(Globe and Mail)
Ottawa is considering trade retaliation against the United States over the Byrd Amendment -- a controversial U.S. law that allows Washington to funnel to American businesses the cash duties it extracts from foreign
competitors, including those from Canada.
The federal government is planning to consult Canadian business shortly on a proposed list of U.S. targets for retaliation, federal sources say. No decision has yet been
taken on whether to move ahead with the plan.
The World Trade Organization has ruled the Byrd Amendment is illegal under global law, but the United States has ignored a WTO order to scrap it. In late August,
Canada and seven other jurisdictions were given the right under global trade rules to retaliate against Washington for its use of the controversial law.
Ottawa plans to release this week a proposal for slapping
hefty tariffs on select U.S. imports -- a plan that could be deployed if Washington continues to ignore international calls to eliminate Byrd.
Specifically, Ottawa is proposing retaliatory tariffs against goods
from about 25 U.S. states. Canada's retaliation strategy has been designed by government officials to generate maximum political pressure in the United States against the law.
States targeted are either home to
major pro-Byrd politicians or are particularly supportive of the American forestry lobby responsible for the cross-border lumber war that's extracted more than $3-billion (U.S.) in duties from Canadian timber companies.
This week Canada will release a list of about 125 product categories of U.S. imports that may be targeted if Prime Minister Paul Martin's cabinet decides to proceed with retaliatory tariffs.
Ottawa wants
feedback from Canadian companies to ensure the tariffs won't hurt domestic interests by blocking vital inputs for this country's manufacturing sector or products not easily substituted.
Possible U.S. targets vary
wildly, from Illinois air conditioners to Kentucky whisky to New York perfume to California peanut butter. Other examples include Ohio mittens, Pennsylvania colour TVs and Nebraska pigs.
The 2000 U.S.
legislation commonly known is the Byrd Amendment allows Washington to distribute to American companies any punitive duties that it collects from foreign rivals deemed to be unloading subsidized or under-priced products
in the United States. This includes the billions of dollars in softwood duties collected from Canadian firms, although Washington has so far refrained from funnelling that money to U.S firms.
Seven other
jurisdictions including the European Union, India, Brazil, Japan and Mexico have also received retaliatory authority from the WTO related to Byrd.
Ottawa has not decided yet whether to retaliate but is taking the
next step of publishing a potential target list in order to preserve its right to retaliate under international trade law.
It's hard to imagine Canada retaliating against the foreign customer that buys 80 per
cent of its exports -- but federal officials say they are determined not to fold in their opposition to Byrd.
Canada's retaliatory authority would be limited to slapping prohibitive tariffs on about $10-million
(U.S.) to $20-million of U.S imports in the short term. That reflects the relatively minor amount of duties that Washington has recently transferred from Canadian importers to their American rivals.
But if
Washington starts funnelling its multibillion-dollar pot of Canadian softwood duties to U.S. timber firms, the annual value of American imports that Ottawa's allowed to hit with tariffs under WTO rules could soar into
the billions of dollars. The U.S. Congress, dominated by protectionist interests, has ignored the WTO rulings.
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