Lumber tariffs draw U.S. opposition

Associated Press

WASHINGTON — U.S. home builders complain the Bush administration’s decision to charge stiff duties on a popular type of Canadian lumber will tax U.S. consumers and dampen a housing boom that has been one of the economy’s strong points.

"This action threatens the very industry that is leading our economic recovery," said Bobby Rayburn, a home builder from Jackson, Miss., and vice president and treasurer of the National Association of Home Builders.

American lumber producers contend that Canada’s trade practices overstimulate production there, driving down U.S. prices and harming the U.S. industry.

After completing a yearlong investigation, the Commerce Department determined Friday that Canada subsidizes its industry by charging low fees to log public forests. The department also said Canada allows its industry to illegally dump lumber in the United States at artificially low prices.

The agency 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 duties still must clear the U.S. International Trade Commission before taking effect.

The dumping duty varies by company. 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.

Canadian International Trade Minister Pierre Pettigrew called the duties "obscene" and said the administration could not "find the nerve to confront its protectionist softwood lumber producers."

While welcoming the U.S. decision, the Coalition for Fair Lumber Imports, which says it represents 75 percent of U.S. lumber production, doesn’t think the duties went far enough to offset the injury to its members. They don’t see the U.S. action as protectionist, but rather an attempt to level the playing field.

Because of Canada’s trade practices, "companies like mine are shutting down mills and laying off employees," coalition chairman Rusty Wood said.

But the duties could hurt other U.S. forest interests. Washington state-based timber giant Weyerhaeuser, which has operations in Canada and was a focus of the U.S. investigation, could have to pay a 35 percent duty on wood products from its Canadian operations.

"The 35 percent tariff on wood products from Canada is unfair," Weyerhaeuser spokesman Frank Menizabal said.

He conceded the ruling could have the short-term impact of helping its U.S. operations, but said over time it would hurt more than it helped. The company is considering an appeal.

Canada and the United States could still reach a settlement before the U.S. International Trade Commission has the opportunity to complete the duties in May.

After talks this week broke down, Pettigrew said his country won’t accept a bad deal. "American demands were quite unreasonable," he said.

Thousands of Canadians have lost their jobs since two temporary duties were imposed last year averaging about 32 percent. Canada challenged those tariffs at the World Trade Organization, which set up a panel in December to hear the case.

Pettigrew said Friday he has asked the North American Free Trade Agreement to establish a panel to decide the matter.