Canadians knock on wood to eliminate U.S. lumber tariffs

| 3/22/2006

The U.S. first levied a 27 percent tariff on Canadian softwood lumber in May 2002, kicking off a market dispute that continues today.

The tariff has since been lowered to 8.7 percent, but a North American Free Trade Agreement panel may soon eliminate the rest of the tax, known as a countervailing duty, according to Bloomberg and Canadian Broadcasting Corp.

American lobbyists and lumber companies believe the Canadian government unfairly subsidizes its lumber industry, causing an unbalanced market.

Canada, according to The Canadian Press, supplies one-third of pine and spruce for the U.S. home-building market. Canadian exporters have shouldered the burden of about $5 billion under the tariff.

U.S. producers continue to lobby to keep the tariff, but a binational NAFTA panel, consisting of three Americans and two Canadians, ruled recently that Canada’s softwood exports were not directly subsidized.

Canadian lumber councils considered the ruling a victory, while the U.S. Commerce Department can still propose a challenge.

If the ruling holds in favor of Canadian lumber councils, the U.S. would have to lift its countervailing duty on softwood.