established in its original countervailing duty and antidumping duty determinations in 2002.

I find the Canadian Government's current position with respect to repayment of duties to be particularly remarkable considering the Commerce Department's treatment of this issue in the previous softwood lumber dispute. In 1994, the Commerce Department stated that the statute implementing the U.S.-Canada Free Trade Agreement did not permit it to refund deposits paid prior to the implementation date of a panel decision. Since the relevant statutory provisions under the NAFTA remain the same, the Canadian parties know that their position is wrong as a matter of U.S. law. Canadian parties could have appealed the 2002 lumber trade findings to the Court of International Trade, which might have issued an injunction to protect their ability to obtain a retroactive refund of the deposits, but they chose the NAFTA panel route knowing full well that NAFTA panels cannot issue such injunctions.

Of course, the deposits made could always be returned as part of a negotiated settlement that preserves the interests of U.S. workers and sawmills, as was done in 1994. But the Commerce Department is otherwise forbidden by law from refunding the deposits made prior to international panel rulings. I expect the Commerce Department to make this clear to Canada.

I think it is important for each of us to encourage the stakeholders to come back in good faith to negotiations to resolve these cases once and for all. I believe there will be a window of opportunity later this year and will work with all parties to encourage meaningful negotiations to find a balanced solution.