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New WTO ruling on lumber favors US
January 20, 2004
By Naomi Koppel, The Associated Press
To submit a Letter to the Editor: opinion@seattletimes.com Geneva, Switzerland - A World Trade Organization appeals panel gave a boost to the United States yesterday, reversing most of an earlier ruling that said U.S. special duties on Canadian lumber were illegal. The panel agreed with U.S. claims that lumber from government-owned lands in Canada can be unfairly subsidized if provincial governments sell the wood at below-market price. Therefore, the United States has the right to impose extra duties to prevent cheap Canadian wood from harming U.S. manufacturers, the panel said. It stressed, however, that Washington would have to carry out more extensive investigations before it could justify imposing duties on some imports of logs. The ruling may hasten efforts to negotiate an end to the two countries' dispute, which has flared over two decades and has cost Canadian lumber producers more than $1.6 billion in duties while the country's government pursued challenges at trade tribunals. Most provinces and some Canadian companies opposed a December proposal that would swap the duties for limits on Canadian imports. The WTO's decision was applauded by Richard Mills, spokesman for the U.S. trade representative. Mills said Canadian lumber policies were unfair subsidies. "The United States remains committed to finding a durable solution in this 20-year dispute. But in the meantime we will continue to use our trade laws to ensure a level playing field," he said. The ruling is a second boost in less than a week from the WTO for the U.S. lumber industry. On Friday, officials said a confidential WTO ruling in a related dispute upheld steep anti-dumping tariffs the United States had imposed on Canadian imports. A third ruling, in December, favored Canada on the question of how to assess damage to the American lumber industry. Yesterday's appeals ruling follows a decision by a panel of WTO experts last August. Canada had complained that the anti-subsidy duties of 18.7 percent imposed in May 2002 were illegal, claiming Canadian lumber is not subsidized. Most U.S. timber is harvested from private land at market prices, while in Canada the government owns 90 percent of timberlands and charges fees called stumpage for logging. The fee is based on the cost of maintaining and restoring the forest. U.S. timber companies contend that Canada's stumpage fees are artificially low and amount to subsidies that allow Canadian mills to sell wood below market value. The August panel issued a mixed ruling, agreeing with the United States that stumpage could be a subsidy but disagreeing with its calculations. The countries appealed different parts of the ruling. In 2002, the United States imported nearly US$6 billion of softwood lumber from Canada about a third of the American market. Softwood lumber, from pine, spruce and other trees, is a key product in home construction. Information from Bloomberg News is included in this report. Copyright 2004 The Seattle Times Company http://seattletimes.nwsource.com/html/businesstechnology/2001839925_lumber200.html |