THE LOUDEST critic of President Bush's free-trade policies at the Summit of the Americas in Argentina last week was President Hugo Chavez of Venezuela. But Bush also had to endure some needling from the prime minister of the United States' biggest trading partner, Canada, over Washington's failure to live up to its commitments under the North American Free Trade Agreement.
On four separate occasions, NAFTA dispute resolution panels have ruled that US tariffs on softwood lumber from Canada violate the agreement. The United States has refused to accept the judgments, however, and the Treasury is now sitting on $5 billion in tariffs exacted from Canadian wood exporters. The Canadians, understandably, want their money back, as well as unfettered access to the US construction market. If the Bush administration wants its views on free trade taken seriously in either Caracas or Ottawa, it should abide by the NAFTA findings and drop the tariffs.
Fighting to keep them is just one of many favors this administration has done for the US timber industry, which has also benefited from policies opening up vastly expanded sections of the national forests to lumbering. US builders, however, ardently oppose the tariffs. A US study has indicated that they raise the cost of an average wood-frame house in the United States by $1,000.
The complaint of the US timber companies is that Canada subsidizes its companies by giving them cheap access to trees in Canada's own national forests. Most US timber is cut on privately owned land despite the administration's best efforts to make US public land more available to loggers. But NAFTA has found that the Canadian practice does not warrant the 20 percent US tariffs.
Canada has not yet resorted to duties on US goods moving north as a reprisal. But Canadian Prime Minister Paul Martin recently dispatched his minister for natural resources to China to discuss expanded Canadian sales of energy and wood to that country. The implication is clear that Canada will find other customers for its products if Washington refuses to abide by free-trade rules. In a speech in Argentina, Martin said Bush and he believe strongly in free trade. ''But," he pointedly added, ''we know it's got to be based on rules -- and rules that are listened to."
A parallel to the softwood standoff is the US failure to end subsidies to its cotton farmers despite a 2004 World Trade Organization decision against the payments, which have the effect of lowering world cotton prices. Brazil has threatened to retaliate against US exports to Brazil if Congress does not end the cotton subsidies. As long as US cotton farmers and timber companies hold such sway in Washington, Bush's free-trade rhetoric will ring hollow in this hemisphere.