WTO says U.S. erred in tariffs on Canadians Softwood lumber ruling issued

WASHINGTON – The World Trade Organization ruled Tuesday the United States erred in imposing stiff tariffs on imports of Canadian softwood lumber used to build homes.

Canada’s trade minister said the interim ruling, which was not made public, supports Canada’s claim its logging practices, which include charging fees for use of government-owned forests, do not amount to a form of subsidies.

“Yet again, it appears that the U.S. is being told that its attempts to prove that our softwood industry is subsidized are flawed,” Trade Minister Pierre Pettigrew said in a statement.

A U.S. trade official called the ruling mixed and said the United States prevailed in at least one crucial respect: the WTO said Canada’s system of providing lumber producers with timber from public lands is a financial contribution and therefore is subject to duties.

The U.S. official, who spoke on condition of anonymity, said the WTO found the United States used the wrong methodology to calculate the tariffs, but did not rule that imposition of tariffs in itself was wrong. The WTO panel urged U.S. officials to take into account lumber prices in Canada rather than in the United States in assessing possible duties, sources on both sides of the conflict said.

The dispute centers on differing logging practices in the neighboring countries. Most U.S. timber is harvested from private land at market prices. In Canada, the government owns 90 percent of timberlands and charges fees, called stumpage, for logging, based on the cost of maintaining and restoring forests.

The United States contends that Canada’s fees are artificially low and amount to subsidies that allow Canadian mills to sell wood below market value. Last year, the Bush administration slapped anti-dumping duties averaging 27 percent on softwood imports from four provinces, contending that Canadian lumber imports threatened the U.S. industry.

Canada complained to the world trade body that U.S. tariffs have cost Canadian lumber companies hundreds of millions of dollars and wiped out thousands of jobs.

U.S. homebuilders and other lumber users supported the Canadians, saying the 27 percent duties could add more than $1,000 to the cost of a typical home in the United States.

The case decided Tuesday is similar to a decision issued last summer. The WTO panel is expected to issue a final report on the tariff dispute in July.

Softwood lumber from pine, spruce, fir and hemlock trees is used to frame houses. The United States imported almost $6 billion worth of softwood lumber last year, about one-third of the American market.