Canada carves another notch in lumber trade tiff with new NAFTA ruling
Wed Dec 1, 5:15 PM ET
STEVE MERTL
VANCOUVER (CP) - Canada is claiming another win in its softwood lumber war with the United States.
A North American Free Trade Agreement panel on Wednesday rejected for the third time the U.S. Commerce Department (news - web sites)'s final determination on the countervailing duty slapped on Canadian lumber imports. Canadian exporters have been paying an average 18.8 per cent countervailing duty for shipments into the American market since May 2002, plus an anti-dumping levy averaging more than eight per cent.
The NAFTA panel remanded the countervailing duty determination back to Commerce, rejecting the way it calculated the alleged subsidy accorded Canadian lumber through low Crown timber-cutting fees levied by the provinces and other favourable policies.
The panel, whose rulings carry the weight of law under the NAFTA treaty, gave Commerce until Jan. 24 to deal with a dozen specific concerns.
The anti-dumping component of the tariff has previously come under fire in separate NAFTA rulings and Canada has successfully challenged both duties before the World Trade Organization (news - web sites).
This is the third time the NAFTA panel rejected Commerce's duty calculations, said Jacquie LaRocque, spokeswoman for federal Trade Minister Jim Peterson.
"In fact the panel has said the duties themselves go against U.S. law," she said in a statement from Ottawa.
"Canada maintains its softwood lumber is traded fairly and we won't stop until the duties are dropped."
The B.C. Lumber Trade Council noted the panel - a majority of them American - unanimously found Commerce acted arbitrarily in determining Canadian lumber producers were subsidized.
The decision has enormous implications for all major Canadian lumber-producing provinces, said council president John Allan.
"If the Commerce Department followed those instructions of the panel . . . if it (the duty rate) goes below one per cent on a national basis, then it's automatically zeroed out and the subsidy case would disappear," Allan said in an interview.
"That would be a huge victory for us."
Canadian lumber exporters have paid almost $4 billion in duties since May 2002 and are depositing it at a rate of $150 million a month.
The money is held in U.S. Customs trust accounts while the duties are appealed before NAFTA and WTO bodies.
Canada won a key victory earlier this fall when a separate NAFTA panel ruled Canadian lumber imports posed no threat of injury to American producers, who filed the 2001 trade complaint that resulted in the duties.
The panel essentially ordered the U.S. International Trade Commission to find no threat of injury after it too rejected the commission's argument and calculations three times.
The U.S. government confirmed last week it would appeal that decision to a NAFTA extraordinary challenge committee, which is expect to rule by March.
If Canada wins there, the reason for imposing the duties would be removed.
However, U.S. officials have signalled they won't return the money already deposited.
Under a piece of U.S. legislation known as the Byrd Amendment, companies that claim injury from subsidized imports can apply to receive some of the money.
However, the WTO has ruled the Byrd Amendment violates international trade rules and authorized Canada, among other countries, to retaliate.
Canadian lumber exporters are paying countervailing and anti-dumping duty deposits at a combined average of 27.2 per cent, the rate set in 2002.
Various reviews have provisionally revised the rate downward, but the duty-deposit rate itself won't change until Commerce publishes its administrative review in about two weeks. |
