DeFazio argues that Canadian timber is clearly subsidized by its government, that the industry repeatedly engages in illegal dumping in the U.S., and doesn’t believe that a secret tribunal should have any power to usurp U.S. law or regulation. DeFazio is a vocal critic of current U.S. trade policy and voted against NAFTA.

Following is the text of the letter:

The Honorable Carlos M. Gutierrez
Secretary
U.S. Department of Commerce
14th & Constitution Avenue, N.W.
Washington, D.C. 20230

The Honorable Rob Portman
U.S. Trade Representative
600 - 17th Street, N.W.
Washington, D.C. 20508

Dear Secretary Gutierrez and Ambassador Portman:

I am writing out of long-standing concern about the relentless attack on the U.S. timber industry by government subsidized producers in Canada. As a result of an October 5, 2005, ruling by a North American Free Trade Agreement (NAFTA) panel, the very viability of this important U.S. industry is at risk.

As you know, in October, a NAFTA panel ignored the overwhelming evidence that Canadian timber producers are subsidized by the Canadian government. In response to the NAFTA panel ruling rejecting the U.S. position, last month, the Department of Commerce agreed to lower countervailing duty tariffs on Canadian softwood lumber from about 16 percent to less than 1 percent. The decision to allow subsidized Canadian timber to flow into the U.S. virtually tariff-free will contribute to the devastation of U.S. producers and workers. Therefore, I ask that you reconsider your decision to virtually eliminate the countervailing duty tariffs and appeal the NAFTA ruling as soon as possible.

The Department of Commerce and the United States' Trade Representative's primary obligations are not to NAFTA or subsidized Canadian timber companies, but to the American people, our timber industry and its workers, and our trade laws. Every administration since President Reagan has found that Canada provides significant subsidies to its timber industry. Currently, that subsidy is worth more than $4 billion annually. Prior to the recent slashing of rates, the dumping and countervailing duty rates in effect mitigated barely half of the subsidy.

It's not just U.S. government agencies that have found Canadian timber is subsidized by the Canadian government, causing injury to U.S. producers. The World Trade Organization has also endorsed this view. Further, a different NAFTA panel has confirmed that Canadian companies are guilty of dumping in the U.S. market in violation of U.S. trade law. It is unsettling that the Department of Commerce has elected to calculate a de minimis subsidy to comply with one NAFTA panel in light of the WTO and other NAFTA panels reaching different conclusions about the threat of unfair trade by the Canadians.

It is particularly galling that shortly after the Panel's ruling, the Canadian government brazenly announced an additional $1.2 billion in subsidies for its lumber industry. With this decision the Canadian government mocks the NAFTA panel decision and aims to hold the American industry hostage. Jim Peterson, Canada's international trade minister, said "If the U.S. actually does the right thing—that is, drop the duties and return our money—the support package can be reviewed." With your decision to comply with the ruling of the NAFTA panel you are capitulating to these extraordinary threats by the Canadian government.

It is clear that the Canadian lumber industry is subsidized and guilty of illegal dumping. It is also clear, as the WTO found, that these actions are causing injury to U.S. producers. You would be derelict in your duties to accept the NAFTA panel decision and implement a duty of less than one percent. I urge you to immediately reject the ruling of this NAFTA panel, and file an appeal of its decision at the earliest possible time.

Sincerely,

/s/

PETER DeFAZIO

Member of Congress