Canada suspends talks on softwood

TORONTO – Canada on Tuesday suspended talks with the United States on their ongoing lumber dispute to protest Washington’s refusal to heed a NAFTA panel ruling that sided with the Canadian position.

A meeting that had been scheduled for next Monday to start the next round of talks in the dispute has been canceled, Canada’s Trade Minister Jim Peterson announced.

Last week, a NAFTA panel dismissed Washington’s claims that Canadian softwood exports are subsidized by Ottawa and damage the U.S. lumber industry. Maine has a long-standing lumber trade with Canadian provinces.

Ottawa called on Washington to return immediately about $5 billion (Can.), or $4.1 billion U.S., in anti-dumping duties collected from Canadian lumber companies since 2002. U.S. builders say the duties drive up the cost of constructing or remodeling homes.

Washington refused, saying the ruling didn’t end the matter because it did not deal with a 2004 decision by the U.S. International Trade Commission which supported the American case. U.S. Trade Representative Rob Portman pledged to keep in place punitive tariffs on Canada and seek a negotiated settlement.

“I have conveyed Canada’s position to U.S. Trade Representative Rob Portman and appreciate our open dialogue,” Peterson said in a terse statement Tuesday.

Neena Moorjani, a spokeswoman for Portman, said the U.S. trade representative was disappointed that the talks had been canceled and hoped negotiations would resume shortly.

“As Ambassador Portman has noted, we continue to believe it is in the interests of the United States and Canada to reach a permanent market-based, negotiated solution and had been prepared for these talks with this goal very much in mind,” she said.

Canada has questioned the U.S. commitment to the North American Free Trade Agreement, the trade pact Canada, the United States and Mexico adopted in 1993.

The Bush administration imposed the tariffs in 2002 after accusing Canada of subsidizing its lumber industry. 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 for logging. The fee is based on the cost of maintaining and restoring the forest.

A spokesman for the Washington-based National Association of Home Builders decried the U.S. tariffs on Canada’s softwood lumber as a “hidden tax” that has cost U.S. home buyers and consumers more than $4 billion.

“We feel like the U.S. should honor the NAFTA ruling and give back the duties and immediately end the tariffs that have been placed on softwood lumber,” said Michael Strauss, a spokesman for the home builders group. Last week’s ruling “should have been the end of the line.”

The association said the tariffs add about $700 in additional costs for a typical wood-frame house in the United States.

A U.S. group called the Coalition for Fair Lumber Imports issued a statement Tuesday saying it was disappointed that Canada would not participate in the talks scheduled for Monday.

“For the last four years, the coalition has shown a willingness to engage in meaningful, constructive discussions to end this dispute,” said the group’s chairman, Steve Swanson. “Repeatedly, the Canadian federal and provincial governments have failed to come to the table with detailed proposals.”