Wednesday, August 10, 2005

On easily-foreseen outcomes

Another day, another trade ruling which the U.S. plans to ignore:
An extraordinary challenge panel under the North American Free Trade Agreement has dismissed American claims that an earlier NAFTA ruling in favour of Canada violated trade rules...

"We are, of course, disappointed with the (panel's) decision, but it will have no impact on the antidumping and countervailing duty orders," said Neena Moorjani, press secretary for the U.S. Trade Representative, Rob Portman.

"We continue to have concerns about Canadian pricing and forestry practices. We believe that a negotiated solution is in the best interests of both the United States and Canada, and that litigation will not resolve the dispute."...

A trade official said the Americans still have some options outside NAFTA, including a formal constitutional challenge.

Depending how the U.S. proceeds, we'll see just how desperate the administration is to appease domestic lumber producers. I'll assume that accepting the loss isn't in the U.S. arsenal at the moment. Given that, the sensible (yet still protectionistic) response would be to pay back the wrongfully-collected duties, then put together a subsidy plan which would only be challenged through a new round of NAFTA litigation, buying the U.S. a few more years (and a new administration) before dealing with the fact that its softwood lumber industry isn't competitive.

The insane route would be to actually institute a "formal constitutional challenge". After all, the result of a successful one would presumably be a court ruling that the U.S. cannot constitutionally be bound to follow any provision of a treaty, or at least any provision of NAFTA. And that's the kind of statement that would give even the most ardent internationalist serious doubts about either reaching future agreements with the U.S., or complying with the ones that currently exist.

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