U.S. sets tariffs on Canadian softwood lumber

Associated Press WriterWASHINGTON (AP) -- The U.S. government issued duties Friday averaging 29 percent on a popular type of Canadian lumber to protect American jobs and retaliate for what it says are unfair trade practices.

Critics say the move could add $1,500 to the price of a new U.S. home and devastate the Canadian lumber industry, which already has suffered mill closings and job losses from U.S. tariffs imposed last year.

The Commerce Department determined in its investigation that Canada subsidizes its industry by charging low fees to log public lands and allows its producers to sell their lumber in the United States at below-market prices, an illegal practice known as dumping.

"While the final duty rates do not fully offset the amount of injury to the U.S. lumber industry, this decision substantiates the U.S. lumber industry's claim that the Canadian government subsidizes Canadian lumber mills," said Rusty Wood, U.S. Coalition for Fair Lumber Imports Chairman.

The ruling involves softwood lumber, commonly used in home construction. The United States imported $5.7 billion worth from Canada in 2001, about a third of the U.S. supply.

The Commerce Department set a 19.3 percent duty to punish Canada for the subsidies and a second tariff averaging 9.7 percent for dumping. The dumping duty varies by company and ranges from 15.8 for Weyerhaeuser to 2.3 percent for West Fraser. Lumber from Canada's Maritime provinces was excluded from both duties.

The duties can't be imposed until the U.S. International Trade Commission determines if American lumber interests have been harmed by the Canadians. But the commission already has issued a preliminary ruling against the Canadians. The final ruling is expected in May.

It's the second time in a month that the Bush administration has sought to impose tariffs to help a struggling U.S. industry. Earlier it imposed tariffs on steel imports.

The trade commission and Commerce Department have been investigating Canadian softwood trade for about a year. The department last year imposed two temporary duties averaging about 32 percent. One of the duties expired in December.

The lumber dispute is decades old. Canada and the United States have reached temporary truces in the past. The most recent agreement expired a year ago and both sides have since been litigating their cases while they talked.

Negotiators worked long hours this week to try to reach agreement before the Commerce Department took action, but talks broke down late Thursday.

"American demands were quite unreasonable," Canadian International Trade Minister Pierre Pettigrew said.

U.S. producers say they're losing revenue and jobs because of Canada's trade practices. The Canadians argue their lumber is cheaper for a variety of reasons, including production efficiency. They say it can't be replaced by a prominent U.S. product, Southern yellow pine, because that wood warps too easily.

During negotiations, the United States asked Canada to adopt an export tax and gradually change how lumber producers buy wood from forests managed by Canada's 10 provinces. Neither side could agree on a fair tax or how those reforms would be implemented.

U.S. homebuilders supported the Canadians because they say a tariff will increase the cost of new homes, while environmentalists sided with the U.S. industry, hoping a trade agreement would lead to less logging.

Thousands of Canadians have lost their jobs since the temporary duties were imposed. Canada challenged those tariffs at the World Trade Organization, which set up a panel in December to hear the case, and has said it will do the same before North American Free Trade Agreement panels.