- The Washington Times - Tuesday, September 13, 2005

The U.S. lumber industry yesterday challenged the North American Free Trade Agreement’s dispute-settlement system in court, saying it violates the U.S. Constitution.

The system, known as Chapter 19, empowers panels of judges to determine whether any of the three NAFTA countriesis violating the trade pact by breaking its own trade laws.

“As NAFTA panels threaten to subvert application of the trade laws to unfair lumber imports, we must enforce our constitutional right to due process and accountable decision making,” said Steve Swanson, chairman of the Coalition for Fair Lumber Imports, an industry group that includes Sierra Pacific Industries and International Paper.

A NAFTA panel last month said U.S. duties on Canadian softwood lumber, the kind used to build homes, ran afoul of the law, angering the U.S. companies and their political supporters.

The Bush administration and Canada’s government both said they would defend the trade agreement and its dispute settlement rules.

“We remain strongly committed to the NAFTA, including the dispute settlement procedure, and the administration will vigorously defend its constitutionality,” said Neena Moorjani, spokeswoman for the U.S. Trade Representative’s Office.

“This is nothing more than a veiled attempt by the Coalition for Fair Lumber Imports to undo the softwood victories that Canada has achieved through NAFTA,” said Jim Peterson, Canada’s international trade minister.

NAFTA, which was signed by the U.S., Mexico and Canada in 1993 and became law in 1994, has three chapters dealing with dispute resolution. One procedure handles government disagreements with companies over investment rules, another deals with interpretation of NAFTA rules, and Chapter 19 deals specifically with dumping rules.

Dumping occurs when products from one country are sold below cost in another.

NAFTA panels, made up of judges appointed by U.S. and Canadian governments, recently found that the U.S. violated its trade rules when it found Canada was dumping lumber in the U.S. and applied tariffs to keep it out of the U.S. market. The panel said the tariffs should be scrapped or revised.

The lumber coalition said the panels are not accountable to the American public, and challenged their constitutionality in the D.C. Circuit Court of Appeals.

“The challenge is against the Chapter 19 dispute mechanism, not the NAFTA as a whole,” Mr. Swanson said. The industry filed a similar complaint in 1994 but dropped it after the governments negotiated a solution to the dispute.

The U.S. lumber industry for decades complained that the Canadian government unfairly subsidizes its lumber industry and U.S. companies sought protection from cheaper imports.

The Bush administration consistently has sided with the U.S. companies, and refused to heed the NAFTA panel decision.

“Nothing can force [the U.S.] to change its behavior. So I don’t see where there would be a constitutional issue if the government is not forced to do anything,” said Todd Weiler, an adjunct professor at American University’s Washington College of Law who specializes in NAFTA but not U.S. constitutional law.

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