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April 20, 2001

Timber industry launches
formal trade complaint

By Mike Barnett
Editor

The U.S. forestry industry has lodged a formal complaint against Canada with the expiration of the U.S.-Canadian Softwood Lumber Agreement on April 1.

The five-year-old pact restricted duty-free imports of softwood lumber to the U.S. from Canada's four largest timber-producing provinces—British Columbia, Quebec, Alberta and Ontario—to 14.7 billion board feet. Without the agreement in place, U.S. producers fear a flood of Canadian imports.

U.S. timber producers say the provinces unfairly subsidize their forestry industry by charging low fees to cut trees on government land.

"It really boils down to an issue of fairness and how the Canadian government subsidizes its timber producers," said American Farm Bureau Federation (AFBF) Trade Specialist Alex Jackson. "They do subsidize their timber producers, we're fairly confident of that and it doesn't add up to the same production costs obviously that the U.S. has."

U.S. foresters are urging the government to impose duties as high as 78 percent on Canadian softwood lumber. The AFBF says U.S. producers' only choice for redress "is to pursue a countervailing duty case to attempt to rectify the imbalance."

In a letter to U.S. Trade Representative Robert B. Zoellick, AFBF President Bob Stallman said the optimal solution would be to pursue a negotiated approach that enables lumber to be sold under a pricing structure that accounts for the Canadian subsidies.

"In the spirit of free and fair trade, we hope officials on both sides of the border recognize that an agreement is preferable to litigation and accordingly, keep the dialogue open for such an outcome," Stallman wrote.

Jackson said it's imperative that a settlement is negotiated to reintroduce either the higher tariff levels or put a limit on the amount of lumber the Canadians can ship to the U.S.

"If they were able to undercut U.S. producers, what in effect they will do is drive them out of business and then they'll raise their prices," Jackson said.

The Canadian government has denied that it subsidizes their timber industry, but has promised to keep close tabs on the amount of timber sold to the U.S. Canada is also urging the U.S. to consider appointing special trade counselors to review the issue.