Dear Mr. Secretary:
We are writing to express serious concern about recent decisions by North American FreeTrade Agreement (NAFTA) binational panels in the ongoing dispute over Canada’s subsidizedsoftwood lumber imports. Most recently, one such panel remanded to the Department ofCommerce its calculation of the countervailing duty on Canadian lumber imports. In addressingthe panel’s concerns, the Commerce Department must ensure that it calculates the duties in away that sufficiently offsets pervasive Canadian subsidies.
There is no question that Canada subsidizes its lumber industry. The CommerceDepartment has repeatedly found significant countervailable subsidies, and the InternationalTrade Commission (ITC) has repeatedly confirmed that Canadian lumber imports threaten thelumber industry with injury. Such findings have also been upheld by the World TradeOrganization (WTO). Nevertheless, in reviews of Commerce and ITC determinations, NAFTApanels have overstepped their limited standard of review and have declared the methodologiesemployed by U.S. agencies unacceptable.
In the past, the Commerce Department has measured the extent of these subsidies byreference to prices in U.S. markets, particularly given the pervasive price effects of Canadiansubsidy programs on private Canadian timber prices. This methodology remains appropriate andlegally defensible. In fact, the WTO specifically rejected Canada’s complaint that such a crossbordermethodology under such circumstances was inconsistent with U.S. WTO commitments.NAFTA panel decisions cannot and should not force the Department to deny legitimaterelief under U.S. law to the domestic lumber industry and its workers. Adopting a methodologythat does not adequately measure these subsidies is contrary to the Department’s statutoryresponsibilities, as the Department must offset fully any subsidies in place. As such, we urge theDepartment, in responding to this flawed NAFTA decision, to fully consider and utilize any legaland appropriate alternative that would allow for this essential trade law relief to stay in effect.
Sincerely,
Senator Max Baucus Senator Larry Craig Senator Ron Wyden Senator Conrad Burns Senator Olympia Snowe Senator Mike Crapo Senator Saxby Chambliss Senator Blanche Lincoln Senator Susan Collins Senator Mark Pryor Senator Gordon Smith Senator Thad Cochran Senator Mike Enzi Senator Trent Lott Senator Lindsay Graham Senator Norm Coleman Senator Craig Thoma sSenator Jeff Sessions Senator Richard Shelby Senator Mark Dayton Senator Mary Landrieu
