U.S. lumber industry seeks almost 80 per cent duties against Canadian softwood
ROBERT RUSSO
WASHINGTON (CP) - Powerful U.S. lumber
companies fired the first salvo Monday in a
nasty trade war with Canada by demanding
punitive duties of up to 80 per cent on
Canadian softwood exports.
The Bush administration has signalled that
it will respond favourably to the request after
an investigation. Slapping a 39.9 per cent
countervailing duty on Canadian softwood
is the only way to blunt the effect of
provincial subsidies, the head of the U.S.
lumber lobby said, after filing an official complaint with the U.S.
Commerce Department.
Please see below for quickquotes of what was said Monday
about the Canada-U.S. softwood lumber dispute
Rusty Wood, chairman of the U.S. Coalition for Fair Lumber Imports,
said an additional anti-dumping penalty of between 28 and 38 per
cent would compensate American lumber mills for Canadian wood
exported south below cost. That means the maximum penalty that
can be imposed is 77.9 per cent.
The staggering penalties are the only way to level an unequal
playing field, Wood told a Capitol Hill news conference.
"That would really work," said Wood, as several supportive U.S.
Senators and members of Congress looked on.
He pegged the number of U.S. mills shut down due to unfair
Canadian competition at 160 and suggested only two Canadian
mills have been shuttered recently.
In Canada. International Trade Minister Pierre Pettigrew called the
U.S. trade actions "absolutely ridiculously high (subsidy)
allegations," and promised to fight the cases "vigorously."
"We believe that these allegations are absolutely wrong and far too
high," he said in the Commons. "We are not subsidizing our
industry."
In a later news conference Pettigrew said the U.S. trade fight is not
about Canadian subsidies:
"It's about protectionism," he said. "Our industry is more modern
and, frankly, more efficient. We're productive because we're darn
good."
Canadian lumber producers deny they are subsidized and have
dismissed the charge they are dumping wood in the U.S. market.
Ottawa could instantly take their complaint to dispute-settlement
panels at either the World Trade Organization or the North American
free trade agreement. That process could take a year or longer to
play itself out.
The stakes could scarcely be higher.
Lumber prices have plummeted recently. Canada exports about $10
billion in softwood to the United States annually. Duties approaching
those demanded by American producers would wipe out mills
across Canada.
A lengthy and costly battle that could stretch out for several months if
not years will likely cost Canadian jobs.
"This legal process will inflict enormous damage not only on
companies but also on Canadian workers, their families and entire
communities, as well as American consumers," said David
Emerson, co-chair of the B.C. Lumber Trade Council and president
of Canfor Corp.
"That's why we need to get free trade talks started at the highest
level on an urgent basis."
The U.S. complaint was filed two days after the expiry of the
five-year softwood lumber deal that had curtailed shipments of
Canadian lumber into the United States since 1996.
"Our message to Canadians is this simple: do not subsidize, stop
the dumping. . .or our actions will be swift and severe," said
Congressman Chip Pickering.
Softwood lumber, from cone-bearing trees, is used primarily in
home construction and renovation. Gary Horlick, counsel to a group
of U.S. home builders, said a 40 per cent duty on Canadian
softwood would add $1,500 to $3,000 to the cost of a new house.
He suggested 300,000 home buyers are priced out of the market
with every $1,000 increase in the price of a home.
The housing sector has been one of the few bright spots in a
sagging U.S. economy of late.
"If you start cutting into housing starts, it's suicidal," Horlick said.
American lumber barons have been calling for duties on Canadian
wood since the 1930s. International trade bodies have upheld
Canada's timber policies three times in the last 20 years.
But the current lumber rumble represents President George W.
Bush's first significant trade dispute. Senators and members of the
House of Representatives from both U.S. parties will be waiting to
pounce on any sign of weakness from a new, untested president.
With Bush anxious to secure fast-track authority to negotiate a free
trade of the Americas agreement, the White House is unlikely to
take anything other than a hard line.
The U.S. Commerce Department will likely take several months
before announcing an interim ruling in the trade cases, but it will
almost certainly order a duty be applied to Canadian lumber
imports, perhaps as early as July.
U.S. Customs officials could begin collecting duty on Canadian
lumber even if the case is referred to international arbitration.
Senator Max Baucus, who has been among the most aggressive
critics of Canada's lumber policies, accused provinces of savaging
the environment by promoting clear-cutting of forests as well as
subsidizing it wood industry.
"I would have preferred a final negotiated solution to this dispute that
obligated Canada to at long last eliminate subsidies that cause
overcutting to the detriment of both the United States lumber industry
and the North American environment," he said.
"Unfortunately, the Canadian government has chosen to ignore the
calls for change from the United States."
-
Some of what was said Monday about the Canada-U.S.
softwood lumber dispute:
"The good news is that perhaps the end is in sight. I'm confident that
the complaints against Canadian subsidies and dumping filed under
U.S. law today will succeed." - Senator Max Baucus, a Montana
Democrat, announcing unfair trade petitions against Canadian
lumber.
"It's about protectionism. Our industry is more modern and, frankly,
more efficient. e're productive because we're darn good. We will
vigourously defend against these erroneous United States
allegations and we will again be proven right." - Canadian Trade
Minister Pierre Pettigrew responding in Ottawa to the trade petition.
"Our message to Canadians is this simple: do not subsidize, stop
the dumping. . . or our actions will be swift and severe." - U.S.
congressman Chip Pickering, a Republican from Mississippi.
"I would have preferred a final negotiated solution to this dispute that
obligated Canada to at long last eliminate subsidies that cause
overcutting to the detriment of both the United States lumber industry
and the North American environment. Unfortunately, the Canadian
government has chosen to ignore the calls for change from the
United States." - Baucus.
"We have high-tech mills, but Canada is subsidizing their lumber
and dumping low-cost lumber." - Rusty Wood, president of Tolleson
Lumber Inc. and head of the U.S. industry group that launched the
unfair trade petitions.
"This legal process will inflict enormous damage not only on
companies but also on Canadian workers, their families and entire
communities, as well as American consumers. That's why we need
to get free trade talks started at the highest level on an urgent
basis." - David Emerson, co-chair of the B.C. Lumber Trade Council
and president of Canfor Corp.
"The rules under which this case will be heard are incredibly biased
and politicized and we are faced with arbitrary and retroactive
penalties." - Jake Kerr, chairman of Lignum Ltd., a B.C. producer.
"I still hope a final negotiated settlement is possible. But I have no
patience for what I regard as insincere, time-wasting tactics such as
the creation of a so-called eminent persons' group. This issue has
been thoroughly debated for two decades. There's simply nothing
else to learn from such discussion." - Baucus.
"If you start cutting into housing starts, it's suicidal." - Gary Horlick,
counsel to a group of U.S. home builders, who worries that a heft
duty on Canadian softwood would add $1,500 to $3,000 to the cost
of a new house in the United States.
"Even for a protectionist lobby that's been at this for 20 years (the
coalition) have really and truly overreached themselves. Ask yourself
whether the news of an 80 per cent tax on this vital commodity is
going to do anything for recovery in the United Sytates economy. It is
the worst possible message the consumer could hear." - Former
Ontario premier Bob Rae, legal counsel for the Canadian-based
Free Trade Lumber Council, in a Washington speech to a U.S.
lumber dealers group.
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