Canadian lumberjacks suffer under tariffs

TORONTO -- Canadian sawmills have been forced to cut thousands of jobs since the United States imposed heavy tariffs on imported softwood lumber over accusations Canada was dumping wood in the U.S. market.

The long-standing dispute reaches far into the North woods where the Canadian timber industry has flourished for centuries.

"It's a devastating blow," said Matt McGonigle, 43, a Vancouver Island saw filer who lost his job at a Doman Forest Industries mill. It shut down in April when the U.S. tariffs were announced. "It creates a lot of bitterness, a lot of anger," he said.

Canadian mills employ over 80,000 people, government figures show, and a prolonged battle over the U.S. duties could eliminate a quarter of those jobs or more, officials say. British Colombia, Quebec and Ontario would be among the hardest-hit areas.

"It's having a major effect. Over 300 small communities depend on the forestry industry," said Brian Payne, president of the Communications, Energy and Paper Workers Union of Canada. "If it drags on much longer you're going to see some significant cutbacks and indefinite closures."

In Quebec and Ontario, which rank second and third in Canadian exports, shipments dropped to half of last year's levels.

Supplying U.S. market

Softwood lumber from pine, spruce, fir and hemlock trees is used to frame houses. Canada exports $6.2 billion in softwood lumber a year to the United States, supplying about one-third of the American market. Softwood is a major component of their trade relationship, the world's largest.

Most U.S. timber is harvested from private land at market prices, while in Canada, the government owns 90 percent of timberlands and charges fees, called stumpage, for logging. The fee is based on the cost of maintaining and restoring the forest.

U.S. timber companies contend that Canada's fees are artificially low, calling them subsidies that allow Canadian mills to sell wood below market value and avoid layoffs even during slow times.

On May 22, the Bush administration slapped antidumping duties averaging 27 percent on softwood imports from four provinces, contending Canadian lumber imports were threatened the U.S. industry.

Canada has challenged the duties at the World Trade Organization, which is expected to issue a preliminary ruling as soon as July 26.

According to Canadian government figures released this month, softwood exports to the United States plunged by an average 25 percent between May 22 and June 28, forcing mills across the country to close or slow down.

Coastal lumber companies have been hit hard, with 11 of 32 mills closed indefinitely and more than 3,100 workers laid off, said Les Kiss of the Vancouver-based Coast Forest and Lumber Association.

The Coalition for Fair Lumber Imports, which represents the U.S. industry, says Canadian subsidies exceed $4 billion a year.

"Canada is free to use subsidies to pursue its own policies as long as they are not injurious to our industry," said Faryar Shirzad, U.S. Assistant Secretary of Commerce for Import Administration.

Some in the United States oppose the U.S. duties. American Consumers for Affordable Homes, which represents home builders and their suppliers, said the U.S. tariffs increase the cost of new homes for Americans.

Canada denies claims it is dumping lumber in the United States. Some critics also point out that the U.S. government spends $600 million a year to support its own timber industry.

"They can't compete with us and so they use trade rules to fight back," said John Allan, president of the British Columbia Lumber Trade Council.

To Andre Lemay, a spokesman for Canada's Department of Foreign Affairs and International Trade, it comes down to the U.S. industry lobby and party politics.

"What we're seeing is that basically it's an election year," Lemay said. "They're catering to a well-organized, loud group, but a very small group."