Trade commission poised to rule on tariffs for Canadian softwood

WASHINGTON – A day of reckoning will arrive next Thursday when the U.S. International Trade Commission decides whether it will slap tariffs as high as 29 percent on Canadian softwood lumber – a possibility that leaves nervous Maine lumber interests hoping for a delicate balance that protects all of the state’s loggers and sawmills.

Competition with Canada, which supplies about one-third of the softwood lumber used in the U.S. housing industry, has been blamed for a flurry of U.S. lumber mill closings, including Maine mills in Passadumkeag and Costigan that left 250 without jobs last year.

Still, a portion of the 13,000 employees who work in the lumber industry in Maine also prosper from the Canadian industry. Loggers in northwest Maine between the Allagash River and the Canadian border sell their product almost exclusively to a dozen sawmills in Quebec. The circumstance leaves the state’s timber industry with divided interests on the tariff issue, according to Abby Holman, executive director of the Maine Forest Products Council.

“We favor the tariff, but we want an exemption on those Canadian mills,” Holman said. “Maine truckers, loggers and everyone else is making a living from them.”

Maine loggers and mills appear to be getting their way – so far.

After the U.S. Commerce Department recommended strict trade sanctions on Canadian imports of spruce, pine and fir on March 22, it exempted all but four of the Canadian mills that buy logs from Maine. Adoption of that plan now rests in the hands of the International Trade Commission, which will determine next week whether Canada’s subsidized imports have injured the U.S. lumber industry.

A hundred members of Congress praised the call for tariffs, including Maine’s Republican Sens. Olympia Snowe and Susan Collins. The two called the move “tough medicine,” which demonstrates U.S. resolve to bring to an end Canadian subsidies of its lumber industry. They added that they would prefer Canada to work on a mutually acceptable agreement to settle the decades-old tensions.

While a tough-talking U.S. lumber industry coalition has been lobbying hard for the tariffs, the housing industry has pushed just as firmly in opposition to the sanctions, claiming that the extra cost would jack up home prices by as much as $1,500.

“Tariffs will boost lumber prices and the profits of domestic producers at the expense of U.S. consumers,” predicted Michael Carliner, an economist with the National Association of Home Builders.

He claimed that related industries using softwood lumber employ more than 7 million workers and outnumber U.S. lumber-producing workers by 30-to-1. “The number of jobs in the U.S. lumber industry will remain restricted by the limited domestic timber supply.”

Still, Carliner believes the housing industry is fighting an uphill battle. Investigations by the Commerce Department have found that Canada’s lumber industry enjoys an unfair competitive edge because it pays a far lower fee to harvest public forests than firms do in the United States.

“These tariffs are not a slam dunk,” Carliner said, “but consumers don’t have the same voice as the affected industries do in trade disputes.”

If the ITC does decide to adopt tariffs, Canada most likely will challenge the move in court as a violation to the North American Free Trade Agreement, which allows for the free flow of commerce between Canada, the United States and Mexico.

Canada is expected to argue that American efficiency standards are to blame, not it’s system of lumbering. It is also expected to note that while Canada is being singled out for tariffs, the United States seems to be ignoring the rising volume of imports from Scandinavia, Russia and Chile coming into the country.