TIMBER! Canadian Lumber Tariffs Could be Cut, Says Commerce
Move would reduce softwood lumber tariffs 50% by the end of the year
WASHINGTON, DC - 06/06/04 - Tariffs on Canadian lumber exports to the US could be reduced by half by the end of the year, according to the US Commerce Department.
The preliminary ruling, hailed by Canadian officials, was based on a review of the duties imposed from May 2002 to March 2003 and would cut the combined subsidy and anti-dumping duties to 13.2% from the current 27.2%.
The amended rate, which can be appealed, would take effect in December.
The Bush Administration imposed the tariffs two years ago to offset what it said were illegal subsidies provided by the Canadian government to that country's lumber industry, Canadian lumber imports to the US totaled $5.6 billion out of a two-way trade of $360 billion.
Canada supplies more than one-third of all the softwood lumber used in construction in the US, according to Commerce.
At the time the tariffs were levied, the US lumber industry was in a severe slump with more than 100 mills having closed and an estimated 100,000 forestry jobs lost.
The tariffs have caused serious friction between the US and Canada, the world's largest bilateral trading partners with Canadian lumber companies having paid about $2.2 billion in duties since they were first imposed - a portion of which will be refunded if the tariff reduction is upheld.
Interviewed by the San Francisco Chronicle, Sherm Harmer, president of the California Building Industries Association, whose 6,000 members have been lobbying to lift the tariffs, praised the decision saying, "It'll go a long way toward keeping housing costs as affordable as possible."
According to Harmer, California contractors are on track to build 200,000 homes in 2004, the most since 1989, but increased demand has raised the price of wood and caused spot shortages. He said the average California home uses about $40,000 worth of wood.
The original duties were calculated by comparing the price charged to log Canada's vast public forests with logging costs in the US - a methodology that drew the wrath of international trade officials.
The rates were recalculated after US trade officials compared logging costs in public forests with those in Canada's Atlantic region, where most forest is privately owned just as it is in the US.?
John Allan of the British Columbia Lumber Trade Council told Reuters the decision exposed the "flaws" in how the original duties were calculated. British Columbia produces half of the Canadian softwood shipped to the US.
The change comes in the wake of a NAFTA panel preliminary ruling that the US had failed to prove its industry was being harmed by Canadian softwood - a decision, which if upheld, would eliminate the duties altogether.
The Commerce Department said that Canadian government programs did "confer a benefit to producers of softwood lumber and that Canadian producers/exporters of softwood lumber have sold their product below fair value.''
But Commerce cut its estimate of the value of this subsidy to about 9%, down from the 19% it had estimated in 2002 when it imposed the tariffs.
At the same time the tariff decision was announced, the agency also revised downward the anti-dumping fees it had imposed on several individual Canadian producers.
The new rates are 2.97% on Abitibi-Consolidated; 4.8% on Buchanan; 2.06% on the Canfor Corp.; 10.21% on Tembec Inc.; 3.68% on Tolko; 1.08% on West Fraser Timber; and 8.38% on Weyerhaeuser Canada .
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