Trade panel: Lumber tariffs too high

WASHINGTON – An international trade panel ruled Wednesday that U.S. tariffs on Canadian softwood lumber may be too high, but it rejected Canada’s claim that there’s no basis for the duties.

The panel, set up under the North American Free Trade Agreement to deal with trade disputes, upheld U.S. claims that the Canadian government subsidizes its timber industry and therefore is subject to U.S. tariffs.

The ruling could mean that the Commerce Department will have to recalculate the tariffs within 60 days. It also could put pressure on Canada to reform its timber industry and move toward a more market-based system.

Softwood lumber from pine, spruce and other trees is commonly used in home construction. The United States imported nearly $6 billion of lumber from Canada in 2002, about one-third of the American market. The United States imposed tariffs averaging 27 percent on softwood imports from four Canadian provinces last year. The Bush administration contends that government subsidies keep Canadian lumber prices artificially low and threaten the U.S. industry.

Canada denies that it subsidizes its lumber industry. It complained to the World Trade Organization that U.S. tariffs have cost Canadian lumber companies hundreds of millions of dollars and eliminated thousands of jobs.

The NAFTA panel criticized the analysis used by the Commerce Department to determine the tariffs. But it said despite the shortcomings, there was enough evidence to show some level of tariff was warranted.