more on legal complications on Canada - White House $450 slush fund fears

[David Farber <dave () farber net>]

Begin forwarded message:

From: Ethan Ackerman <eackerma () u washington edu>
Date: August 31, 2006 12:11:47 PM EDT
To: dave () farber net
Subject: Re: [IP] legal complications on Canada - White House $450  
slush fund fears

Greetings Dave,

Without commenting or subscribing one way or the other to the "slush
fund" allegations of this agreement - some of the partisan sites seem
to have that covered  (
http://www.dailykos.com/storyonly/2006/8/29/124512/078 )

I'll just offer some intervening legal concerns that may allay concerns.


1 ) Existing appropriations law already governs that ~$5Billion in
collected tariffs, so it'd be hard for the administration to spend
that money without somehow violating that law.**

"That law" is the Continued Dumping and Subsidy Offset Act (CDSOA) of
2000 - commonly called the Byrd amendment.  It sets out the tariff
collection framework and directs where and how the collected tariffs
shall go - directly to the affected US lumber industry within a
certain number of days in the case of softwood tariffs.

The CDOSA was prospectively repealed for tariffs after Oct 7 2006, but
remains in effect for monies collected before then.
(More about Byrd Amendment & lumber -
http://forestrylaw.blogs.com/forestry_law_weblog/2006/02/ 
byrd_is_going.html

**A caveat - a US trade court recently ruled that some of the CDOSA
provisions for direct payments to industry partially violate NAFTA,
prevented the Treasury from sending the $ directly to the US lumber
industry, and required it be held in Treasury escrow accounts pending
further resolution - where it is now.  The US government has until
September to appeal that decision.
(More background
http://www.international.gc.ca/tna-nac/disp/byrdqa-en.asp )

2) The US Constitution generally limits expenditures from the Treasury
to those appropriated by Congress and requires that international
treaties be ratified by the Senate.  And in this case, we also see
that the ranking member of the Senate Appropriations Committee has
taken a personal interest in appropriating these funds - so I doubt
this particular issue is done in either the Courts or the
appropriations process...


-Ethan


On 8/31/06, David Farber <dave () farber net> wrote:

> Begin forwarded message:
>
> From: David Akin <jdakin () gmail com>
> Date: August 30, 2006 10:05:02 PM EDT
> To: dave () farber net
> Subject: Canada gives Bush White House $450-million?
>
> Hi Dave --
>
> We don't know quite what to make of this up here but I wonder if some
> IPers have some thoughts about the following. I have a professional
> interest in this as our network is keen to explore this issue so I
> encourage any IPers -- Americans, in particular --  to send me a note
> if you have some thoughts:
>
> Here's an imaginary headline:
> Canadian government signs off on international trade treaty that gives
> Bush White House a $450-million fund that critics say could be used to
> bolster Republican fortunes in mid-term elections!!
>
> This hasn't yet got much press beyond some blogs.
> [Decent, if biased, roundup at:
> http://www.correntewire.com/
> 450_million_slush_fund_for_bush_from_canadian_lumber_deal_just_in_time 
> _f
> or_the_mid_terms]
>
> This story starts with Elliot Freedman,  a Washington-based trade
> lawyer with Baker & Hostetler who has been hired by some Canadian
> forestry interests who oppose the treaty,  who told a Parliamentary
> Committee in Canada last week the following:
>
> "... , at the height of the Watergate scandal, [the] focus was on an
> illegal slush fund available to the Committee to Re-elect the
> President, which was thought to be tipping the balance of American
> politics. The fund never exceeded $20 million.
>
>    One of the articles of impeachment against Richard Nixon stated
> that he received foreign campaign donations, perhaps as much as
> $50,000. Both by statute and by the United States Constitution, gifts
> of money to the United States must go to the Department of the
> Treasury and be appropriated by Congress. The lone abhorrent and still
> controversial exception ... has been money donated in the immediate
> aftermath of the emergency created by Hurricane Katrina, and the sums
> involved were very small.
>
>    So here we have the Government of Canada requiring that Canadian
> private parties sign over $450 million to an escrow fund slated to be
> conveyed to the White House. The agreement does not mention Congress,
> and the Bush administration says Congress will not be involved in any
> way with this agreement. The Government of Canada is thus making a
> gift of $450 million to be spent by the President. That was more than
> a belt buckle, even more than a stetson, on July 6.
>
>    There is only one date certain in the deal: the planned
> expenditure of the $450 million must be determined by September 1.
> Curiously, that date is traditionally the kickoff for campaigns in the
> United States in election years. Yes, it's an election year, and the
> Republican control of Congress is considered to be in trouble. The
> entire Republican campaign war chest has less than $300 million.
> Canada will add to it by 150% in funds to be expended for meritorious
> initiatives. It does not require much imagination to foresee the
> strategic places where this money will be spent. "
>
> [Feldman's quotes taken from testimony given in front of a Canadian
> House of Commons Standing Committee last week. Online at :
> http://cmte.parl.gc.ca/cmte/CommitteePublication.aspx?SourceId=150801
> ]
>
> The deal Feldman is talking about is a treaty negotiated this past
> summer between the Bush White House and the new Conservative
> government of Canada, a philosophical ally of the Republican Party.
>
> The text of treaty is online here:
> http://www.international.gc.ca/eicb/softwood/pdfs/InitialledSLA2006-
> en.pdf
>
> The two parties negotiated the deal after arguing in court and
> elsewhere about $5-billion worth of duties on softwood lumber that the
> Canadian government for a time believed were illegally collected by
> the American government from Canadian forestry companies. Under the
> terms of the deal referenced above, Canadian lumber producers will get
> back 80 per cent of those duties or $4-billion. Another $500-million
> will be split collectively among U.S. lumber producers. Another
> $50-million is to be spent by a bi-national council on some
> productivity initiatives.
>
> The rest -- $450-million -- is to be spent by the White House
> according to the following conditions contained in the deal (for those
> playing along with the actual treaty, turn to Section XIII, Part A):
>
> "By Sept. 1, 2006, the United States shall identify in consultation
> with Canada meritorious initiatives to receive the [$450-million in]
> funds ... Such meritorious initiatives shall support, in the United
> States:
> - Education and charitable causes in timber-reliant communities;
> - Initiatives related to low-income housing and disaster relief; and
> - Educational and public-interest projects addressing forest
> management issues that affect timber-reliant communities and the
> sustainability of forests as spirces of building materials, wildlife
> habitat, bio-energy, recreation and other values."
>
> Many critics believe that that criteria is vague and broad enough to
> allow Bush to funnel $450-million into all sorts of projects in
> Congressional districts where the Republican might need a little help
> this fall.
>
> Politics aside -- and perhaps more remarkably -- this amounts to what
> is essentially $450-million in foreign aid that Canada is directing to
> the so-called richest nation in the world, the United States.
>
> Again -- keen to hear some American reaction to this, on or off IP.
>
> Thanks, Dave.
>
> DAVID AKIN
> -----------------
> Reporter | Parliamentary Bureau
> CTV National News
> -----------------
> Ottawa | Ontario | CANADA
> -----------------
> Cell: +1 613 220 7935
> Full contact info:
> http://www.davidakin.com
> Blog:
> http://davidakin.blogware.com


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