Posted: Thursday, May 03, 2012 11:00 AM
Judge warns court interference would undermine trade deals, negotiations
By MATEUSZ PERKOWSKI
Dozens of U.S. lumber companies have lost a lawsuit claiming they were unlawfully excluded from a $500 million payment from the Canadian government.
Canada agreed to make the payment to a group of U.S. lumber companies, the Coalition for Fair Lumber Imports, to settle a longstanding trade dispute over the country's timber subsidies.
Under the 2006 Softwood Lumber Agreement, Canada also began imposing fees and volume restrictions on lumber exports.
Several lumber companies not included in the coalition sued over the $500 million payment, arguing the money should have been divided among all U.S. lumber producers, not just coalition members.
Judge Richard Eaton of the U.S. Court of International Trade has now rejected that argument, ruling that the payment was made as part of a political decision that's not subject to the court's purview.
The U.S. government did not violate a law governing trade deals because "there is nothing in the statute to indicate every provision of the agreement must proportionately benefit every participant in the industry," he ruled.
Negotiating the terms of the deal was the prerogative of the U.S. Trade Representative, Eaton said. If a court altered those terms, Canada and other nations would lose confidence that the U.S. can adhere to its agreements.
"Judicial interference would disturb the balance struck through these negotiations, undermining their value as a mutually satisfactory means of achieving the ends of the foreign trade policy," he said.
The U.S. government also acted reasonably in disbursing the $500 million only to members of the coalition, as they had brought the original complaint against Canada and agreed to drop their lawsuits against the country as part of the deal, Eaton said.
"The coalition bore the time and expense of extensive legal battles to address the practices of the Canadian industry, providing a sufficient rationale for compensating its members to the exclusion of more passive members of the domestic lumber industry, such as plaintiffs," he said.
The lawsuit over the $500 million was previously dismissed by the Court of International Trade but the case was revived last year by a federal appeals court, which found that the plaintiffs had the right to sue over the deal.
Earlier this year, the U.S. and Canadian governments agreed to extend the terms of the Softwood Lumber Agreement through October 2015. The deal was previously set to expire in 2013.
U.S. Coalition for Fair Lumber Imports: www.fairlumbercoalition.org
Office of the United States Trade Representative: www.ustr.gov
U.S. Court of International Trade: www.cit.uscourts.gov