Canada dumping softwood lumber of U.S.

Wednesday, October 31, 2001

Associated Press WriterWASHINGTON (AP) -- The Bush administration said Wednesday it would impose another tariff on Canadian lumber after finding Canada is dumping its wood on the United States at artifically low prices.

The 12.6 percent duty will be added to the 19.3 percent tariff put on Canadian softwood lumber in August because the administration found the Canadian government unfairly subsidizes its industry.

Softwood lumber, commonly used for home construction, comes from fir, pine and other cone-bearing trees.

The U.S. lumber industry had been pressing for tariffs, saying they're needed to save jobs; but opponents say it will drive up prices of wood products for U.S. consumers. An economist for a homebuilders group says the two tariffs add about $1,500 to the price of an average home.

The U.S. and Canadian lumber industries have battled over prices for decades. U.S. lumber producers allege Canada charges unfairly low "stumpage" fees to companies that log on government lands, allowing Canadian firms to sell lumber in the United States for less than the cost of production. They also say the fees amount to a government subsidy.

In April, the U.S. industry asked the Bush administration to investigate and add tariffs up to 78 percent.

"Canada really needs to fix an unfair trade system," said Luke Popovich, spokesman for the Coalition for Fair Lumber Imports, a U.S. industry group. The tariffs "ought to get their attention."

Canadian producers have denied the accusations. They also contend their lumber should be shipped into the United States duty-free, reflecting the open trade expected among the United States, Canada and Mexico under the North American Free Trade Agreement.

Elliot Feldman, an attorney representing Canadian lumber interests, said the tariffs are a tool to force Canada to negotiate.

"Canadians would like to believe they are best friends to the United States," but that's not the case when it comes to lumber, he said.

The dispute heated up when a 5-year-old softwood trade agreement expired on March 31. A new agreement has not been reached, despite talks.

This month, President Bush appointed former Montana Gov. Marc Racicot to be the U.S. envoy to try to jump-start the discussions. Both sides met in Montreal last week and more talks are planned in November.

Canada also has taken the issue up with the World Trade Organization.

The U.S. International Trade Commission found in May a "reasonable indication" that the U.S. industry is facing harm from Canadian imports. Three months later, Commerce Secretary Donald Evans announced the first tariff, which he made retroactive to May.

The Canadian lumber industry says it's been hurt significantly by the first tariff, which has forced mills to close and left thousands out of work.

Both tariffs have been imposed on a preliminary basis while the Commerce Department and the trade commission make their final determinations on the two investigations. Those decisions are expected next year.

However, it's unlikely either would decide to rescind the tariffs.

The United States imported 36 percent of its softwood lumber last year, nearly all of it from Canada. In 1999, there were 807 U.S. softwood lumber producers, concentrated in the West.

------On the Net:

U.S. Commerce Department's trade site: http://www.commerce.gov/

Canadian Department of Foreign Affairs and International Trade: http://www.dfait-maeci.gc.ca

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