Sunday, July 17, 2005

Agreeing only to disagree

Another reminder of why we should be skeptical about new free trade agreements:
Canadian officials want to keep down expectations about another round of talks aimed at resolving the endless Canada-U.S. softwood lumber trade war...

Lumber exporters are paying about 21 per cent in combined countervailing and anti-dumping duties, first imposed in May 2002 after the U.S. Commerce Department accepted American lumber producers' claims Canadian softwood was unfairly subsidized.

The figure was as high as 27 per cent but has been revised downward after a series of reviews.

Ottawa and the lumber-producing provinces have always denied exports are subsidized and challenged the duties under the North American Free Trade Agreement and before the World Trade Organization.

Canada has claimed victory in a series of WTO and NAFTA rulings but must still deposit the money with U.S. Customs until the issue is resolved...

Hanging over the whole discussion is a threat by the United States, based on a legal interpretation, to keep much of the money collected in duties so far no matter the outcome of Canada's legal challenges.

The reward for our current free trade agreements is that we now have a bunch of favourable rulings which the U.S. feels free to disregard for protectionist reasons. So now we're headed back into additional talks, with no realistic prospect of an agreement, and with the knowledge that the U.S. will likely end up with a financial windfall from its obstructionism.

And this is from the country that's supposedly one of the main proponents of free trade (at least when CAFTA is the topic of conversation).

Is there any reason to think that future agreements will be any more effective in removing trade barriers toward other markets? And if not, then why are such agreements supposed to be worth our time?

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