DECEMBER 2005

Inside Washington by Janet Kopenhaver, AWPA Director of Government Affairs

TRADE

. Free Trade Agreements Update

Leaders from across the Americas met in Mar del Plata, Argentina recently to discuss the potential for a Free Trade Areas of the Americas (FTAA) agreement. The 34 country leaders, including President Bush, attended the Summit whose efforts were directed at building and implementing a shared agenda on the theme "Creating Jobs to Fight Poverty and Strengthen Democratic Governance."

In the end, there was no agreement on a specific date for resuming negotiations on the agreement. According to press reports, twenty-nine countries said they wanted to resume negotiations on the FTAA in 2006. But four countries, including regional heavyweights Brazil and Argentina, stated their opposition to the deal. (The other two were Paraguay and Uruguay.) These countries also wanted to wait until after they see what occurs from the Doha Round of negotiations at the WTO.

. WTO Panel Upholds Lumber Duties

A World Trade Organization (WTO) compliance panel rejected a Canadian complaint that US tariffs on imported Canadian softwood lumber are out of line with international law. Canada said it will appeal the ruling.

Canada has threatened to seek $3.6 billion in retaliatory sanctions against the US for the tariffs. Last year, the WTO ruled the tariffs had been incorrectly calculated. But the compliance panel ruled that the US has made the proper changes to bring the duties into compliance.

US lumber producers and environmentalists have alleged that Canada's provincial governments subsidize the softwood industry by charging below-market rates to cut trees and not enforcing environmental laws.

On another front, NAFTA panels each consisting of five individuals has concluded that Canadian lumber is not subsidized, has not been illegally dumped into the US market, nor does it cause injury or a threat of injury to US producers. The Commerce Department responded by reducing duties on Canadian softwood lumber from an average of 16% to less than 1%.

US officials added that they were considering an appeal of the NAFTA decision and would look into whether the latest Canadian government decision to give its lumber producers $1.3 billion in aid violated trade rules as a subsidy.

. USTR Wants China to be More Involved

USTR's Rob Portman recently stated that he wants China to take a greater role in global trade talks. China, since joining the WTO in 2001, has played a low-key role.

China is a member of the "Group of 20," which is led by Brazil and India and includes other developing countries demanding an end to rich-country farm subsidies. But China has not been publicly outspoken in pushing a particular agenda. The Bush Administration is hoping that a more outspoken China would side with the US against Europe on key trade issues.

LEGISLATION

. Senate Warns Trade Negotiators

The US Senate passed an amendment warning US trade negotiators that they would not tolerate a World Trade Organization (WTO) agreement that stripped fair trade provisions from US trade law.

The Senate amendment, which was included in a tax reconciliation bill, mirrored language from a bipartisan resolution introduced by Sens. Larry Craig (R-ID) and Jay Rockefeller (D-WV), which had more than 40 co-sponsors. The amendment stated that, "Congress strongly believes that the proposal put forward by countries seeking to undermine trade remedy disciplines in the Doha Round would result in serious harm to the US economy, including significant job losses and trade disadvantages."

The amendment also indicated that the Senate would be unlikely to approve any future agreements that "weakened" our trade laws: "The United States should not be signatory to any agreement or protocol...that adopts any proposal to lessen the effectiveness of domestic and international disciplines on unfair or safeguard provisions."

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