They wanted to keep the money, even though both the WTO and a U.S. court have said that they are entitled to none of it. Despite what the United States Court of International Trade said on April 7 in a case brought jointly by the Government of Canada and Canadian industry, the basic terms propose to give the U.S. industry $500 million and have the U.S. government keep another $500 million.
The lead counsel for the coalition told the three-judge panel in the Court of International Trade in New York, just last week, that the coalition was compromising because it was only getting $500 million, when according to the Byrd Amendment they should be getting $5 billion. He did not mention that the legal cases before NAFTA proved that he lost and is entitled to nothing, and that he also lost the challenge to the Byrd Amendment and through that vehicle also is entitled to nothing. Indeed, the only way he can get any money is through this deal.
So we wanted all our money back. The U.S. coalition wants all of it. We get back some, and the coalition gets some, and there is the compromise--only without the deal, we eventually would have got all our money back, guaranteed, and the coalition would get nothing, guaranteed. Exhaustion and bleeding have led our members and the rest of the industry to say that assuming everything else is right--it's a big assumption--they can live with giving away $1 billion; as you know, we've never given any money back in past episodes in which there has been a dispute.
Here is a minor digression: there have been a lot of comparisons in the last couple of weeks to the deal into which the United States recently entered with Mexico over cement; the Mexicans gave up $150 million. But let's be clear--the Mexicans had not won the legal case, and after two years they go to full free trade. We won, and after seven years we will be further from free trade than we are today. Guess who got the better deal.
Let us go back to the balance sheet. According to the legal decisions, we are entitled to free trade. NAFTA was supposed to spare us appeals and make the cases go quickly. NAFTA failed us as to speed, but not as to justice. We won. But the deal imposes restrictive managed trade. The U.S. wants managed trade in softwood lumber, and there's no doubt as to who will be the manager.
The nature of the managed trade is also important. A prime objective of the U.S. coalition has been to make Canada the marginal supplier in North America for softwood lumber. It has been to assure that in down or slow or soft markets, Canadians would be the shock absorbers of the system. When demand contracts, Canadian mills should close and Canadian workers should lose their jobs well before the same thing happens in the U.S.
The current design of the deal, as we understand it, does exactly what the coalition wants. We face absolute quotas or, alternatively, graduating export taxes. The tougher the market, the more we pay. The U.S. industry becomes completely insulated from competition in down markets. So we want free access, and they want protection in down markets. The deal imposes trade restrictions that get tougher on Canadians the more the market slows down.
There is a great deal more, of course, and much we do not know yet. We know that under current terms, provincial governments must present all changes to forest policies to the Americans for approval. We might be able to live with this American oversight and with limited access to the U.S. market, but that analysis must be very refined and exact. It is complex and cannot be worked out quickly. Different interests in different parts of Canada must be understood with great refinement and subtlety.
At this stage, there is a lot less known than there needs to be. We don't know whether the border measures will be fashioned so that Canadian industry can survive. All industry associations, including the Free Trade Lumber Council, are working hard to help the federal government get the legal text of the deal right. Some industry members still believe it is possible to improve the basic terms, but this, we are told, is not in the cards.
What we saw on April 27 is what we will get if Canada does the legal drafting right. If not, it could be significantly worse.
To summarize quickly, we want our legal victories; they want them erased. We want all our money; they want a lot of it. We want free trade; they want trade restricted and managed. We want to manage our forests according to our own rules and ways; they want significant oversight over our forest policies.
I have indicated how the deal appears to be reading at this stage. You must decide whether Canada can and should live with it.
Thank you.