U.S., Canada Sign Deal on Softwood Lumber; Canada to Tax Exports if Price Falls Below Minimum
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Sunday July 2, 7:07 am ET
By Bradley S. Klapper, Associated Press Writer
GENEVA (AP) -- The United States and Canada signed an agreement Saturday to settle a drawn-out and heated trade battle over softwood lumber, a major home-building component.
The deal, details of which were first released April 27, was signed by U.S. Trade Representative Susan Schwab and her Canadian counterpart David Emerson at a ceremony in Geneva, where both were attending World Trade Organization talks.
President Bush "is pleased that the United States and Canada today reached agreement on a final text that will conclude the long-standing dispute on softwood lumber trade," the White House said in a statement.
"Many difficult issues were overcome by both sides," the White House said. The office of the U.S. Trade Representative said the deal should go into force after September.
The U.S. timber industry said in April it could support the accord, but Americans should not expect a price break from the deal when they pay for their new houses.
Canadian Prime Minister Stephen Harper, who took office in February as the Conservative Party returned to power for the first time in more than 12 years, had sought to resolve the bitter dispute that has strained U.S.-Canadian relations for at least two decades. Harper and Bush discussed the matter in April before outlining the key terms of the agreement.
The White House said Bush "appreciates Prime Minister Harper's strong leadership on this issue."
U.S. tariffs on Canadian lumber started at an average of 27 percent in 2002, but now average 11 percent because of various reviews and trade panel rulings.
The U.S. goal is to keep Canada's share of the U.S. softwood lumber market from exceeding the current level of around 34 percent. However, the deal does not impose any specific cap.
Instead, Canada agreed to impose taxes on its lumber exports to the United States if the price of lumber falls below a specified level. Softwood lumber is currently averaging $370 per 1,000 board feet.
The trigger point for Canadian taxes to be imposed would be about $10 below the current sales price. The tax would start at 5 percent and then go to 10 percent and as high as 15 percent, depending on how low lumber prices fell. The aim of this system would be to protect U.S. producers by boosting the price of Canadian lumber.
"This agreement resolves concerns on both sides of the border and allows us to focus on the larger positive trade relationship binding our two countries," U.S. Commerce Secretary Carlos Gutierrez said in a statement.
Speaking in Parliament, Harper said the deal would lift tariffs and quotas, and mean that $4 billion of the $5 billion in penalties collected by the U.S. on softwood imports from Canada since 2002 would go back to Canadian producers.
Canadian opponents of the deal want all of the tariffs returned to Canadian lumber companies because international trade panels repeatedly have ruled that the U.S. penalties were improper.
Under U.S. law, American companies were awarded penalty fees when they won trade cases against foreign competitors accused of selling products in the U.S. at unfairly low prices. From the U.S. perspective, returning some of the escrowed money from taxes on Canadian softwood amounted to a concession in the bargaining.
The agreement signed Saturday will undergo a legal review in August. No U.S. legislation is required for the deal to come into force, but the Canadian Parliament will have to approve the new export charge system. |
