U.S. sets tariffs on Canadian softwood lumber

By Staff
from staff and wire reports
March 23, 2002
WASHINGTON The government set stiff import duties on a popular type of Canadian lumber Friday, angering its largest trading partner and potentially setting the stage for higher U.S. new-home prices.
Canadian International Trade Minister Pierre Pettigrew called the duties obscene'' and said the Bush administration could not find the nerve to confront its protectionist softwood lumber producers.''
American producers have contended that Canada's trade practices overstimulate lumber production there, driving down prices and eventually costing jobs at mills in this country.
U.S. Rep. Chip Pickering, the Republican 3rd District congressman, praised the stiff duties. He said they "ensure that we have a fair playing field with Canada and will protect Mississippi jobs."
U.S. homebuilders, who oppose the duties, estimate they could add $1,500 to the cost of the average new home and lock about 450,000 people out of the housing market.
Federal probe
After a yearlong investigation, the Commerce Department determined that Canada subsidizes its industry by charging low fees to log public forests and allows its industry to illegally dump'' lumber in the United States at artificially low prices.
The department set two duties totaling 29 percent for most Canadian lumber producers 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 percent for Weyerhaeuser to 2.3 percent for West Fraser. Lumber from Canada's four Maritime provinces was excluded from both duties.
The ruling involved 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 duties came just over two weeks after President Bush sought to help the U.S. steel industry by imposing tariffs, though he exempted Canada in that order.
Playing politics
Gary Hufbauer, senior fellow at the Institute for International Economics, a Washington think tank that promotes free trade, said the president is trying to curry favor for Republicans before the November elections and improve his chances of getting legislation through Congress to increase his trade authority.
He is making these pretty big concessions to protectionist interests,'' Hufbauer said. And there are going to be a lot of industries that say, Me too. They got theirs. I want mine.'''
U.S. trade officials say the determinations are consistent with legal obligations and not based on politics.
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.
The Commerce Department last year also imposed two temporary duties averaging about 32 percent, though one of the duties expired in December.
Companies hurt
U.S. lumber producers say Canada's trade practices cost them fortunes. Companies like mine are shutting down mills and laying off employees,'' said Rusty Wood, chairman of the Coalition for Fair Lumber Imports.
Pickering said that Mississippi's timber industry "is absolutely vital to the economy of our state and provides us thousands of jobs. This decision sends a clear message to the Canadian government that we will not tolerate their unfair 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.
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.