- The Washington Times - Saturday, March 23, 2002

The Commerce Department wants to impose a 29 percent tariff on lumber imports from Canada on the grounds that the largest U.S. trading partner unfairly subsidizes its own timber mills and dumps the product in the United States at below-market prices.
The decision yesterday, which could raise the price of wood-framed houses, came one day after negotiations between the two nations to resolve their long-running disagreement over lumber reached an impasse.
The combination of circumstances prompted tough talk from Canada, which exports about $6 billion in softwood lumber such as pine, fir and spruce, to the United States each year.
"After all the efforts we have made in the last few months to really address the substance of the American allegations about the softwood-lumber issue, I have to tell you that I honestly find the [tariff] of 29 percent obscene," Canadian Minister for International Trade Pierre S. Pettigrew told reporters in Ottawa.
In contrast, American officials struck a more conciliatory tone, saying they wanted to continue talks and resolve the dispute once and for all.
"Our interest is in moving forward with the Canadians in as rapid a manner as possible," a U.S. trade official said on the condition of anonymity.
The dispute centers on Canada's system for allowing lumber companies to harvest timber from government-owned land. The United States has long said that Canada unfairly subsidizes its producers by keeping the fees they pay for this privilege artificially low, a charge Canada denies.
In the United States, most timber is harvested from private land.
The Coalition for Fair Lumber Imports, which represents the U.S. industry, requested the Commerce Department ruling in April of last year. The International Trade Commission must still make a definitive ruling on the duties, probably sometime in May, when the duties would formally take effect.
Canada has challenged the move as a violation of the World Trade Organization and the North American Free Trade Agreement. But it has agreed to negotiate with the United States on changes to Canadian timber-harvesting practices, something the U.S. industry has encouraged.
"We still believe the two governments should talk long-term reform," said John Ragosta, a lawyer for the U.S. industry group.
As a result, the two sides have negotiated on a plan to have Canada, for example, auction timber-harvest rights to its firms. At the same time, they have discussed a temporary tax on Canadian lumber exports that would offset what the U.S. industry claims are unfair advantages enjoyed by Canadian firms.
But the talks, which also involve the Canadian the provinces of British Columbia, Ontario and Quebec, bogged down Thursday night in connection disagreements over the size of the export tax, sources close to the negotiations said.
On the fringes of the dispute are major buyers of lumber, who have complained bitterly that import restrictions will raise their costs, and ultimately, consumers'.


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