- The Washington Times - Wednesday, August 11, 2004

GENEVA (AP) — The World Trade Organization yesterday largely upheld a ruling that supported steep anti-dumping tariffs imposed by the United States on imports of Canadian softwood lumber, but maintained that U.S. authorities miscalculated the amounts.

Canada and the United States both had appealed the earlier decision by a WTO panel, but a 63-page final ruling rejected both countries’ challenges.

A panel of three trade specialists rejected claims by the Canadian government that the United States had acted illegally in investigating whether lumber from Canada was being sold at below the cost of production — a practice known as dumping.

Rejecting the U.S. appeal, the panel also upheld an earlier ruling that the U.S. government’s calculations were wrong because Washington used a method called “zeroing,” in which sales at above-market prices are ignored.

The panel said the WTO should order the U.S. government to change its calculation methods to conform with WTO rules. Washington will have to recalculate the level of the duties. It was not clear what the new figure would be.

In a slight change to the earlier ruling, however, the appeals panel found that the United States had miscalculated the price of lumber from one of the Canadian companies involved, Abitibi Consolidated Inc.

“Though we’re disappointed that the panel sided with Canada on this technical issue, we’re pleased overall,” said Richard Mills, spokesman for U.S. Trade Representative Robert B. Zoellick. “Canadian companies are competing unfairly in dumping lumber.”

Canadian authorities also welcomed the decision.

“We are pleased that the WTO appellate body affirmed that the U.S. practice of zeroing in this case breaches WTO anti-dumping rules,” said Jim Peterson, minister of international trade.

“We are also very pleased that the appellate body ruled in Canada’s favor on Abitibi.”

The anti-dumping duties, ranging from 2.18 percent to 12.44 percent, were imposed in May 2002 after an investigation by the U.S. Department of Commerce. U.S. producers accuse the Canadian government of subsidizing its lumber industry.

Softwood lumber, from pine, spruce and other trees, is a key product in home construction. In 2002, the United States imported nearly $6 billion of softwood lumber from Canada, about a third of the American market.

The complaint about anti-dumping tariffs is one of three lumber cases that Canada has brought to the WTO. Two other rulings in recent months largely have favored Canada.

The Canadian government also is pursuing the issue under the North American Free Trade Agreement.

The battle between the United States and Canada over lumber has been building up steam since the expiration of their Softwood Lumber Agreement in March 2001.

Under that accord, Canada had been allowed to ship a certain amount of lumber to the United States without duties, with tariffs set for shipments beyond that level. In return, the United States agreed not to start any trade action, including the imposition of protective duties.

When the agreement expired, the United States, under pressure from domestic producers, moved quickly to impose extra duties on Canadian imports.

The WTO already has ruled against the practice of zeroing in a case brought by India against the European Union. Another case — brought by the European Union against the United States over duties on steel and pasta — still is being studied.

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