U.S. Puts Tariffs on Canadian Lumber

The U.S. government issued duties Friday totaling 29 percent on a popular type of Canadian lumber to protect American jobs and retaliate for what it says are unfair trade practices.

Critics say the move will drive up wood product prices for U.S. consumers and devastate the Canadian industry.

The U.S. Coalition for Fair Lumber Imports, a trade group, said Commerce Department officials briefed U.S. industry officials on the tariffs Friday. A formal announcement was expected later.

The department determined in its investigation that Canada subsidizes its lumber industry by charging low fees to log public lands and allows its producers to sell their lumber in the United States at below-market prices, an illegal practice known as dumping.

"While the final duty rates do not fully offset the amount of injury to the U.S. lumber industry, this decision substantiates the U.S. lumber industry's claim that the Canadian government subsidizes Canadian lumber mills," coalition chairman Rusty Wood said.

The department set a 19.3 percent duty to punish Canada for the subsidies and a second tariff of 9.7 percent for dumping, coalition spokeswoman Deborah Regan said.

It's the second time in a month that the Bush administration has sought to impose tariffs to help a struggling U.S. industry. Earlier it imposed tariffs on steel imports.

The lumber duties can't be imposed until the U.S. International Trade Commission determines if American lumber interests have been harmed by the Canadians. But the commission already has issued a preliminary ruling against the Canadians. The final ruling is expected in May.

The dispute involves softwood lumber, commonly used in home construction. The United States imported $6.4 billion worth from Canada in 2000, about a third of the U.S. supply.

Negotiators from both countries worked long hours this week to try reach agreement before the Commerce Department took action but talks broke down late Thursday.

"American demands were quite unreasonable," Canadian International Trade Minister Pierre Pettigrew said.

The lumber dispute is decades old. Canada and the United States have reached temporary truces in the past. The most recent agreement expired a year ago and both sides have since been litigating their cases.

U.S. producers say they're losing revenue and jobs because of Canada's trade practices. The Canadians argue their lumber is cheaper for a variety of reasons, including production efficiency. They say it can't be replaced by a prominent U.S. product, Southern yellow pine, because that wood warps too easily.

During negotiations, the United States asked Canada to adopt an export tax and gradually changed how lumber producers buy wood from forests managed by Canada's 10 provinces. Neither side could agree on a fair tax or how those reforms would be implemented.

U.S. homebuilders supported the Canadians because they say a tariff will raise the cost of new homes, while environmentalists sided with the U.S. industry, hoping a trade agreement would lead to less logging.

The trade commission and Commerce Department have been investigating Canadian softwood trade for about a year. The department last year imposed two temporary duties on Canadian lumber averaging about 32 percent, but they never fully took effect.

Thousands of Canadians have lost their jobs since the duties were imposed. Canada challenged the temporary duties at the World Trade Organization, which set up a panel in December to hear the case, and has said it will do the same before North American Free Trade Agreement panels.