35% Duties Smash Canada's Softwood Lumber Castle

WASHINGTON, DC, May 2, 2002 (ENS) - Imports of Canadian softwood lumber, flooring, and siding will be subject to countervailing and anti-dumping duties, the U.S. International Trade Commission (ITC) ruled today.

In final affirmative determinations in parallel dumping and subsidy investigations, the commissioners voted 4-0 that that there is a threat that 779 U.S. lumber producers are being "materially hurt" by these imports. The commission said that imports of Canadian lumber are “dumped” at prices into the U.S. market at prices lower than in the home market.

The commissioners' action will lead to imposition on the softwood lumber imports from Canada of antidumping and countervailing duties that combined range to more than 35 percent.

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Softwood lumber in a British Columbia forest products yard (Photo courtesy Lakewood Lumber)
International Trade Minister Pierre Pettigrew today announced that Canada will conduct an immediate review regarding possible challenges to today's ITC determination that Canadian softwood lumber exports pose a threat of injury to U.S. industry.

“This is a brutal kick in the teeth for British Columbia’s forest industry and communities," said British Columbia Forests Minister Michael de Jong. “We’ll see you in court, Uncle Sam.”

Consumer groups said today's decision, which found a "threat of injury" to U.S. forest producers from Canadian softwood lumber imports, is wrong, and cannot be sustained under North American Free Trade Agreement and World Trade Organization rules.

At the same time, the commission denied U.S. producer claims that they had been injured, which would have allowed retroactive imposition of duties.

The talks broke down when the United States refused to accept an independent dispute resolution process considered critical by British Columbia and other provinces.

The Office of the U.S. Trade Representative has complained that Canadian softwood lumber sold in the United States is directly and indirectly subsidized by provincial governments through a complex web of below market rate pricing, long term timber harvesting contracts and mandated operation requirements.

Led by International Paper, Potlatch, Plum Creek, Sierra Pacific, and Temple Inland, southern land owners formed the Coalition for Fair Lumber Imports and filed petitions a year ago alleging that they had been harmed by Canadian softwood lumber imports and asking for countervailing and antidumping duties.

Two unions - the United Brotherhood of Carpenters and Joiners of Portland, Oregon and the Paper, Allied-Industrial, Chemical and Energy Workers International Union of Nashville, Tennessee - joined the petition.

Today the commissioners agreed with their position in a final determination.

Canada has challenged the antidumping and countervailing tariffs before the World Trade Organization, and the final WTO report is due by August 30.

Under NAFTA, Canada is challenging the U.S. Department of Commerce’s final countervailing duty and anti-dumping determinations. In late February, the Government of Canada filed a notice of intent requesting a binding panel be established to review the final determination. A final panel report is expected by December 31.

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Softwood logs awaiting the logging truck in Burns Lake, British Columbia (Photo courtesy Burns Lake)
The subsidy and antidumping cases followed the 2001 expiration of the five year Softwood Lumber Agreement, which made Canadian exports to the U.S. market over a certain volume in any year subject to export taxes.

A North America wide coalition of environmental groups says the softwood lumber trade is taking place at unsustainable levels and efforts to resolve the softwood lumber dispute are not properly informed by the environmental effects of the trade.

The coalition has requested that the North American Commission for Environmental Cooperation (CEC) investigate the toll that the softwood lumber trade between Canada and the United States is taking on Canada's forest and trans-border ecosystems. The groups from Canada, the United States and Mexico assert that management practices in Canadian forests are unsustainable.

“The CEC is uniquely situated within the North American body politic to bring an expert and objective eye to an assessment of the environmental implications of the trade in softwood lumber,” said Sierra Legal lawyer Devon Page.

“Subsidies to logging wherever they occur in North America are bad for the environment”, said Elizabeth May, executive director of the Sierra Club of Canada. “Inadequate environmental protection is tantamount to a subsidy and requires investigation.”

The softwood lumber approach of the British Columbia government did not succeed south of border and was not popular with environmentalists at home in a province dominated by the timber industry. Lisa Matthaus of the Sierra Club of BC said April 25, “The government’s proposals hurt communities, cut jobs and damage our natural environment. Adding insult to injury, this government’s proposals won’t resolve the current dispute.”

B.C. First Nations are concerned about the lack of consultation with them on the softwood lumber issue and oppose the province's proposals to enhance corporate tenure rights. "The province’s softwood proposals will provide even more opportunities for subsidies through cheating than we have already seen," said Guujaaw, president of the Council of the Haida Nation.

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(Photo courtesy Be Constructive)
Susan Petniunas, spokesperson for American Consumers for Affordable Homes, an alliance of 18 American organizations and companies which has been fighting the trade action, said, "For the first time ever, a panel of consumers was assembled to testify before the ITC in March. They represented homebuilders, lumber dealers, The Home Depot, manufactured housing firms, and others. Each clearly pointed out that softwood lumber does not compete with southern yellow pine, and that the charges by the U.S. coalition were false," she said.

Bobby Rayburn, a homebuilder from Jackson, Mississippi, and vice president and treasurer of the National Association of Home Builders, said, "Over the past 20 years, independent review panels have evaluated Canada's timber pricing on three separate occasions. In each case in which it was taken to a final decision, it was ultimately determined that the Canadian government did not provide unfair subsidies to its lumber industry. We believe that Canada will almost certainly prevail once again in its current cases before NAFTA and the WTO."

The U.S. Department of Commerce (DOC) will publish Anti-dumping and Countervailing Duty Orders by May 23. The Orders will require Canadian exporters to make cash deposits on future shipments of softwood lumber to the United States.

The burden will fall most heavily on the provinces of British Columbia, Alberta, Ontario and Quebec. The Maritime provinces of New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland are exempted from the subsidy investigation.

Canadian softwood lumber accounts for more than one-third of the U.S. market. In 2001 U.S. imports of this lumber amounted to $5.97 billion.